Harvard professor's interview on US tax reform bill easy to understand. US multinational investment in Ireland at risk.

Patslatt1

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Harvard professor's interview on US tax reform bill easy to understand. US multinational investment in Ireland at risk.

See https://hbr.org/ideacast/2017/12/breaking-down-the-new-u-s-corporate-tax-law

Prof. Desai, a tax expert, thinks the US multinationals will no longer need to invest in the computer industry in Ireland thanks to the Trump administration corporate tax reform which incentivises investing in the US.Maybe part of the afternoon services to the EU could be done in the morning from the US Eastern time zone. This raises the question whether substantial US investing in Ireland is needed to service EU customers. Maybe other industries such as pharmaceuticals would be similarly affected.

If Prof Desai is right,the Irish government should encourage Irish small business expansion by lowering marginal income tax rates on small business owners whose dividends are taxed at around 50% on modest incomes above 35,000 euros.

The US finally joined the rest of the world in adopting the territorial tax system under which the foreign operations of US companies will no longer be taxed at US income tax rates. Under the abandoned worldwide system, a US subsidiary taxed at say 15% effective rate in a country or jurisdiction had to calculate what the tax would be in the US and the difference if higher would be paid when the money was repatriated to the US. The US nominal federal tax rate was the world's highest at 35% but was reduced to 21% in the reform bill. The US will now tax only dividends from US subsidiaries abroad under the territorial system except for the 10% minimum tax below.

Some other key tax changes are:
[]a minimum 10% federal tax on foreign corporate income, to apply if the tax rate in the foreign country or jurisdiction is less than 10% (or less than the US federal rate of 21%?)
[]a 10% tax on fees paid by US companies to intercompany affiliates abroad
[]reduction of corporate tax on exports which contravenes WTO rules on trade
[]abolition of the minimum 20%corporate income tax in the US
[]immediate writeoff of capital spending against taxable profits
[]interest deduction for tax return limited to 30% of taxable income

The 10% minimum tax above is meant to reduce the advantage of tax havens. But that's a far lower tax than the former 35% tax.

The 10% tax on fees above is meant to prevent shifting profits to low tax jurisdictions. However, it could prove highly disruptive to companies whose fees are not designed to shift profits. Say a fee of a million dollars was charged to cover costs of 950,000, the profit of 50,000 would incur a tax of 100,000 and that loss might be difficult to prove.
 
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sic transit

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You really don't seem to have any grasp whatsoever what the "computer" industry is nor what MNCs do here nor does your genius professor. These days it's largely a service hub, with support and some R&D(the tax thing). The tax thing is great and they'll take it but it's primarily the ready availability of people who can help them service the vast market of EMEA. Follow the sun has been a industry policy for two decades and no orange bloke in the WH is going to change that. The tax question is a global one.
 

Congalltee

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Ireland is accused of Revenue stealing and not taxing taxable profits because it was generated by a company with an Irish hq (nameplate) but that Revenue was not generated in Ireland.
Is this accusation true?
What’s in it for us?
Why isn’t the overseas revenue taxed here? (If we can get away with it)
Why is t the overseas revenue taxed where it was generated by that country in line with its laws?
Why is Oxfam so anti-Irish on this point? (Should it have to register with SIPOC if it keeps running political campaigns?)
Will the oecd come to satisfactory conclusion?
Will ireland exercise its veto in EU?
 

Analyzer

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That is alright.

We can focus on getting
Denis "redacted" O'Brien
Paul the Bonox Paysome
Brendan Knickers O'Connor

to locate their tax residency here.

Support your local tax efficient hoor in a green jersey.
 

Analyzer

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If Prof Desai is right,the Irish government should encourage Irish small business expansion by lowering marginal income tax rates on small business owners whose dividends are taxed at around 50% on modest incomes above 35,000 euros.
You are a niaive as they come.

Do you have any dea of how hungry the Irish institutional state is for money to extort out of the people ?

And for what purposes it needs the money ?



