Irish GDP is inflated by multinational tax booking rather than real activity

Evidence

Low corporate tax rates made Ireland a popular site for multinational corporations to establish headquarters and declare their profits, which played an important role in the country’s boom. Google, Apple, Microsoft, and Facebook have set up headquarters in Ireland, but most of them have very few employees in the country. These firms pay a corporate tax rate of 12.5 percent in Ireland, which is just over a third of the 35 percent they would pay in the United States. Because of this dynamic, Irish GDP is inflated by global firms booking huge revenues through Ireland for tax purposes. When one looks at Irish GNP, which takes out such revenues, growth declined by 2.5 percent in 2011. — Mark Blyth, Austerity, 634

Categorization

• XREF: Connects to Mattei’s account of how headline macro indicators can misrepresent the distributional reality; also relevant to modern analyses of Irish ‘leprechaun economics’ GDP distortions. — connects to: Irish GDP is inflated by multinational profit-shifting and overstates national output — Mark Blyth, Austerity: The History of a Dangerous…, 767; Ireland’s reported export boom was inflated by tax-driven phantom service exports — Mark Blyth, Austerity: The History of a Dangerous…, 636; Ireland’s export surge reflects multinational accounting, not real economic recovery — Mark Blyth, Austerity: The History of a Dangerous…, 635 (+1 more)

Broader Connections

• Irish GDP is inflated by multinational profit-shifting and overstates national output #corroborates (0.98) — Mark Blyth, Austerity, 767
• Ireland’s export surge reflects multinational accounting, not real economic recovery #corroborates (0.95) — Mark Blyth, Austerity, 635
• Ireland’s reported export boom was inflated by tax-driven phantom service exports #expands (0.92) — Mark Blyth, Austerity, 636
• Ireland’s banking bailout cost 45 percent of GDP through creative accounting #qualifies (0.70) — Mark Blyth, Austerity, 632