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Taxing thoughts: Ireland, tax competition and the cost of intellectual capital

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dc.contributor.author Killian, Sheila
dc.contributor.author Mullins, Martin
dc.date.accessioned 2020-09-02T07:55:11Z
dc.date.available 2020-09-02T07:55:11Z
dc.date.issued 2008
dc.identifier.uri http://hdl.handle.net/10344/9172
dc.description peer-reviewed en_US
dc.description.abstract This paper examines the impact of tax competition on the commodfication of ideas, and points towards a particular set of negative consequences that affect the developing world. As multinational business becomes increasingly independent of national borders, the power relationship between business and government has shifted from one in which governments imposed tax on business in return for the privilege of operating within its jurisdiction, to one in which governments distort their tax system to suit business, in the hope of enticing them to locate on their shores. The race to the bottom in terms of tax rates has been well-chronicled in studies such as Christensen et al (2004), and Murphy (2006) Countries which were successful at the first round of tax competition are now finding that tax rates alone will not hold the multinationals on which they have become so dependent. The economic growth associated with their earlier success has brought high operating and wage costs. Multinationals who have remained lightly rooted in the soil of these countries can easily move their manufacturing to cheaper, emerging economies, taking with them their coveted jobs and exports. In order to retain them, these first round winning countries are now encouraging multinationals to locate their research and development as well as their production facilities with them. They hope that this is a less mobile activity, less easily replicated in a developing country, and so will anchor the multinational firmly in their territory. In this new level of the tax competition game, incentives are given not only for gross production, but for the production of knowledge. As a consequence, knowledge itself becomes commodified, and intellectual capital widely defined and privatised. This means that ideas previously shared must now be bought, and products previously sold at a price determined by the local market may now only be sold if the market can support their original, patent-protected form. This paper tracks the development from the old to the new rules of tax competition, using the example of Ireland to illustrate the strategies adopted at each stage. The rational, self-serving response of multinationals is explored, and the immediate downstream effects for developing countries discussed. The writings of Michel Foucault are used to gain perspective on the idea of intellectual capital. Finally, the sustainability of the new form of tax competition is questioned, and some hypotheses are formed about the longterm consequences. en_US
dc.language.iso eng en_US
dc.publisher Association for Accountancy & Business Affairs en_US
dc.relation.ispartofseries Accountancy Business and the Public Interest;7 (1)
dc.relation.uri http://visar.csustan.edu/aaba/aabajournalpage.html
dc.subject developing world en_US
dc.subject products en_US
dc.subject tax competition en_US
dc.title Taxing thoughts: Ireland, tax competition and the cost of intellectual capital en_US
dc.type info:eu-repo/semantics/article en_US
dc.type.supercollection all_ul_research en_US
dc.type.supercollection ul_published_reviewed en_US
dc.date.updated 2020-09-02T07:47:49Z
dc.description.version PUBLISHED
dc.rights.accessrights info:eu-repo/semantics/openAccess en_US
dc.internal.rssid 1120184
dc.internal.copyrightchecked Yes
dc.description.status peer-reviewed


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