Socialism for the rich does not come cheap, you know !!
 

valamhic

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Don't forget to factor in the high electricity prices. Hovering between the 3rd and 4th highest in the world and twice that of the USA where Trump's tax cuts are attracting investment out of here. The obsession with green energy has dissipated in the UK with Brexit taking priority.

The Irish cannot handle wealth or prosperity, never could. The Irish man always tries to punch above his weight (punching thin air) but always ends up falling flat on his arshe.
 

Patslatt1

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You really don't seem to have any grasp whatsoever what the "computer" industry is nor what MNCs do here nor does your genius professor. These days it's largely a service hub, with support and some R&D(the tax thing). The tax thing is great and they'll take it but it's primarily the ready availability of people who can help them service the vast market of EMEA. Follow the sun has been a industry policy for two decades and no orange bloke in the WH is going to change that. The tax question is a global one.
What's to stop part of the service hub from being in the US eastern time zone and speaking to the EU in its afternoon? US immigration laws would have to allow visas for EU linguists. BTY, Trump likes Norwegian immigrants!
 

Patslatt1

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So dividends should be taxed at standard rate regardless of levels of income? If that is what you are suggesting then what would stop every small business owner drawing down minimum wage salary and then issuing the rest as a dividend and ensure they never pay tax on income above the standard rate? The higher rate of tax would become a PAYE tax rate only.
Even in tax mad France, the 50% income tax rate doesn't kick in until around 120,000 euros taxable income and in the US at a way higher income.The Irish will put up with anything, including the highest income tax rates in the EU and with very inferior benefits compared to the best managed EU welfare states.
 

Patslatt1

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Ireland is accused of Revenue stealing and not taxing taxable profits because it was generated by a company with an Irish hq (nameplate) but that Revenue was not generated in Ireland.
Is this accusation true?
What’s in it for us?
Why isn’t the overseas revenue taxed here? (If we can get away with it)
Why is t the overseas revenue taxed where it was generated by that country in line with its laws?
Why is Oxfam so anti-Irish on this point? (Should it have to register with SIPOC if it keeps running political campaigns?)
Will the oecd come to satisfactory conclusion?
Will ireland exercise its veto in EU?
Taxation is a core issue of sovereignty, so no EU governments would be dictated to on tax laws that meet international WTO rules on trade. In Apple's case, its clever tax avoidance scheme was not state aid but was legal because any company that invented such a unique scheme could have availed of it. Someone always has to be the first to invent a new tax avoidance scheme but Apple's was closed down before others had time to copy it. The EU Commission is either engaged in a power grab beyond its powers or simply wants to intimidate Ireland into increasing the corporate income tax rate from 12% and limiting loopholes.
 
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Patslatt1

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Don't forget to factor in the high electricity prices. Hovering between the 3rd and 4th highest in the world and twice that of the USA where Trump's tax cuts are attracting investment out of here. The obsession with green energy has dissipated in the UK with Brexit taking priority.

The Irish cannot handle wealth or prosperity, never could. The Irish man always tries to punch above his weight (punching thin air) but always ends up falling flat on his arshe.
A relative who works in wind turbines says that subsidies will begin to be phased out soon because new generation gigantic turbines about 150 yards high can generate energy at prices competitive with fossil fuels. The problem of inconsistent wind speeds can be dealt with in continent wide electricity interconnectors, since the winds are usually blowing in many places. BTW, the UK made a terrible deal for new nuclear power plants by guaranteeing prices treble the prevailing international auction prices for wind farm electricity. That does not compensate for the reliability of nuclear power, assuming technical hurdles of building the plants can be overcome.
 

owedtojoy

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See https://hbr.org/ideacast/2017/12/breaking-down-the-new-u-s-corporate-tax-law

Prof. Desai, a tax expert, thinks the US multinationals will no longer need to invest in the computer industry in Ireland thanks to the Trump administration corporate tax reform which incentivises investing in the US. This raises the question whether substantial US investing in Ireland is needed to service EU customers. Maybe other industries such as pharmaceuticals would be similarly affected.

If Prof Desai is right,the Irish government should encourage Irish small business expansion by lowering marginal income tax rates on small business owners whose dividends are taxed at around 50% on modest incomes above 35,000 euros.

