By Taylor Kaine
While many think that America is the ultimate land of opportunity, over the past several years a new country has risen to the top. Ireland is now ranked the number one country to do business in, while the U.S continues to fall. It is ranked 14 on Forbes' List of Best Countries for Business.
Of the factors, the most important is the tax burden. Ireland is currently ranked no. 6 in regards to tax burden - the lower the number the lower the burden - compared to the US's 14. This is a result of Ireland's corporate tax rate being 12.5% compared to the US's 40%. The lower tax burden means two big things: first off, the companies gains are not subject to as high of taxation, making the cost of business go down which results with more money for the companies. This allows them to expand and hire more employees; it's a win, win, and the economy can grow at the same time (specifically GDP will rise as the more money being spent is driven by an increase in aggregate demand). Secondly, people will have more money; this is partly due to more people being employed in addition to people paying less taxes.
The second big contributor is monetary freedom -- essentially this is a combined measure of price stability (how much inflation has occurred) and price control (restrictions placed on the prices of goods/services). If a central bank pursues a large bond buying policy, thus pumping money into the economy, it runs the risk of inflation running rampant. This is exactly what the US Federal Reserve is continuing to do with the use of their policy. It creates a large increase in inflation. On the other hand, Ireland's Central Bank uses a policy that is less aggressive by using reserve transactions to both increase GDP while managing inflation. The second variable, price control, is simply what price interference does the government do instead of allowing all goods/services to be priced at the market clearing level. The US partakes in this far more than does Ireland, in this category, Forbes ranks Ireland 11th while the US pulls in at a solid 80th. This shows that when the government manipulates the price of something, a misallocation occurs and resources are not used in the best way possible. This results in a market failure and it makes it more difficult for the economy to grow or remain healthy.
Picture Link: http://www.zerohedge.com/article/what-will-happen-ireland-and-various-mncs-when-ireland-finally-forced-hike-tax-rates
Sources:
http://www.zerohedge.com/article/what-will-happen-ireland-and-various-mncs-when-ireland-finally-forced-hike-tax-rates
Taylor, this was a very interesting piece. I was unaware of the business in Ireland, and was impressed by the statistics Ireland put up. The way they run their economy seems to be working quite well, and perhaps the United States should take note. My only question, or point of curiosity would have to be that there has to be some flaw in their system, it almost seems to good to be true. Other than that we'll find out soon enough if there is a flaw, and whether or not the United States decides to take notes.
ReplyDeleteIt's interesting how the US underestimates the capabilities of other countries. We may be very self-promoting, so to say, while the other countries are sneaking under our radar, gaining up on us. I believe that Ireland could surpass us in business and possibly a few other areas as well. Instead of worrying about a few of the inner mechanisms in our own system, we should be learning how to thrive and grow by other countries that aren't frequently discussed. Excellent choice of topic, very eye opening.
ReplyDeleteLike Bennett, I did not know that Ireland was so prosperous. At the same time however, I have to wonder if the data is a little skewed because they are such a smaller country than us. Sure there is a much lower tax rate, and all but is there really a better opportunity for business there even though there is much less room for it? With the United states being so big it makes me wonder also if being extremely hampered by debt is part of the problem.
ReplyDeleteThis just goes to show that the United States isn't the "best country in the world". So many countries are overlooked, as you talked about with Ireland here. I do find it surprising though that the US is ranked 80th in price control while Ireland is 14th. I do see now why Ireland can overpower us in the category of business, and maybe our country should be looking to these under looked countries like Ireland in order to improve our own country's economy. I am glad that you chose a topic like this that isn't being overly discussed; it really gave me a lot of new insight about the US and how other countries have strengths in their economy as well.
ReplyDeleteThe United States in recent years seems to have been passed in many economic categories due increase taxes and regulation. However, just a few years ago Ireland had a huge recessions in which people were unable to finish buildings they stated. If you drive throughout Ireland there are unfinished shopping centers, and other buildings that are practically useless. It is interesting to see that investors are so willing to spend money in a country that economically speaking may still be somewhat unstable following a recession of their sorts.
ReplyDeleteI had no idea that Ireland was such a prominent country. I believe that since Ireland is prospering so efficiently that we should include them more within our business and economy. Ultimately, the United States could gain and grow from the growing Ireland. It is really interesting to see that we aren’t the best of the best in the world because that is how the US is perceived at times. Especially in these hard times we could use a little guidance of a stronger country and Ireland could be just that.
