[dogma1138]

This isn't only ongoing, this is by design, and being actively pushed further, because in the EU if you are by definition an equal opportunity tax haven like Luxemburg you are golden.

Luxembourg is like the delaware of Europe, it's a banking and financial institution state and both its own laws and the EU laws and policies it lobbies (and when you effectively are not only Delaware but also the DC of the EU it kinda helps) for ensure that it would continue to operate as one.

The bad thing that Ireland and is a big no-no in the EU is to go to the likes of apple and say:

Hai Apple I really want you inside of me! I know I'm small, and I don't have a huge workforce and internal market, I'm not like Germany. I also don't have a huge economic and financial infrastructure like Luxembourg, Switzerland or UK (London) but I'm a really hard worker! Tell me what skills you need, and I'll educate my people, I'll give you low interest loans to build your shiny offices and I will give you tax deduction if you employ my peeps. I would do all that I can to make sure it will be easy for you to operate here because I really don't have much to offer and I need to compete with the bigger countries since the euro is expensive and the price stability is managed by the ECB and my people need to eat and loans I've been taking on are becoming harder and harder to pay.

Now this is the only way that Ireland can really attract large corporations and make it more lucrative to invest in its industry, this is what effectively every country on the planet does when it wants to grow. And since Ireland can't control it's own monetary policy and currency it also can't just be a cheap place to be, while there is some local variation because of the mandate of the ECB to control the price stability within the Eurozone the prices of many goods and services are quite similar (Ireland is actually more expensive than Germany because it's an island which increases the costs of logistics and it has lower production which means more imports which add costs even if they import within the EU) it needs boost its economy in order to match the salary level of the other Eurozone states and to do it it needs to offer something to corporations.

It can't offer them a huge workforce because it doesn't have one, It can't offer them access to financial and banking infrastructure because it doesn't have that either, what it can offer is English, fund both academic and vocational education and training based on the skills those companies need and give them tax incentives to come and employ Irish people. Ireland isn't Luxembourg Apple didn't set up effectively a "shell" there that's pretty much there for easy tax loopholes and actually employes no one, Apple employees directly over 6000 people in Ireland and indirectly 4-5K more, same goes for Microsoft, Google, Facebook, Amazon and the likes. This isn't some tax break Island that those companies incorporate in by name only and don't actually have staff, companies have "real" employees in Ireland because the Irish "incentives" are tied to direct employment. Ireland isn't trying to create tax loopholes to make a quick buck to split it between a few 100's residents, it tries to keep it's 5M people employed, forcing them to play by the "same rules" as 4 of the world's 10 largest economies is asinine.

[jomamaxx]

"Luxembourg is like the delaware of Europe,"

But most taxes in the US are Federal.

In Europe they are effectively 'state level' - making the problem worse for Europe than for state-by-state tax competition in the US.

Re: your Ireland comment - yes - I see your point, but the issue here is not Ireland having a 'lower tax rate' of 12.5% - rather than they allowed Apple to have 'special privileges' thereby paying next to nothing, right?

[Amezarak]

> But most taxes in the US are Federal.

Are you sure about that?

It's going to depend very much on where you are, how you're organized, what tax breaks you get, and how much money you make, but states generally have both a) many different kinds of tax: income tax, property tax, sales tax and b) a cumulative higher tax rate. A much higher proportion of my money personally goes to the state than it does to the feds.

[jomamaxx]

In Europe, there are no 'Federal' taxes i.e. at the European level. All taxes are to the 'State'. So it doesn't matter if my analogy is a little bit off.

[Amezarak]

I am not sure I understand why it makes a difference. If the baseline (federal taxes) are the same everywhere, it's just the same as if there were no federal taxes. States compete and offer special tax breaks on a state level; that's the same situation we had here in Europe, except that the federal government, unlike the EU, doesn't seem to care if states offer a company crazy tax breaks, subsidies, or loans, even if said breaks are a special deal for that company alone.

[jomamaxx]

There are no 'Federal Taxes' in Europe. Corporations don't pay a corporate tax at the European level - just to the states. So there is tax competition.

[Amezarak]

Right...but the existence of a federal tax is irrelevant; there is still tons of tax competition because the states assess their own taxes. The federal tax rate, from the competitive perspective, is irrelevant because everyone pays it. But every state has different taxes and they compete with each other to give the biggest tax breaks.

For for example you might have:

State A: State income tax: 5% Property tax: 5% Sales tax: 5%

State B: State income tax: 6% Property tax: 6% Sales tax: 5%

Yes, everyone in both State A and B pay, let's say, a federal 7% income tax and payroll taxes. But the state taxes make a huge difference. State says to Wal-Corp - build a store here and you'll be exempt from property taxes and sales tax for 5 years, and we'll give you a special state income tax credit that reduces it to 3%. That's the kind of deal making we have going on with states, except the federal government doesn't intervene to stop it like the EU did here.

[fulafel]

Also the EU budget is tiny relative to states, around 1% of GDP.

[dogma1138]

It was more of a humorous remark, Delaware is more about the laws and courts that govern corporations rather than a simple tax break.

http://www.newsworks.org/index.php/local/brandywine-to-broad...