The US finally joined the rest of the world in adopting the territorial tax system under which the foreign operations of US companies will no longer be taxed at US income tax rates. Under the abandoned worldwide system, a US subsidiary taxed at say 15% effective rate in a country or jurisdiction had to calculate what the tax would be in the US and the difference if higher would be paid when the money was repatriated to the US. The US nominal federal tax rate was the world's highest at 35% but was reduced to 21% in the reform bill. The US will now tax only dividends from US subsidiaries abroad under the territorial system except for the 10% minimum tax below.

Some other key tax changes are:
[]a minimum 10% federal tax on foreign corporate income, to apply if the tax rate in the foreign country or jurisdiction is less than 10% (or less than the US federal rate of 21%?)
[]a 10% tax on fees paid by US companies to intercompany affiliates abroad
[]reduction of corporate tax on exports which contravenes WTO rules on trade
[]abolition of the minimum 20%corporate income tax in the US
[]immediate writeoff of capital spending against taxable profits
[]interest deduction for tax return limited to 30% of taxable income

The 10% minimum tax above is meant to reduce the advantage of tax havens. But that's a far lower tax than the former 35% tax.

The 10% tax on fees above is meant to prevent shifting profits to low tax jurisdictions. However, it could prove highly disruptive to companies whose fees are not designed to shift profits. Say a fee of a million dollars was charged to cover costs of 950,000, the profit of 50,000 would incur a tax of 100,000 and that loss might be difficult to prove.
Having worked for many years in "computer industry", I can affirm that most of it disappeared to China and the Far East after the Dot Com bubble burst.

What was left moved up the food chain into R&D, software development and software services, which are quite successful here still.
 

Watcher2

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Ireland is accused of Revenue stealing and not taxing taxable profits because it was generated by a company with an Irish hq (nameplate) but that Revenue was not generated in Ireland.
Is this accusation true?
What’s in it for us?
Why isn’t the overseas revenue taxed here? (If we can get away with it)
Why is t the overseas revenue taxed where it was generated by that country in line with its laws?
Why is Oxfam so anti-Irish on this point? (Should it have to register with SIPOC if it keeps running political campaigns?)
Will the oecd come to satisfactory conclusion?
Will ireland exercise its veto in EU?
That's at least one of the accusations.
Jobs is in it for us.
The overseas revenue is taxed at the relevant rate here in Ireland. It's taxed here because it's claimed that the profits are generated from decisions taken here in Ireland that generates the taxable profits. Profits are legally taxed where the management and control is centred.
It is taxed in line with overseas countries tax laws. See above regarding management and control. Same rules apply.
Don't know about oxfam. Why do they give a sh1t about taxes in Ireland or France?
The or do is one of the biggest anti Irish tax rules around and they are making a huge impact in this regard.
Ireland HAS TO use its veto but there are stronger forces at play such as the OECD. Our days are numbered on current tax policy.

But it's not really the 12.5% rate that has the like of the oecd so exorcised, it's the zero rate double Irish which has essentially been dismantled already.
 

Watcher2

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What's to stop part of the service hub from being in the US eastern time zone and speaking to the EU in its afternoon? US immigration laws would have to allow visas for EU linguists. BTY, Trump likes Norwegian immigrants!
The US is a 24/7 country. The EU, not so much.
 

valamhic

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Are you honestly expecting anyone to answer?
In order to contribute to this discussion, a basic understanding of financial accounting practice is required coupled with basic reasoning. The Trump hating clowns from the commie leftie greenie libloon fringe here are not at the races. (including Sid transit whose knowledge was gained in the bookies)

This is a good thread for intelligent posters, but they are few and far between. The thread will died out in a jiffy.

In simple terms, Trump has reduced tax in a way calculated to bring money and jobs back to the US. An entirely new move for the US. It could clean the jobs out of Ireland, but for one thing. How long will Trump last. No one knows that and if he goes, Soros will increase taxes again.

