Post by LFC on Apr 19, 2021 21:28:30 GMT
This is old news but I hadn't read quite so much detail about how Ireland supposedly became an economic powerhouse. Paul Krugman dubbed this Leprechaun Economics. The Wikipedia page is very informative. I thought much of what occurred was due to low taxes causing a number of companies to relocate, even if just temporarily. It turns out that Ireland became "the world's largest tax haven." Irish GDP was so wildly skewed by bogus declarations of income for tax avoidance, much of it by Apple, that they had to create GNI to measure the actual Irish economy. The figures provided and reality didn't track very well (bold mine).
Leprechaun economics was the 26.3 per cent rise in Irish 2015 GDP, later revised to 34.4 per cent, in a 12 July 2016 publication by the Irish Central Statistics Office (CSO), restating 2015 Irish national accounts. The term was coined by Nobel Prize–winning economist Paul Krugman to mark the fact that the long-term distortion of Irish economic data by tax-driven accounting flows had reached a climax; by 2020, Krugman said the term was a feature of all tax havens.
While the event that caused the artificial Irish GDP growth occurred in Q1 2015, the Irish CSO had to delay its GDP revision, and redact the release of its regular economic data in 2016–2017 to protect the source's identity, as required by Irish law. Only in Q1 2018 could economists confirm Apple as the source and that leprechaun economics was the largest ever base erosion and profit shifting (BEPS) action, as well as the largest hybrid–tax inversion of a U.S. corporation.
Leprechaun economics marked the replacement of Ireland's prohibited BEPS tool, the Double Irish, with the more powerful Capital Allowances for Intangible Assets (CAIA) tool, or "Green Jersey". Apple used the CAIA BEPS tool to restructure out of its hybrid–Double Irish BEPS tool, on which the EU Commission would levy a €13 billion fine in August 2016 for illegal avoidance of Irish taxes. As a result of Leprechaun economics, Ireland, already qualified as a "major tax haven", was estimated by academics as the world's largest tax haven.
Leprechaun economics had follow-on consequences. In September 2016, Ireland became the first of the major tax havens to be "blacklisted" by a G20 economy, Brazil. In February 2017, Ireland replaced GDP with "Modified GNI (or GNI*)" (2017 Irish GDP was 162% of 2017 Irish GNI*, where as EU–28 2017 GDP was 100% of GNI). In December 2017, the U.S and the EU introduced countermeasures to Irish BEPS tools. In October 2018, Ireland introduced a "reverse Leprechaun tax", to discourage IP from leaving Ireland. In 2018, the OECD showed Ireland's public "debt metrics" differ dramatically depending on whether Debt-to-GDP, Debt-to-GNI* or Debt-per-Capita is used; and in 2019, the IMF estimated 60 per cent of Irish foreign direct investment was "phantom".
While the event that caused the artificial Irish GDP growth occurred in Q1 2015, the Irish CSO had to delay its GDP revision, and redact the release of its regular economic data in 2016–2017 to protect the source's identity, as required by Irish law. Only in Q1 2018 could economists confirm Apple as the source and that leprechaun economics was the largest ever base erosion and profit shifting (BEPS) action, as well as the largest hybrid–tax inversion of a U.S. corporation.
Leprechaun economics marked the replacement of Ireland's prohibited BEPS tool, the Double Irish, with the more powerful Capital Allowances for Intangible Assets (CAIA) tool, or "Green Jersey". Apple used the CAIA BEPS tool to restructure out of its hybrid–Double Irish BEPS tool, on which the EU Commission would levy a €13 billion fine in August 2016 for illegal avoidance of Irish taxes. As a result of Leprechaun economics, Ireland, already qualified as a "major tax haven", was estimated by academics as the world's largest tax haven.
Leprechaun economics had follow-on consequences. In September 2016, Ireland became the first of the major tax havens to be "blacklisted" by a G20 economy, Brazil. In February 2017, Ireland replaced GDP with "Modified GNI (or GNI*)" (2017 Irish GDP was 162% of 2017 Irish GNI*, where as EU–28 2017 GDP was 100% of GNI). In December 2017, the U.S and the EU introduced countermeasures to Irish BEPS tools. In October 2018, Ireland introduced a "reverse Leprechaun tax", to discourage IP from leaving Ireland. In 2018, the OECD showed Ireland's public "debt metrics" differ dramatically depending on whether Debt-to-GDP, Debt-to-GNI* or Debt-per-Capita is used; and in 2019, the IMF estimated 60 per cent of Irish foreign direct investment was "phantom".