Germany attacks Ireland's low corporate tax system as "unfair competition"

From the Irish Examiner:

Ireland has the second-lowest corporation tax rate in the EU at 12.5%, which is credited for creating the celtic tiger, attracting massive foreign investment and jobs. Germany has the highest at 38.6%. In 2004 over €33 billion flooded into the country, almost the same as went to Germany.

German minister Peer Steinbruck warned that Ireland and other low tax countries in Eastern Europe were involved in what he called cutthroat competition that was not sustainable in the long run.

“Corporate tax laws such as those in Ireland are being exploited by German companies that set up subsidiaries there, borrow money from them and then write off the interest against their profits in Germany,” he complained.

The German government is adopting a two pronged attack — first in pushing the European Commission to develop an EU-wide harmonised tax base and secondly by reopening the EU’s Code of Conduct on unfair tax competition.

Mr Steinbruck’s deputy, Axel Nawrath, said they would push the finance ministers of the other member states for a new code of conduct once the German presidency ended at the end of June.

“This is something that must be addressed by the group dealing with the code of conduct. Germany is very adamant about this,” he said.

Politicians from all parties, Internal Markets Commissioner Charlie McCreevy and business interests have all warned that the plan to harmonise the corporate tax base must be killed.

Big hat tip to Daniel J. Mitchell at Cato@Liberty who comments:

The bad news is that Germany is attacking Ireland. The good news is that the Germans now attack with words and bureaucratic schemes rather than Panzers and Stukas. But the attack - based on German complaints that Ireland’s low tax rates are “unfair” - is nonetheless despicable. Instead of attacking Ireland, the Germans should learn from the Irish Miracle and cut tax rates and reduce the burden of government.

Banging the lower-corporate-tax-rate drum

Larry Kudlow joins the chorus of those pushing for a corporate tax rate decrease and notes:

We should not bat an eye at reducing the 35 percent federal corporate tax rate.

And, while we’re at it, we should cut the corporate capital gains tax rate as well. Loews CEO James Tisch, who is justifiably concerned about our long-term competitiveness, is pushing this latter proposal. He believes that hundreds of billions of languishing corporate asset dollars would be unlocked and reinvested if this were to occur. He’s right. The result would be an inevitable infusion of new oxygen into the corporate bloodstream. It would create new businesses and greatly expand existing ones. All this would of course create tens of thousands of new jobs for American workers, not to mention a tidal wave of new tax receipts at Treasury.

Right now, the US and Japan are the flag bearers of the highest corporate tax rates in the world. (When one includes state taxes, the US rate is actually higher—40 percent). Yet, the EU average according to Washington policy analyst Dan Clifton is only 27 percent. And virtually every country around the globe is slashing away at their corporate income tax rate. Ireland’s booming economy boasts a corporate tax rate of only 10 percent. Even France comes in lower than the US. It’s quite clear that we have put ourselves at a significant competitive disadvantage in a very palpable, real sense.

Update: From our friends at Cato@Liberty, add yet another country to the list of those lowering corporate tax rates:

Kiwi officials openly admit that these reforms are driven by a need to compete with other nations, further confirming the need to protect and promote fiscal rivalry from the anti-competition schemes of international bureaucracies such as the Organization for Economic Cooperation and Development.

French have been voting with their feet

Notes Cato-at-Liberty, in reference to an Anne Appelbaum column in the Washington Post:

Anne Applebaum’s Washington Post column discusses the upcoming French election. But most relevant for fans of tax competition, she notes that two million French have fled the high taxes and economic stagnation of their home country. Not surprisingly, a poll reveals that the overwhelming majority of French expats are happy in countries with more opportunity. Applebaum also explains that Europe’s less competitive nations have been trying to export their anti-growth policies in an effort to “make life equally difficult everywhere.”

Carbon Credits... um... not have much credit?

Found an interesting article regarding Carbon credit offsets, and some quick digging led to some very unsurprising though bad news. Seems that carbon credits aren't all they're cracked up to be, do little to actually help the so called carbon dioxide crisis, and that companies who invest in carbon credits are doing so in a high risk, unregulated market. Sounds like some shady business practices afoot. You can guarantee that if this was another business the government would be all over this to nail down those who do it.

read more, here.

Hat tip: Instapundit
Hat tip: Newsbusters

Wii Rock

Came across this article, which discusses who's on top and what's happening with the big 3 consoles. No surprise, the Wii has been dominating, even though it's plagued with serious supply issues. I waited for 3 months for mine that my lovely wife got me for Christmas before cancelling my order because I got fed up. Interesting that all the articles I have read have trashed the PS3. They blame the high price, and foolish marketing decisions for the dead last Sony console's issues.

Excerpt:

"The downside of such a strong opening position is that there's little room for improvement and plenty of distance to fall, and Sony had nowhere to go but down. Meantime, as the PS3, and its diminutive (but equally black and shiny) brother the PSP continue to come up short in the software department, Nintendo and Microsoft are both quite happy to take chunks out of Sony's hindquarters. It's not hard for shoppers to come up with convincing justifications for buying a Wii or a 360, but until some better games come along, the PS3's key advantages are narrowed down to the Blu-Ray drive's movie-playing ability, and the considerable future potential of the powerful hardware. Sony's games division is not in a happy place at the moment."

read the whole thing here.

Estonia flat tax = booming economy

Yet another story about a developing country's success with a flat tax system - the Cato blog links to a story by John Stossel over at TownHall:

Estonians need an average 10 to 15 minutes to file their income taxes. Most do it without leaving their desk: 84 percent file online. … Unsurprisingly, Estonia is booming. The former Soviet republic used to be poor, with an average income 65 percent below its European neighbors. Today, Estonians are almost as rich as their neighbors, and their economy is growing more than 11 percent a year. Corporations like a tax system that is low and simple, too, and that leads them to do more business in flat-tax countries. American companies such as Microsoft, Colgate, 3M, Bristol-Meyers Squibb, and Johnson & Johnson opened businesses in Estonia after the flat tax was adopted. Twelve years ago, foreign investment in Estonia made up only 5 percent of GDP, but today, it’s up to 20 percent.

Flat Tax: If they can do it, why can't we?

If lesser developed nations like Montenegro, Albania, and East Timor can implement a low flat tax, why can't we?

Montenegro is moving to a 15% flat tax on personal income that will gradually be lowered to 9% by 2010. Albania's will be 10%. East Timor seeks to set itself up as a free-trade nation (much like Hong Kong and Singapore) with income tax rates between 5-10%.

Update: Russia's politicians reject progressive tax scheme, keeping the current flat tax system in place:

Russia’s flat tax has been remarkably successful. Growth is reasonably strong and tax compliance has improved. Indeed, inflation-adjusted personal income tax revenues have been growing at double-digit rates.