When your name gets called by the president of the United States and he is discussing tax havens, then you know it’s a bad day.
Such was the case for Ireland, which was one of three countries tagged by President Obama when he announced plans on Monday to force American companies to bring their overseas profits home to be taxed.
Ireland is already reeling from the global financial fallout and the property bubble bursting, so the latest move by the Obama administration could not have come at a worse time.
There was approximately $3.3 billion in tax revenues from American multinationals last year, according to Irish figures.
In addition there are 100,000 desperately needed jobs tied up in multinational firms operating out of Ireland. A threat to those jobs and income is a very worrying reality.
The Irish economy has been dealt a serious blow with the U.S. government signaling it is to target €2.5 billion of Irish tax revenues in the near future.
There are 580 American companies operating in Ireland, representing over 70 percent of all the Irish Industrial Development Authority's efforts to create employment there. There are said to be 200,000 downstream jobs associated with those American companies.
The massive scale of the problem can be gleaned from those numbers. If even a small percentage of the American companies decide to pack up and go home the impact on an open economy like Ireland would be profound.
There is no question that Ireland is being targeted. The White House fact sheet stated clearly that Ireland is one of three countries, Bermuda and the Netherlands, being the other two, where nearly one-third of all American corporation profits overseas come from.
That is as clear an indication as any that the Obama folk are taking direct aim at American corporations in those three countries.
Ireland cannot afford to be whistling past the graveyard on this one, as some early reaction seemed to indicate. If enough pressure is applied and this legislation passes Ireland will lose many important clients.
In addition, it is more difficult for Ireland to chase multinational investment from America while this uncertainty about the success or otherwise of the Obama legislation exists.
Some nonsense is already being talked by Irish politicians that Ireland is not a tax haven for American companies. It is -- and Obama knows it.
The notion of being able to tax those profits back in America is a very attractive one to the Obama administration.
It is ironic that Ireland, where Obama is practically revered, will now be dependent on lobbyists, Republicans and conservative Democrats to stop this bill in its tracks when it comes to a vote on Capitol Hill. Many senior politicians have expressed reservations about the proposal, so its passage is no sure thing.
At stake could well be the future of the Irish economy. Having taken its lumps on the recession and banking front, Ireland now finds itself facing another grave threat.
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