Media reports have frequently mentioned that seventy percent of foreign investment in Ireland comes from the United States. The same reports are usually quick to note that the corporation tax associated with these companies is only paid in Ireland due to the very low tax rate of 12.5%
Donald Trump made it clear that he expects these companies to pay their taxes in America and he will offer them a tax rate similar to Ireland.
The Intel plant (Leixlip) and the data centers all around Dublin are not going to disappear. Infrastructure like that is a long term investment and the jobs associated with those projects are not at immediate risk. But jobs and corporation taxes are independent subjects for companies with a global footprint. They can't move a semiconductor plant at the press of a button but they can shift their profts to be taxed elsewhere.
While those companies may not make any job cuts, the shift of tax revenues out of Ireland will be a big risk for the expenditures of the state. Expect cuts to expenditures in regional areas, cuts to libraries or cuts to mental health services. These are the things that always get cut, in any country, when government receives less taxes.
It will take years for Ireland to replace those revenues because the previous governments have always been very complacent. They assumed a low Irish tax rate would be a gift that keeps giving.
People know this and there is a perception that the state may be tempted to sell some assets to fill temporary gaps in the budget. It is inevitable that some investors already have shopping lists ready and will contact the new government with spontaneous proposals to sell off land and infrastructure.
When I'm speaking to people about the elections, one of the questions that comes up is "how likely is it that Trump will really do something like this to Ireland?"
The answer is clear. Donald Trump was elected the first time on 9 November 2016, coincidentally, my birthday. On the night of vote counting, as he was waiting for the final results to become certain, he went into a New York restaurant and walked around the room telling people his plans. People who were there didn't recall him making references to building a wall or draining a swamp. People remember him saying that he would cut their taxes. That was the first thing on his mind when he was elected.
Sure enough, in the first Trump presidency from 2016 to 2020, corporation tax was cut from 35% to just 21%. Now he promised to cut it down to 15%.
How will Donald Trump pay for that tax cut? He will expect the lower rate of tax will be offset by the companies who bring their offshore profits back into the American system. In other words, rather than taxing some profits at a high rate, he wants to tax all companies at a low rate and he hopes the net amount of tax will stay the same.
He will expect the companies to play ball.
I've spoken a lot about how tech companies try to give everybody a false sense of empowerment. In the past, they try to avoid siding with the democrats or republicans because they want to pretend to be friends with everybody and gain the trust of people on both sides. Yet in the 2024 US elections, they revealed their true colours: many leaders in the tech industry openly sided with Donald Trump. They didn't care if democrat supporters would abandon their platforms. This is a big hint that they will go along with his plan to shift their taxes from Ireland back to the US.
This is a change that could happen very suddenly, within two years, while it may take five to ten years for the Irish state to develop additional income streams to replace the corporation tax.
It is this very sudden nature of the loss, like falling off a cliff, that increases the pressure on the state to dramatically cut services and sell assets.
Many of the same supporters who helped Trump will be hoping to buy state assets at bargain prices.