Ireland has the best tax policy for encouraging economic growth, according to a Republican senator and member of the powerful US Senate finance committee that helps draft American tax laws.
Johnny Isakson, a senator from Georgia, praised the Irish Government's 12.5 per cent tax rate and economic policies that encouraged companies to set up operations in Ireland.
He rejected a view held by Democrats that the US would not engage in a “race to the bottom” by reducing its corporate tax rate to encourage American multinationals to invest more at home.
“We have won the race to the bottom,” he said. “We have the least progressive, pro-growth tax policy of any country in the world.”
Taoiseach
The American politician was speaking during the visit of Taoiseach
Enda Kenny
to Atlanta as part of his St Patrick’s Day trip to the US. Mr Kenny held meetings with executives from major companies based in the southeast including Coca-Cola.
Georgia, a strongly Republican state, is home to some of the US's biggest companies, including UPS and Delta Airlines.
Mr Isakson, who spoke to The Irish Times after addressing a reception on Friday for Mr Kenny, blamed the high-rate US tax code for encouraging companies to invest overseas, including through so-called "corporate inversions", and for creating tax havens in the places such as the Cayman Islands.
The Obama administration wants to impose a one-time 14 per cent tax on the overseas hoarded profits of American multinationals and a 19 per cent tax on future overseas earnings to encourage US companies who keep money offshore to avoid the 35 per cent corporate tax rate.
Double tax
The US was one of only three countries that taxes foreign-earned profits a second time when repatriated, said Mr Isakson. He wants a territorial tax system under which companies pay taxes on profits where they are earned and not double-taxed on their return to the US. “We are forcing them to invest in the countries where they earn the money rather than bringing the money back into the
United States
. That is a disincentive for economic growth and opportunity,” he said.
Georgia's other Republican senator, David Perdue, praised Ireland's economic recovery in a speech on Saturday attended by Mr Kenny at the Piedmont Driving Club in Atlanta.
Northern Irish businessman Neville Isdell, the former chairman of Coca-Cola who owns the CHQ building in Dublin's docklands, said critics of Ireland's tax rate don't consider the other attractions such as the education system that encourage investment.
