Bono recently made waves for defending capitalism and its role in alleviating poverty. Rock stars aren’t supposed to express appreciation for the same free markets that have made them wealthy. But not only has he witnessed first hand how markets work to bring people out of poverty, he’s even defending tax competition!
Bono, Defender of Tax Competition
Bono has made a fresh defence of U2’s tax arrangements, claiming the Irish government would ultimately appreciate the band’s decision to offshore a share of its income through the Netherlands….
“U2 is in total harmony with our government’s philosophy,” he told The Observer. “Tax competitiveness has taken our country out of poverty. [The revenue] accept that if you engage in that policy then some people are going to go out, and some people are coming in.”
He added: “At the heart of the Irish economy has always been the philosophy of tax competitiveness. On the cranky left that is very annoying, I can see that. But [that] is why Ireland has stayed afloat.”
This is an astute observation on Bono’s part. Ireland has indeed benefited in the past by offering more competitive corporate tax rates than its neighbors, though it has suffered recently from problems caused by excessive spending and other bad policies.
More impressive, though, is the apparent recognition that benefiting from capital mobility requires acceptance of a two-way street. You can’t expect to succeed long term in attracting international investment while also undermining the ability of capital to flow throughout the world. US politicians are particularly hypocritical on this point. While the United States benefits tremendously from foreign investment, for instance, politicians try in futility to thwart the lesser movement of capital out of the country, and furthermore support anti-competitive efforts at the OECD, and pass destructive and fiscally isolationist laws like the Foreign Account Tax Compliance Act.
