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Comment by dtap | Hacker News Reader

Basic Economic theory tells us that increasing taxes will hinder business development. The question is just would you rather give up the business (and its quantifiable value) for the increase in tax revenue.

The Ireland issue is really interesting to me. Many companies (Accenture, Warner Chilcott) are moving their incorporation from Bermuda to Ireland. The U.S. can bully around the little island states, but Ireland is much more of a bargaining force.

In my view, this is in the same vain as Delaware Corporations, just to the extreme.

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Economic theory says no such thing. It is true that investment might reduce if taxes are raised if ceteris paribus, but as tax rises either increase revenue or reduce national debt, they are never ceteris paribus.

Imagine we had very low taxes, but the state did not build roads (so transport costs went up), provided only minimal policing (so companies would have to spend more on their own security people) etc., it is far from obvious that it would be good for business in general.

Ireland is increasingly annoying not just the US, but other EU countries, and many others. It is also subject to EU law, and its economy us currently very weak, making more dependent on the rest of the EU.

Incidentally, Warner Chillcot was originally a Northern Irish business (Galen) that changed its name to that of an American company it bought.

Here in California, we have very high taxes, and the state does not build roads, and provides only minimal policing.

That's an interesting point you're making and it's no doubt true in general. And there are other reasons as well why companies stay in high cost locations (like central London or NYC).

But what's all the more important is how much of the taxes a company pays actually buys something they would otherwise have to buy themselves. The same goes for personal income tax.

The problem with paying for things via taxes is that everybody is paying the same regardless of how much of it they actually consume. For instance, software companies benefit a lot from free public education but very little from good roads and bridges. For a postal service it's the other way around. Of course there are always indirect benefits that mitigate this effect.

Some things are just much more efficient when paid for by everyone collectively. But at the same time individual choices become less important. Individuals and companies benefit less from good choices and suffer less from bad ones. There's less incentive for a postal service to avoid unnecessary trips if roads are free and fuel is subsidised. There's less incentive for individuals to get a useful degree rather than studying ancient persian cults.

So it's a balance. But I'm concerned that here in europe there is a tendency of making so many choices for everyone collectively that being different becomes very expensive. I don't want to save for my pension because I don't want to retire. Ever. Making that decision for myself is near impossible in europe. I hate that.

Imagine we had very low taxes, but the state did not build roads

No need to imagine. Businesses existed a long time before the state ever got around to building roads. Businesses seem to exist just fine without much government intervention at all -- so well, in fact, that one of government's roles is to prevent monopolies.

This whole "government provides infrastructure so businesses should be happy to have it" presumes that the infrastructure the government is providing is the best and most efficient use of the dollars in question for that particular business. That's a really big assumption.

Removing tax havens (your island state bullying) is long overdue.

There is a lot to consider in how to tax a multinational doing legitimate business in a foreign country. Don't confuse that with what companies use Bermuda and the Caymans for.

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