US firms ‘stupid’ if not based in Ireland

A TOP US economist has told firms that they are “stupid” if they are not in Ireland.

Economist Martin Sullivan said it’s no wonder the outskirts of Dublin look like Silicon Valley given that Ireland’s corporation tax rate is around a third of that in the US.

This news comes as Ireland battles to hold on to the power to set its own corporation tax rate.

The North also recently moved a step closed to bringing its rate in line with that in the Republic, with the British government giving it powers to set its own rate.

Mr Sullivan said more US multinationals are shifting their research and manufacturing facilities to places like Ireland and Switzerland.

“Well, if you have a 35% rate in the United States and, for example, a 12.5% rate in Ireland, there’s an incentive to move your factory to Ireland,” he said.

Around 600 American companies are in Ireland and they employ 100,000 people.

“Almost everybody is in Ireland. All the pharmaceutical companies, all the high-tech companies. You’re stupid if you’re not in Ireland,” said Mr Sullivan.

CBS show 60 Minutes looked at the exodus of US companies for tax reasons and found that many companies said they have been forced to move abroad because the corporation tax rate in the US at 35% is too high.

60 Minutes correspondent Lesley Stahl visited the town of Zug in Switzerland where many companies are based and taxes are between 15% and 16%.

The population of Zug is 26,000 and the number of companies in the area is 30,000 and growing at 800 a year.

Head of Cisco, John Chambers, called the US corporation tax rate “insane”. He said it is forcing companies into these manoeuvers, especially when many other industrialised countries, including Canada, are busy lowering their tax rates to lure US companies.

“Every other government in the world has realised that the US has it wrong. They’re saying, ‘I’m going to have lower taxes, period.’ That’s what you see all across Western Europe, that’s what you see in Asia in the developed countries,” Mr Chambers said.

According to the show Cisco has eight companies in Ireland.

“We do what makes sense to the shareholders,” Mr Chambers said. “We go where there are incentives in countries that say, ‘We want you here, we’re going to give you tax advantages, and we want you to add jobs here, etc.’ We can no longer in America say, ‘This is how we do it, therefore you must do it.’ We’ve gotta change, or we’re going to be left behind,” he added.