Sunday, October 12, 2014

The Double Irish, Corporate-Tax Loophole, Might Be Going Away

Ireland is expected on Tuesday to announce changes to its tax code that could eventually close one of the world’s most famous corporate-tax loopholes, dubbed the Double Irish, after heavy pressure from governments and the European Union.

WSJ explains:
The Double Irish uses a twist in Irish laws to funnel royalty payments for intellectual property from one Irish-registered subsidiary to another that resides for tax purposes in a country with no corporate income taxes. It is often paired with a related tax structure that planners call the “Dutch Sandwich,” which uses a Netherlands-based structure to avoid certain taxes. The Double Irish structure allows companies to legally shift billions of euros in profit to tax havens each year.
According to WSJ, Google is among the firms that uses the Double Irish loophole. Before Google switched to wire payments for Adsense payments, I used to receive payments to EPJ from Google via a physical check that emanated in Ireland.

But don't forget about what the great economist Ludwig von Mises said about tax loopholes:
 He pithily summarized  the case in favor of tax loopholes, according to the  following  anecdote related by  Paul Samuelson (“Tribute to Gottfried  Haberler for American Enterprise Institute Memorial 18 September 1995″) : 
Some of us at sherry before a Fiscal Policy dinner in the Harvard Faculty Club were beefing about certain tax loopholes in the IRS code.  Gotttfried [Haberler] whispered quietly, “Capitalism breathes through those loopholes.”  The next day  I told him how much I had liked his aphorism.  Always the straight-arrow scholar, he said, “Yes, but the words are those of Ludwig von Mises not Gottfried Haberler.

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