It is up to the US government to reform the country’s corporate tax system because the international trend is moving to the Irish model of low corporate rate with the burden on consumption taxes, said the former US president Bill Clinton.
Moreover, there is no substance to the claim that Ireland is a tax haven, he said. “Ireland has the right to set whatever taxes you want.”
Mr Clinton made his comments to Pat Kenny during an interview on Newstalk. During Senate Committee meetings last June into the tax affairs of multinationals, Ireland came in for heavy criticism because it was used by Apple in aggressive tax avoidance schemes.
The former president said that when he took office in 1993, the US was suffering from an “ugly fiscal deficit” and surging debt levels. He decided to raise taxes for wealthy Americans and increase the corporate tax rate to the international average, which was then 36%.
The international average is now 23% but the US tax rate has not changed. “All over the world expenditure has not gone down, but there has been a shift away from corporate taxes to consumption taxes and income tax. We need to reform our corporate tax rate, not to the same level as Ireland but it needs to come down.”
The world’s largest economy is currently mired in a stand-off between the White House and the Congress over budget cuts and raising the US debt ceiling. The Republican party has so far remained implacable in its refusal to compromise on spending cuts that would reopen Federal agencies that have been closed for two weeks.
However, if the two sides fail to reach an agreement on raising the US debt ceiling the implications would be far more serious. The US could default on its debt for the first time in its history.
Mr Clinton blames the crisis on the intransigence of an ideologically driven clique of extreme right-wing Republicans, who remain steadfastly opposed to President Obama’s healthcare plan.
“They want him [Obama] to repeal Obamacare, but he was re-elected even though his opponent [Mitt Romney] promised to overturn it.”
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