theguardian.com
Trump's Accusations Prompt Prediction of US Pharma Profit Repatriation from Ireland
US President Donald Trump accused Ireland of facilitating tax avoidance by US pharmaceutical companies, prompting experts to predict profit repatriation to the US rather than plant closures; Ireland's corporate tax revenue heavily relies on these companies, creating significant economic vulnerability.
- What is the most likely response of US pharmaceutical companies operating in Ireland to Donald Trump's accusations and potential policy changes?
- US pharmaceutical companies based in Ireland are more likely to shift profits back to the US than close manufacturing plants, according to experts. This is in response to Donald Trump's accusations of Ireland stealing American tax revenue and jobs. About €50bn of medicines are exported annually from Ireland, with much of the profit never touching Irish soil.
- How significant is the practice of "profit shifting" to Ireland's corporate tax revenue, and what are the potential methods the US could use to address this?
- The "profit shifting" practice, where companies book profits in Ireland despite manufacturing elsewhere due to IP ownership, is a key factor. This practice contributes significantly to Ireland's corporate tax revenue, with large US multinationals accounting for 75% of it. Trump's administration could use tariffs or tax code changes to incentivize profit repatriation to the US.
- What are the long-term economic risks to Ireland if US pharmaceutical companies repatriate profits or manufacturing, and how might Ireland mitigate these risks?
- The potential impact on Ireland's economy is significant, with estimates suggesting a €10bn loss in corporate tax if three major US multinationals repatriate. The risk is amplified by the possibility of the US lowering its corporate tax rate, eliminating Ireland's competitive advantage. Future stability of Ireland's pharmaceutical sector depends on navigating this evolving geopolitical and tax landscape.
Cognitive Concepts
Framing Bias
The framing leans towards portraying Trump's accusations as having some validity. While it includes counterpoints, the initial framing focuses on the potential accuracy of Trump's assessment of 'phantom exports' and the 'trade imbalance'. This framing could implicitly influence readers to view the situation from a US-centric perspective.
Language Bias
The language used is mostly neutral, although phrases like "refreshingly honest" when describing Trump's comments might be considered subtly loaded. The use of 'phantom exports' carries a negative connotation. More neutral alternatives could be "profits booked in Ireland but not reflective of physical activity within Ireland" and "tax avoidance strategies", respectively.
Bias by Omission
The article focuses heavily on the perspective of US pharmaceutical companies and Irish economists, potentially omitting perspectives from Irish workers in the pharmaceutical sector or representatives of smaller Irish businesses impacted by the situation. The potential impact of profit repatriation on Ireland's economy beyond corporate tax revenue is also not extensively explored. The article also does not discuss the potential benefits or drawbacks of the practices discussed from the point of view of US consumers.
False Dichotomy
The article presents a somewhat false dichotomy by implying that the only two options are either profit shifting to Ireland or the closure of manufacturing plants. It might neglect other potential responses from US pharmaceutical companies, such as restructuring their operations or shifting investments to other countries.
Sustainable Development Goals
The article highlights how US pharmaceutical companies use Ireland's tax system to minimize their tax burden, leading to a significant loss of tax revenue for the US and increased inequality between the US and Ireland. This practice of profit shifting exacerbates global economic inequality by allowing multinational corporations to avoid paying their fair share of taxes in countries where they generate profits, thus depriving those countries of resources needed for public services and development. The potential repatriation of profits to the US, while potentially lessening the inequality between the US and Ireland, could increase inequality within the US itself, as the benefits may not be evenly distributed.