On Apple tax, State must side with its citizens

Paul Sweeney: It is widely agreed that globalisation has bought immense benefits. But it is also recognised that these benefits are not equally distributed. Last week’s Apple decision demonstrates the complexity of the issue of distributing the benefits of globalisation. The Irish Government, faced with a windfall of some €13 billion, appears to have sided with the world’s largest and most profitable company against the welfare of its citizens.

The profound impact of inequality on children in Ireland

Rory Hearne: The impact of economic inequality on children’s levels of wellbeing has received increased attention internationally. This blog draws on the findings from TASC’s second annual report on economic inequality in Ireland, Cherishing All Equally 2016, to provide a brief analysis of the extent and impact of economic inequality on children in Ireland.

Appeal of Apple tax ruling is not in the public interest

James Stewart: The commission assessment of unpaid taxes at €13bn plus interest, to be recovered by Ireland is much higher than most expected, especially the Government.

Replacing USC with 600% Property Tax is Not Likely

Nat O'Connor: Talk of a 600% increase in property tax is a catchy headline, but not realistic fiscal policy. However, it is useful if it gets people thinking about how we pay for public services—and who pays.

There is a political promise in the Programme for Government to abolish USC (the Universal Social Charge). Yet USC brings in around €4 billion per year. So, officials in the Department of Finance (and presumably Revenue) have produced a document spelling out various ways to raise €4 billion elsewhere if the USC was abolished.

There are two key questions: Do we want to keep the same level of tax revenue in order to provide the same level of public services? Who should pay more or less tax?

Housing and homelessness crisis worsens

Rory Hearne: This week’s figures on homelessness and rent increases provide further evidence of the on-going housing crisis. Unfortunately the Government’s recent Action Policy for Housing and Homelessness provided no significant change in direction from the policies that caused the current crisis. Therefore, issues of homelessness and housing unaffordability are going to worsen in the coming months and years with harsh results for those most affected.

Despite recovery, Ireland remains a hugely unequal society

Rory Hearne: The fact that the number of homeless children in the capital exceeds 2,000 for the first time since current records began is further evidence Ireland is a deeply unequal country. Economic inequality is worsening despite the recovery and, for those experiencing inequality, particularly children, Ireland is a very harsh place.

London on the Liffey? Some impacts of the relocation of financial services jobs to Dublin

James Wickham:  Post-Brexit it is widely believed that Ireland will benefit from the relocation of some  financial services employment from London to Dublin.  There are some issues about the type of employment generated by mobile financial services...

The Not-Sharing Economy Part 2 – Uber and Airbnb

Paul Sweeney: In my last blog, I argued that the so-called “sharing economy” is based on an increasingly “fissured workplace.” Many technology firms can have a negative impact on jobs, workers’ conditions, on taxes and indeed on the sovereign state and democracy. This blog will examine two of these firms in the so-called sharing -  Uber, the world’s most valuable start-up and Airbnb, the  third most valuable one.

Uber

Uber has had endless global litigation, including a class-action lawsuit from drivers in California and Massachusetts which it recently settled for $100m. It avoids Irish VAT by shipping payments through Netherlands. 

Women’s unpaid care is pivotal factor in gendered economic inequalities

Dr Ursula Barry and Dr Maggie Feeley: Despite the issue of gender inequalities being well-aired in the past decades, current evidence shows that women in Ireland still experience immense economic disadvantage.

The “Sharing” Economy is based on a Fissured Workplace

Paul Sweeney: Uber and Airbnb are not the Sharing Economy. Instead, they represent a rapid increase in the “Fissured Workplace”. 

This “sharing” is large businesses shedding their employees and sourcing labour through "a complex network" of external entities, creating intermediaries between the workers and profiting from that work.

The fissured workplace is developing between a ruthless breed of capitalists, a shrinking elite of core workers, and the rest. 

Is Ireland's Income Tax High?

Paul Goldbrick-Kelly: A great deal of political debate in Ireland rests on the assumption that Ireland’s rates of taxation are prohibitive. This is generally taken to mean that Irish taxes on income, specifically, are particularly onerous. This perception is rarely, however, assessed with reference to available statistics.

Working conditions in the Irish back office: Are all jobs in Financial Services and ICT really that good?

Alicja Bobek: There are two sectors of the Irish labour market with average earnings significantly above the national average: Financial Services and ICT. In both sectors the annual earnings (including irregular earnings) were above €50,000 in 2015. Employment in these two sectors is also relatively secure for a large proportion of individuals as the majority of jobs are full-time and permanent (CSO, 2015); they can also be characterised as white collar and have relatively higher levels of job autonomy (O’Connell, 2010).

