In America: How Silicon Valley Bedded Dublin to Fleece US Taxpayers Dry

Zetong Li

“…with lower rates, small business can lead the way in creating jobs for all who want to work," said Ronald Raegan in 1986, when he overhauled America’s tax code, slashing the top corporate tax rate from 46% to 34%. This marked the beginning of a decades-long trend where corporate rates fell faster than individual rates. By 2017, under President Donald Trump and a Republican Congress, the statutory corporate tax rate was cut to 21% via the Tax Cuts and Jobs Act (TCJA), a permanent reduction justified as necessary to “make America competitive again”.

Proponents argued lower rates would spur domestic investment and job growth. Yet, as corporate profits soared post-TCJA, wages rose only modestly. The average worker’s wages went up by a mere $750 per year, this was far below the guaranteed $4000-9000. With plummeting wages, tax rates and social security, the only thing still rising – corporate profits. The question that persists is - did the TCJA deliver on its promises? Or did it pave the way for citizens to foot the bill, while companies amassed wealth?

Ireland’s Tax Gambit: From Austerity to Global Tax Haven

Ireland’s journey to becoming a corporate tax haven began in the 1990s. Facing economic stagnation, the country slashed its corporate tax rate to 12.5% — the lowest in the EU — to attract foreign investment. The strategy worked: multinationals like Apple and Google established subsidiaries, routing global profits through Dublin. Unlike the US, Ireland reinvested corporate tax revenue into social programs, including healthcare and education, helping it recover from the 2008 financial crisis. By 2023, over 50% of Ireland’s corporate tax revenue came from just 10 US tech giants, funding robust social safety nets even as America’s frayed. The means that enabled all of this, and possibly the root of America’s social safety net decay – Profit Shifting.

Profit-shifting — the practice of moving earnings to low-tax jurisdictions — is the lifeblood of corporate tax avoidance. For example, Apple licenses its intellectual property to an Irish subsidiary, booking profits there instead of the US. While legal for corporations, this tactic would land individuals in hot water. A US citizen hiding income offshore faces penalties up to 50% of the evaded amount and criminal charges. Yet corporations face no such repercussions, thanks to loopholes like the Foreign-Derived Intangible Income (FDII) deduction, which rewards offshore profit booking with a 13% effective rate, half the domestic rate.

The Biggest Offenders –

Headquartered in Seattle, with offices and fulfillment centers in seemingly every part of the country, Amazon, the country’s second-largest company by revenue, made just over half a trillion in profits. That is $311 billion in 2024. How much did they pay in federal tax? Less than 10 billion, or about 3%. By leveraging R&D tax tokens, meant to bolster innovation and stock-based compensation, Amazon has managed to avoid paying a single dollar in federal tax. The biggest digital retailer, that kills any domestic competition, also doesn’t pay tax.

In 2024, the European Court of Justice ordered Ireland to recover €14.1 billion in unpaid taxes from Apple, a ruling that underscores the scale of avoidance. Despite earning $394 billion globally in 2023, Apple’s U.S. tax contributions remain obscured by deductions and offshore, and unrealized holdings.

Stock options, often termed “unrealized gains,” are treated as expenses to reduce taxable income, even though executives like Elon Musk use them as collateral for billion-dollar loans (e.g., Musk’s Twitter acquisition). This double standard lets corporations write off hypothetical losses while wealthy individuals monetize untaxed paper wealth. Also termed as – blatant hypocrisy, meant to misguide Americans.

Adobe & HP: The Hypocrisy of “American” Companies

Adobe, founded in California, employs 4,000 workers in Ireland but shifts intellectual property there to exploit its 12.5% tax rate. Similarly, HP, a Silicon Valley icon since 1939, uses Irish subsidiaries to avoid U.S. taxes. Contrast this with a Main Street hardware store: if it employed thousands of Americans, sold to U.S. customers, but paid taxes in Bermuda, lawmakers would deem it unpatriotic. Yet tech giants face no such scrutiny.

While U.S. tech giants employ 375,000 in Ireland, their domestic workforce faces layoffs amid record profits. For example, Meta cut 11,000 U.S. jobs in 2023 while expanding Irish operations. This would be a perfectly acceptable practice should the companies in question give up on maintaining the hegemony that is the US tech industry. But – they continue to pride themselves on being American, donating millions to political causes, attending presidential inaugurations, and testifying to Congress to ask for more governmental contracts.

Effective vs. Statutory Rates: The Great Disconnect

The U.S. statutory corporate tax rate—the official rate set by law—stands at 21% post-2017’s Tax Cuts and Jobs Act (TCJA). However, the effective tax rate, what companies pay after deductions and credits, tells a different story. Post-TCJA, profitable corporations paid an average effective rate of just 12.8%, with 95 companies paying less than 10%. Amazon, for instance, reported a 4.3% effective rate in 2023, a stark contrast to the 21–25% rates small businesses often face. This disparity stems from loopholes like R&D credits and stock-based compensation write-offs, which allow tech giants to slash liabilities while Main Street firms shoulder the burden. All of this seems very far removed from Raegan’s Oval Office Address in 1986 which was intended to be “…tax breaks for small and independent businesses which create 80 percent of all our new jobs.”

To close loopholes, Senator Sheldon Whitehouse (D-RI) advocates abolishing FDII and GILTI: “loopholes in U.S. tax law let companies use accounting tricks to move profits earned here in the United States to offshore tax havens. The Trump tax scam supercharged the offshoring incentive, claiming to set guardrails that many pointed out were doomed from the start.” Economist Gabriel Chodorow-Reich adds that restoring R&D incentives while raising rates could balance innovation and revenue. Former Treasury Secretary Janet Yellen endorsed public country-by-country profit reporting, calling sunlight “the best disinfectant.” Senator Elizabeth Warren (D-MA) proposes tying federal contracts to tax compliance: “No free rides for freeloaders.”

Companies Apple and Google, headquartered in drought-stricken California, should relocate resource-heavy operations to Ireland. However, these firms prioritize tax savings over environmental ethics, maintaining data centers and offices in water-scarce regions. However, moving their data centers abroad would mean having to contend with EU environmental regulations, which are far stricter than those of the US. So, these companies are truly multinational, they exploit multiple loopholes across every nation.  So – while Californians watch their state burn due to wildfires, and cannot water their front lawns, the data center in the valley consumes more water than every suburb combined. Perhaps the least the companies whose data centers consume more water than the average person ought to pay their fair share in taxes. Especially seeing as they consume more than their fair share of resources.