ReplyDeleteThis is very interesting because it would be assumed that the United States would be better in business than the United States, simply due to our country being much larger. However, it would make sense due to us having to tax more on our goods in order to balance out our debt. The United States also brings in resources from other countries more than it send out to other countries. This causes an increase in tax to be necessary for our country. However, this puts a strain on businesses. Many production companies often move to countries with a smaller tax put on goods in order to make more of a profit. They can make the products for less, and sell the products at the same price, but however, their won't be as high of an added tax allowing for more consumers to buy products.
ReplyDeleteI think this is a great topic to educate us all about because it gives us a global perspective. The global economy should be a focus of ours as is our national economy. It is interesting to me to learn that we are not ranked higher being "the land of opportunity" and all. You provided great insight onto what it means to think on a global level and consider the state of other countries rather than solely focus on ourselves. Maybe, we as a country should look to prevailing economies across the globe as inspiration. I think it would be a good idea to look externally for solutions rather than only internally because we clearly do not know all the answers and should utilize the successes of other countries.
ReplyDeletethis topic is awesome to talk about, it shows how stuck up american's are. People think that being an american is all great, at least that's what we think but other countries hate us because we think we are the best when we are clearly not. Kids today are like "I hate school why do we have to be here" when other kids would love to have an education. we take things for granted way to much and this is a cause of why we keep sucking it up each year because of people who dont care in america
ReplyDeleteI had no idea that Ireland was so high in demand for business. Like you said, I believe that this has to deal with the lower taxes. Ireland's 12.5% compared to the United States' 40% is a wake up call almost. I hope that the United States takes notice of this, lower their taxes, and increase their supply. I believe that this could boost their confidence as well as their business.
ReplyDeleteWow this is really interesting. I had no idea our country ranked 80th, in fact, I have never seen this ranking before. I would have to agree with Elli's point that it is surprising since the US claims to be the "land of opportunity". This should be a challenge to us to step out of our bubble and pay attention to the differences globally. It is easy to listen to our own leaders and follow their lead when it comes to economic decisions but maybe it is time we do our own research and look for our own voice in the situation. Awesome article Taylor!
ReplyDeleteI'm very surprised to discover that the US isn't the best business country as it usually played out to seem like. It's very sad to think about how our country used to be the golden gates of opportunity is now being destroyed by the thing that had originally made us so strong, our government.With the increased inflation that the Federal Reserve's actions are causing and the high tax rates our government is ratifying will plummet our business even farther than it already has. I truly hope that our government and people can come together to rebuild the great name that we originally had. To fix the inflation problem, the Federal Reserve should sell bonds to tighten their economic policy, thus sucking money out of circulation. With less money, inflation will decrease, eventually stabling the economy. With a stable economy, then the business side of our country can strengthen again, but it will be a long process in order to have a long term effect on business in our country.
ReplyDeleteIt sounds like Ireland is doing what the US is doing except in more moderate methods. The US waits until the moment where they see things are wrong and then take action while Ireland tries to keep their values at about the same. It's obvious which one is working better but I can't help but think if there are outlying factors. Ireland has a population of just about 6.5 million people, a mere fraction of that of the US. Perhaps their economy is better with this method due to their manageability. Handling over 300 million people compared to Ireland's population is a little bit more of a hassle.
ReplyDeleteYou have a good point, Kyle, when you have a population as large as the US, that is heavily involved in international trade, along with the fact that the US was probably one of the harder hit countries during the recession in 2008, the US has a lot more factors to juggle. Including spending hundreds of millions of dollars every year in the middle east. The US is losing it's lead as the nations greatest super power, China, India, and other developed countries are catching up fast.
DeleteI thought you had a really great topic to talk about because I am really fascinated by Ireland due to me being Irish. I also liked this topic because you would never guess that Ireland would be the number one country ranked for business, but I liked that you chose this because it opened our eyes that other countries are good at things as well. The graph you showed, showed great information about the overall tax rate as well as a video about information on the topic. Great job Taylor.
ReplyDeleteThis is very well written, and very interesting. I've always had an idea of Ireland as being the rather poor sister of England. But you've clearly done extensive research and enlightened me to the exponential growth the the Emerald Isle has undergone in recent decades. Their low tax rates and expansionary opportunities will be like blood in the water to the sharks of the corporate world, and I can only imagine the explosion of interest and trend of investment will continue. Ireland will soon be no small country by means of economic prowess. Well done!
ReplyDeleteIt was interesting to learn that Ireland is first, I wouldn't have expected them, but once I look more closely, it makes sense that they are top.
ReplyDeleteThis goes directly back to the level of government that should be involved in the people's lives. In the beginning of this country, we decided that the government should be for the people, and the people would be making the decisions. When the government has a more hands-off approach, inevitably the country functions better. A good economy is the direct result of the invisible hand moves when the government lets the people function in their normal way.