Is the G20 “Enhanced Structural Reform Agenda” serious about inclusiveness?

Pierre Habbard: Recently, the G20 Finance committed to a new — but yet to be made public — “Enhanced structural reform agenda”. Ministers also called for the “benefits of growth” to be “shared more broadly”. 

Will the two fit together? And, will they lead to policy change?

New Thinking on Taxation and Inequality from OECD

Paul Sweeney: The previous blog on the recent OECD paper on taxation pointed out its new recognition that taxation systems are not just about efficiency but must include other principles like equity. The paper sets out trends in inequality and the use of taxes and transfers to reduce it. 

The OECD paper takes a tax-by-tax discussion on tax design that supports inclusive growth. It discusses the efficiency and equity implications of each tax and offers options to reconcile both objectives. It argues that, “while a tax-by-tax assessment is critical, the possibility of reconciling efficiency and equity through tax policy will depend on the interaction of many elements within and beyond tax systems.”

Has the OECD abandoned its neo-liberal taxation policies?

Paul Sweeney: The OECD has relentlessly pursued a neo-liberal taxation policy. It seldom uses the word taxation without the appendage “burden” For its tax department, tax is not a “charge” or a “payment”, but nearly always a “burden”. On taxation, the OECD seemed like a Koch Brothers’ funded think-tank rather than one funded by governments. So when it revises its thinking in a new paper, it has to be welcome. 

The Effective Corporate Tax Rate, Again

Prof David Jacobson: I'm glad to see that even though Stephen Donnelly TD got most of the limelight, our Progressive Economy colleague, Jim Stewart, was at least referenced in the article by Jack Horgan-Jones on Section 110 companies in the Sunday Business Post (“REVEALED: the vulture funds that paid just €250 in tax”, SBP 24/07/2016).  

Jim Stewart is the leading researcher on how Multi-National Corporations in Ireland have minimized their corporate tax payments, on how their tax advisors – the big accounting firms – have helped in this, and on how the state, sometimes unwittingly, has allowed this to happen.  Among other important analyses, Dr. Stewart has shown that the effective corporate tax rate for US companies in Ireland is around 2 per cent, nowhere near the nominal rate of 12.5 per cent. 

Soaring Profits almost equals the Total Wages Bill in Ireland.

Paul Sweeney: The news that Ireland saw GDP growth of over 26.3% in one year in 2015 at first appears remarkable. However, it had little impact on jobs or citizens’ welfare. It was the work of “magicians” working for multinationals in the tax avoidance industry.

It really illustrates is how multinational corporations and their servicing agents in the big four accounting firms and legal firms are using Ireland to avoid tax internationally with major profit-shifting, base erosion and other financial shenanigans. 

Normally - in the past in developed countries - the wage share was around 75 per cent of national income. It has been in decline because of globalisation, the decline of union power, reduced taxes on companies, productivity gains going to capital etc.

A remarkable figure is the 44% growth in profits in 2015 over 2014. This is in stark contrast to some growth in aggregate wages of 5.6% (mostly because there were more workers employed) and indeed a small rise in the earnings of the self-employed.

From self-harm to social Europe?

James Wickham:  When in the 1960s the poor of the US ghettos rioted for the first time, they burnt down the areas in which they lived.  When the excluded of the French banlieus rioted in the 2000s, they burnt down the schools which served them.  Now the excluded white ethnics of the English working class have gone one better.  They have not only trashed their country’s economy (which arguably has given them very little for years) they have set in motion a process by which the institutions of the United Kingdom itself could be destroyed.

A New EFTA-EU Relationship Post-Brexit?

Nat O'Connor: Trying to imagine a “perfect” agreement for the UK to enjoy a stable, friendly and mutually beneficial trading relationship with the EU is problematic. A better solution would be to envisage this future relationship as an ongoing process rather than a final agreement or compact. The best candidate for this process would be a new relationship between the European Free Trade Association (EFTA) and the EU, based on respectful ongoing dialogue on the best way to organise trade with the EU’s neighbourhood. This would involve strengthening the EFTA into something more than it is today. If done right, such a process could provide the EU with a valuable mechanism for trading and co-operating with its close neighbours.

Brexit, Ireland and economic policy

James Stewart: Brexit marks a fundamental change in how we think about the EU and  our relations with our closest neighbour. Advice on what should be done has been both freely given and plentiful.