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Why Is Ireland So Rich? - YouTube

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while ireland may be associated with

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cold pints of beer cool accents and

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leprechauns it also just happens to be

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one of the richest countries on the

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planet and while low corporate taxes

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have played a role in this rise to

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riches the full story is a little more

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complicated and a lot more scandalous so

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grab a coffee sit back and relax as we

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tell you why ireland is one of the

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world's wealthiest countries on this

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episode of the rooster report but before

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we do don't forget to like subscribe and

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hit that notifications button so that

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you never miss out on any of our latest

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videos

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according to the imf's 2021 figures

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ireland's gdp per capita of 94

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556 dollars makes it the third richest

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country in the world for those of you

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who don't know gdp per capita

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essentially takes a country's gdp and

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divides it by its population and as any

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economist who's worth their salt can

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tell you this makes it a confusing and

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rather misleading metric after all

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countries like the cayman islands and

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luxembourg have used super low to

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non-existent taxes to artificially boost

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their gdp per capita and many have

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accused ireland of doing the same but

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believe it or not ireland is not quite

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as business friendly as you may think

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sure at the moment their corporate tax

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of 12.5 percent pales in comparison to

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the united states's 21 21

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and while their 25 tax credits for

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innovation and low 6.25 tax on

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intellectual property helps sweeten the

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deal there are countries like bermuda

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and the cayman islands that have

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corporate tax rates of zero percent yet

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despite the fact that there are better

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options out there ireland still manages

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to keep corporations around after all

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major names like google paypal and

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airbnb all have headquarters there too

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this very day so this begs the question

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why don't major corporations take their

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business elsewhere well to see why we

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have to look at ireland's shady economic

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past

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perhaps the most infamous ploy that

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brought corporations to ireland is the

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double irish with a dutch sandwich tax

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avoidance scheme corporations would

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start by setting up two irish

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subsidiaries and one dutch subsidiary

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subsidiary one would have its base in a

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zero percent tax country such as the

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cayman islands subsidiary 2 would be a

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tax resident in ireland and subsidiary 3

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would be a dutch tax resident how this

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scheme would work is that subsidiary 1

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would sell products in say the united

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states however subsidiary 1 would then

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allow subsidiary 2 to collect a 100

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royalty on this profit however in order

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to avoid irish taxes subsidiary 1 would

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first send these products to the dutch

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subsidiary who would then send them to

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subsidiary 2. if all was done correctly

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since subsidiary 2 was from the cayman

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islands it could then hold all of these

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profits tax free forever with all of

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this being 100

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legal

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ireland also attracted corporations with

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its innovative shannon free zone first

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opened in 1959 it was essentially a 2.43

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square kilometer manufacturing area

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where goods would only be taxed after

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leaving the nearby shannon airport what

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this meant was that corporations could

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fly in parts and manufacture them

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without paying any tariffs or

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manufacturing taxes and this not only

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made it cheap to manufacture goods there

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but also convenient since ireland is

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located directly between the united

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states and europe has strong

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intellectual property laws and is home

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to millions of highly educated

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english-speaking workers now to be fair

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this setup wasn't perfect

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after all since most trade is conducted

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using cargo boats this free trade zone

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only made sense for high quality goods

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that had to be shipped via an airplane

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such as microchips and diamonds however

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this was a sweet enough deal for major

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companies such as intel luffanza and de

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beers to set up shop there making the

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shannon free zone a sweeping success

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however both this tax scheme and free

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trade area aren't really around anymore

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due to heavy international pressure the

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double irish with the dutch sandwich

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loophole was closed to new companies in

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2015 and existing corporations that used

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it had until 2020 to change their plans

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additionally in 2003 the shannon free

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zone stopped offering its lucrative tax

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incentives making it a far less

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attractive place to do business

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yet despite this corporations stuck

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around in regards to the double irish

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and dutch sandwich ireland softened the

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blow of its discontinuation by making it

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extremely cheap for businesses to

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withdraw their profits in ireland once

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the loophole was closed in 2020.

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therefore many of these companies

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decided to withdraw and invest their

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money in ireland rather than bring the

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money elsewhere and be subject to heavy

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taxes additionally despite the shannon

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free zone having stopped its tax

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incentives in 2003 the machines that

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were set up there were extremely

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expensive therefore since ireland still

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is relatively business friendly most

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corporations have decided that it wasn't

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worth it to set up shop elsewhere as

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such although ireland is no longer as

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friendly to corporations as it used to

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be and has been able to ingeniously use

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its more business-friendly past to

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guarantee a continuous corporate

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presence even with its now higher tax

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rates

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but despite having a high gdp per capita

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ireland has been criticized for doing a

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poor job at passing this wealth down to

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its citizens and yes it's true that

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ireland's big corporations hire tens of

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thousands of high-skilled workers but

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that doesn't mean that they have helped

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the average citizen that's because if we

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crunch the numbers it becomes clear that

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the lives of most irish residents aren't

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as rosy as the gdp figures make it seem

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one of the main indicators of this is

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its gni used to calculate income from a

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country's citizens and businesses this

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figure does not include the incomes of

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foreign companies that invest there in

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the case of ireland its gni is about 40

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percent lower than its gdp and this

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means that while ireland ranks second in

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the eu when using gdp per capita it

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ranks just 8th when using gni per capita

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the situation begins to look even worse

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when looking at actual individual

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consumption per capita this measures the

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amount of goods and services that people

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in a country actually consume and in

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this regard ireland's consumption is

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just 95

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of the eu average making it a below

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average country in europe despite its

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supposedly strong economy to top this

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off if we look at market income

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inequality which measures income

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inequality before taxes and benefits are

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applied ireland ranks dead last in the

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this has ultimately resulted in a

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situation where ireland's most educated

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citizens hold high-paying corporate jobs

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while the rest have to deal with poor

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job prospects and extremely high rents

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creating a cycle of poverty that is one

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of the most profound in the developed

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world

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so what do you think is ireland a model

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country or do you think that its

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policies have been a net negative for

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its citizens let us know in the comments

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down below and if you enjoy these types

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of videos please consider subscribing so

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that you never miss out on any of our

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