No Taxes, Larger Dividend

Every year I find a little something extra in my bank account. It's the dividend from Abbott Labs. And I pay tax on it.

Apparently there's some dissatisfaction among members of the United States Congress over that dividend, because it represents money that they did not get. Abbott's division in Ireland, you see, does not pay corporate tax anywhere, but those profits end up in the pockets of the shareholders so how can I be upset?

The corporation is based in Illinois, although it has branches all over the world. (I am particularly envious of those employed in Italy, where the food is better than anything you'll find in Dublin.)

For tax purposes, however, Abbott Laboratories does not reside anyplace. Therefore, no government can claim its revenues under tax laws. And for that, politicians in the States are angry at politicians in Ireland for allowing that to happen.

To make matters worse, Ireland doesn't much care about the hurt feelings and grumblings. It is such corporate tax strategies that provide the island with much needed jobs and tax revenues from the salaries of those employed.

It's a question of who pays for things, and in Ireland, it is the citizen doing the heavy lifting while corporations get a pass. As long as they come, build offices, and hire people, they are providing something of value.

Foreign investment paid for Ireland's boom years and lifted the nation out of its isolation. Until then, the nuns were still operating Magdalene laundries where girls were locked up for the crime of being pregnant outside of marriage. The last one closed in 1996. Yes, 1996.

The Irish might get stirred up to learn that multinationals like Abbott managed to escape paying corporate taxes in Ireland, but they are clever enough to realize that Abbott might not be there if not for the low tax rate and the laws that allow them to not be a resident of anyplace. Those who remember what Ireland was like in the 1970s and 1980s, when the leading export was young people, aren't going to demand massive changes to the corporate tax structure.

They might be quietly hoping that the U.S. Congress doesn't figure out that lowering their own corporate tax rates might make the homeland a more desirable place to put up an office building and hire local people. Heaven forbid that it happens. All those Irish jobs just might evaporate.