Realist, not conformist analysis of the latest financial, business and political news

Today’s Gross Propaganda – The Observer On Apple’s Ireland Taxation

Statistics are important, they’re how we make sense of that complex world out there. That complexity being exactly why people can manipulate them in order to confuse us. Which is what The Observer is doing here with their comments about Ireland and digital taxation.

The point being that Gross Domestic Product and Gross National Product are, often enough, similar enough that we don’t have to worry all that much about which we use. Except, obviously, that often enough isn’t always for if it were then we’d not say often enough. The major example to use here is Ireland. That territorial nature of the tax system there – profits are only taxed if they’re actually made in Ireland rather than merely flow through it – means that GDP and GNP diverge wildly there.

Thus when we want to discuss the Irish economy we cannot use GDP, we must use GNP instead. The difference is that GDP records what is recorded in the territory – not exactly but close enough. GNP records what accrues to the people of the territory. That flow of Apple’s global outside North America profits through Ireland is part of Irish GDP and not of GNP. When discussing anything useful about the Irish economy we’ve thus got to use GNP.

The difference is considerable:

There’s a substantial difference due to those tech profits

By comparison:

Not so much difference

When talking about the Irish economy we should not be using GDP, it’s the great exception to that measure being useful.

Except, of course, when it’s convenient to do so for propaganda reasons:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Take the case of Ireland. There are corporation tax receipts in its budget, but they are small relative to the number of wealthy companies in Dublin and Cork. The tax-to-GDP ratio in Ireland has decreased from 30.8% in 2000 to 22.8% in 2017.[/perfectpullquote]

Anyway, the entire tech tax problem has gone away already. For the US now taxes such overseas profits. The tech companies are thus being fully taxed. There’s no problem to solve any more, is there?

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2 years ago

More to the point, what is a “wealthy company”? That’s like saying a wealthy house or a wealthy Ferrari. Companies are assets, not people. Their profits should be taxed when they are distributed not reported.

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