Is Global Corporate Tax a threat to business in Ireland?

By David Fritsche Jr.

Taxes are going up:

Yesterday, the United States proposed instituting a “Global Minimum Tax Rate”.  It will be presenting to the G20 this week to adopt this policy and “avoid a race to the bottom”.  This is certainly in the benefit of the United States.  But will it help other countries?

The Corporate tax rate in the US was cut from 35% to 21% in 2017.  With that, many corporations came back to the US.  It created jobs and grew the economy to record levels prior to the Covid Crisis.  The Biden administration will be raising the corporate tax rate to 28%.  With trillions of dollars in new spending, the fear is, this is only the beginning.

Is Global Corporate Tax a threat to business in Ireland?

The problem with taxes on corporations:

But there is a problem.  Corporations can move.   All those small countries out there are a problem to controlling the corporations…I mean helping the global concerns.

Right now, the options are countries like Ireland.  Ireland aggressively markets to corporations and has a 12.5% tax rate.   With that it has attracted some of the largest corporations in the world.  If Ireland were to agree, their competitive advantage over the United States would vanish.  Would Apple, Google and Pfizer stay?  Maybe.  Maybe not.   But certainly, there would be little incentive for companies to move to Ireland.

Who does this benefit?

So, it is clear, the Global Minimum Tax (GMT) would benefit the US and keep corporations from moving out of the US.  But that is not what the new Treasury Secretary, Janet Yellen is selling.  She is selling this as a benefit to all countries and an opportunity to invest in global projects such as those proposed by the United Nations and the World Economic Forum.  Is it truly a benefit to all countries?

The answer to that depends on your worldview.  Bigger taxes = bigger government.  If you believe bigger government is the answer to the world’s issues, then your country may need to suffer for the benefit of the world.  Should Ireland sacrifice for the good of the US and the rest of the world?  Should Malta?  The Cayman Islands?  I think that would be difficult sell.

The Great Reset

However, there are global issues such as climate change, health issues and more that need a global approach.

At a very high level, the GMT is a part of the World Economic Forum’s “the Great Reset”.  We can cover the details in future articles, but suffice it to say, this is about reshaping our entire economic and social constructs through global cooperation towards the protection of the planet and equity for all people.  While this sounds amazing on the surface, its one of the biggest efforts ever in human history.  We should proceed carefully and be diligent in our decisions.

Decisions like the GMT have real-world consequences to people in countries like Ireland.  And real-world benefits to countries like the US.  And this is only the beginning.   There are changes coming that are reshaping everything from business to society.  Once the decisions are agreed to, they will change things forever. Let us take our time and get it right.

David Fritsche Jr

David is proud of his Irish Heritage extending back 2 millennia.  David worked for NASA on Voyager II, Galileo and IRAS projects. Several awards from NASA including NASA’s Award of Excellence. He co-authored books for Que, Microsoft and New Riders press. David was CEO of GCN which sold to a public company in 2000.  David consulted for Microsoft, Intel, Daimler Chrysler, AT&T, Boeing and hundreds of other companies. Microsoft asked David to transition SQL Server for use on the Internet. David is the founder and Chairman of Globalsoft1, a full-stack software development company that has managed over 4 trillion records.

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David Fritsche,  Founder & CTO

Honorary Sheriff  I  NASA Award I  IACP Member

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