TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Tuesday, March 29, 2011

Dillon: The Tax-Driven Tale of Ireland in the European Union

Sara Dillon (Suffolk) has published Anglo-Saxon/Celtic/Global: The Tax-Driven Tale of Ireland in the European Union, 36 N.C. J. Int'l L. & Com. Reg. 1 (2010). Here is the abstract:

This article examines the peculiar history of Ireland’s position within the European Union. It argues that Ireland’s political personality, based on post-colonial dependency, has encouraged national reliance on a low corporate tax rate and American multinational investment as a supposedly acceptable strategy for pursuing a prosperity which eluded Ireland for decades after independence. Ireland took the easy route in that, when it joined the EC, instead of actually making products of interest to European and international markets, it took advantage of its location within the common market to single-mindedly lure multinational corporations through tax savings. Ireland’s approach has lacked the kind of “loyalty to an idea” characteristic of the EU since its founding.

In analyzing the nature of Ireland’s anomalous presence in the EU, the article explores the usual manner in which the EU “transforms” national history, and the corresponding manner in which national history acts on the EU. Ireland has resisted this kind of transformative interaction. While playing the part of an enthusiastic participant in the European project, Ireland was not in fact internalizing EU values of solidarity and cooperation. Rather, Ireland treated its access to the European market, and the extremely low tax environment for US-based multinationals, as a kind of get rich quick scheme. While Irish behavior was inconsistent with the EU ideal of mutual solidarity, it was also damaging towards US society, with its obvious need for increased public investment, which in turn requires adequate revenue from such sources as corporate taxation.

Under this analysis, Ireland also short changed its own culture (including a potential indigenous business culture) and physical environment. Over a long period of time, the EU inexplicably allowed Ireland to use purely tax-based techniques which, if widely imitated by other EU states, would have caused a fiscal crisis for the Union. Despite a severe economic downturn that began in 2009, it appears that Ireland will, if at all possible, maintain a passive and tax-dependent approach to economic development.

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I have a background in a different academic area and I am constantly amazed by the low standards of scholarly articles in the tax area. This one is another shockingly poor example. The author seems to take it as given that there's something wrong or unsavory about low tax rates (Ireland has pursued a "supposedly" acceptable strategy; Ireland has lacked the "loyalty to an idea" characteristic of the EU [the idea in question is unspecified but it seems to be that tax rates should be high]; the US has an "obvious need for increased public investment" [I assume this means higher taxes]). The entire article is built on unexamined assumptions and circular reasoning. All fine for a letter to the editor or dinner party chit-chat, but it's jarring to see in a supposedly scholarly journal.

Posted by: Nonce | Mar 30, 2011 9:05:59 AM