The Irish Miricle
The key to Ireland’s success has been its excellent tax climate for business. In 1980, Ireland established a corporate tax rate for manufacturing of just ten percent. That low rate was subsequently extended to high-technology, financial services, and other industries. More recently, Ireland established a flat 12.5 percent tax rate on all corporations — one of the lowest rates in the world, and just one-third of the U.S. rate.
Inspired by the Celtic Tiger, many Eastern European nations have gone one step further and installed both low corporate taxes and simple, flat-rate taxes on individuals. According to my colleague Dan Mitchell, there are now 13 nations in the “flat-tax club,” including Estonia, Russia, and Slovakia.
It’s become fashionable to argue that increased government spending on education is the key to success for countries like Ireland. I’m skeptical. For one thing, booming economies today can attract high-skill workers from global labor markets. In Ireland, brain drain has been replaced by brain gain as smart people from across Europe are drawn into the country’s growing industries.
Ireland was an economic basket case 20 years ago. Back then low wage call centers were set up in Ireland. Thankfully for the Irish they managed to slash government taxes and spending. This has led to a nearly unprecedented growth of a national economy.
Ireland realized that the business or Ireland was business. Apparently they are welcoming businesses to come there and profit. Unlike the Democrats in the US they realize that a what’s good for business is good for the worker and good for the country.
The last paragraph of what I quoted was an interesting comment. In my opinion we have to spend enough on education (which we do). But spending more than enough (which we also do) doesn’t do a thing more for the country or the students. Pretty obvious when you think about it.
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