Germany Attacks Ireland

This is a bad news/​good news story. The bad news is that Germany is attacking Ireland. The good news is that the Germans now attack with words and bureaucratic schemes rather than Panzers and Stukas. But the attack — based on German complaints that Ireland’s low tax rates are “unfair” — is nonetheless despicable. Instead of attacking Ireland, the Germans should learn from the Irish Miracle and cut tax rates and reduce the burden of government. Fortunately, as noted by an article in the Irish Examiner, the Irish are resisting Germany’s fiscal aggression:

The German finance minister has threatened to go after Ireland’s low corporation tax system that he says leads to unfair competition with Germany and other EU countries. …Ireland has the second‐​lowest corporation tax rate in the EU at 12.5%, which is credited for creating the celtic tiger, attracting massive foreign investment and jobs. Germany has the highest at 38.6%. In 2004 over €33 billion flooded into the country, almost the same as went to Germany. German minister Peer Steinbruck warned that Ireland and other low tax countries in Eastern Europe were involved in what he called cutthroat competition that was not sustainable in the long run. …The German government is adopting a two pronged attack — first in pushing the European Commission to develop an EU‐​wide harmonised tax base and secondly by reopening the EU’s Code of Conduct on unfair tax competition. …Politicians from all parties, Internal Markets Commissioner Charlie McCreevy and business interests have all warned that the plan to harmonise the corporate tax base must be killed. Taoiseach Bertie Ahern has said that harmonizing the tax base across the EU could seriously affect the country’s ability to compete for investment and jobs in the global economy. …Mr McCreevy has said that those pushing for the Common Consolidated Corporation Tax Base (CCCTB) see this as the first step in having a single uniform corporate tax rate across the union.