An example of Trump's tax changes are that capital allowances can be written of for tax in the year of purchase. Unheard off anywhere else. 7 years in Ireland for my farm,
 

valamhic

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A relative who works in wind turbines says that subsidies will begin to be phased out soon because new generation gigantic turbines about 150 yards high can generate energy at prices competitive with fossil fuels. The problem of inconsistent wind speeds can be dealt with in continent wide electricity interconnectors, since the winds are usually blowing in many places. BTW, the UK made a terrible deal for new nuclear power plants by guaranteeing prices treble the prevailing international auction prices for wind farm electricity. That does not compensate for the reliability of nuclear power, assuming technical hurdles of building the plants can be overcome.
There is a massive debate on other threads on wind energy and I won't impinge on this one by diverting. At present there is 2,500 mw of wind using standard size turbines. Capacity factors last year was a bit better then normal @ about 27%. The interconnectivity is years away, too far away time wise to effect the Trump changes.

Yesterday's Sunday Times and SBP carried articles about the failure at Gaelectric. Its going down the tubes and the compressed air at the salt mines in Antrim is abandoned. The Chinese refused to invest because the government is ending fixed tarrifs (cutting subsidies). We now have 6000 mw of heavy plant, 2000 of fast acting plant and 2,500 of wind. = 10,500 mw and likely to rise to 11,000 and stabilize at that. With a glut of Trump's oil coming resulting in a reduction in electricity prices its hard to see any drop in Irish prices.

Add this to the tax advantages of the USA and Irish job numbers will be squeezed. I must be remembered that nearly all spare government cash this few years went into renewable energy, a complete waste. With Gaelectric, the crows are coming home to roost. Maybe it all for the better, the Irish can cope with wealth.
 

Patslatt1

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I assume you are excluding the social security charges for employers and employees in France when you make the point above.

The point you you make makes no sense if you are not excluding and that you are excluding them also renders your point senseless.
France stands out for huge employer payroll taxes but the employer bears most of the burden. Thanks to these taxes on jobs, France has huge unemployment and low labour force participation. Employee social security taxes are generally good value for money in the EU, paying for health care and old age pensions.

In Ireland, the inefficiency of the health service which takes 12% of the national income is a major failure. Old age pensions of 12,000 euro a year are about 40% of the average aftertax income on the industrial wage, but many do not get the full amount, so the average pension is a lot less than 40%. That's because the huge public sector pay and penions burden is taking too largr a share of the national income.
 
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Patslatt1

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Yes but the point is that the rates you originally quoted about France was misleading when you exclude the social security charges. When you quoted the 50% Irish rate you included all charges, PRSI USC and Income tax.
Ireland's top marginal tax rate begins on 35,000 euro taxable income, way lower than incomes in the rest of the EU, the important point.The average Irish professional or trades person earning between 45 to 80,000 a year is shafted. See http://digitalnomadeurope.com/income-tax-rates-european-union/
 
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Analyzer

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What's to stop part of the service hub from being in the US eastern time zone and speaking to the EU in its afternoon? US immigration laws would have to allow visas for EU linguists. BTY, Trump likes Norwegian immigrants!
Well, actually, I would look at it the other way.

What is to stop them moving a service hub to Slovakia, where second language English and German speakers are available, and where univeersities are not loaded up with the expensive parasites that exist in Irish universities, where dumbing down is rampant.

Fact : Irish universities have nosedived since the 1980s.

And why stop at Bratislava ? Students in Israeli universities are operating at an enven higher level of proficiency.

Meanwhile in Belfield the focus is on a plastic peanut, and getting jobs in the closseted establishment based on one's rugger credentials.

We have a massive intellectual blindspot in the workplace of that controls the state and aligned private sector bodies.
 

sic transit

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What's to stop part of the service hub from being in the US eastern time zone and speaking to the EU in its afternoon? US immigration laws would have to allow visas for EU linguists. BTY, Trump likes Norwegian immigrants!
No language skills for starters and time zone is way too wide. EMEA stands for the Europe, Middle East and Africa. There's a whole lot more than the chatting thing involved in it. Sales and support is part of the service
 


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