This post has been corrected.
There’s been considerable congressional uproar about the corporate practice of inversion—when companies establish subsidiaries overseas in order to benefit from a lower tax rate. The general criticism is that companies should “stay” in the US so as not to deprive the government of tax revenue.
What the practice’s critics might not realize is that those lower tax rates free up tons of cash to spend on American companies (and jobs maybe!). The Bureau of Economic Analysis just dropped its first-ever report (pdf) on new foreign direct investment, or money newly spent to acquire, found, or expand US companies, and Ireland topped the list by a wide margin.
One of the most popular destinations for inversions has been Ireland, if you ask firms like Pfizer and Apple, and ”Irish” firms spent $42.5 billion on direct US investment in 2014; that’s 17% of the global total and 40% of runner-up Canada.
Even more incredible is that $42.5 billion is roughly equivalent to €35.1 billion 2014 euros. