By: Veronica Baladi
When many Americans think of the word “leprechaun,” a red-haired, jumpy little man with a ditzy four-leaf-clover and pot of gold usually comes to mind – not a transglobal economic crisis that affects their daily lives. But what do leprechauns have to do with the economy?
Over in Ireland, a land notorious for its leprechauns and low tax rates on corporate profits (tax havens), many multinational companies have been incentivized to expand across the pond. As a result, Ireland’s GDP skyrocketed a staggering 26.3% in 2015, leading the world to believe it was by the grace of the leprechauns – though high rises in GDP are generally healthy indicators, this gush was not all rainbows. The growth, sounding so promising to the public, was artificial. In actuality, a creative use of accounting and an avoidance of taxes occurred instead of an actual surgence of revenue and productivity – particularly by conglomerate Apple, Inc. In other words, Apple avoided billions in tax through the agreed cover of Irish GDP, ironically not having a single physical Apple store in Ireland. Both Apple and Ireland weren in hot water with the United Nations and the rest of the world. Nobel Prize-holding economist Paul Krugman has dubbed this phenomenon “leprechaun economics.”
Though Ireland’s 2016 scandal is in the past, they have since been blacklisted by the European Union and very much consider the term offensive, this umbrella term has come to encompass distorted, hyperinflated data. However, the United States is certainly experiencing some uncorrelated leprechaun effects itself. US multinational corporations are masters of deception, citing massive business in otherwise obscure tax havens. President Biden’s hopes to introduce the Made In America Tax Plan reclaim revenue lost as a result of similar tax-relocation-shenanigans. To put it briefly, the plan is an attempt to promote a fairer, more enforced tax system by raising taxes on corporate income tax while promoting in-house, domestic operations. This way, massive companies are less enticed by tax havens, while the government earns a projected $2 trillion more. This new plan does not merely regulate proper accounting on the big corporations: the basis is to create new jobs for any American and actually restore economic production.
By restructuring the fundamental basis of taxes – incentivizing outside investors by inversely raising taxes and having educated experts to enforce these changes – administration is hoping to encourage lawful, due change and regain a handle on actually earning their taxes. In theory, it sounds like a path to a more economically transparent world. But, leprechaun economics have shown us that not all companies are aligned with this common vision. The past may shine a light on the nuances of passing this costly venture. Companies like Apple have gone to extreme lengths, such as far as somewhat successfully conspiring with the Irish government, to flat-out avoid taxes. Who’s to say they will not continue to do the same?
Works Cited
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tax-plan-2/.
Bowers, Simon. “Apple’s Cash Mountain, How It Avoids Tax, and the Irish Link.” The Irish Times, The
Irish Times, 6 Nov. 2017,
Desk, News. “Keiser Report: Leprechaun Economics (E965).” The Global Herald, 10 Sept. 2016,
theglobalherald.com/news/keiser-report-leprechaun-economics-e965/.
Krugman, Paul. “Biden, Yellen and the War on Leprechauns.” The New York Times, The New York
Times, 8 Apr. 2021, http://www.nytimes.com/2021/04/08/opinion/biden-corporate-taxes.html.
“Leprechaun Economics.” Owlapps, http://www.owlapps.net/owlapps_apps/articles?id=51127636&lang=en.
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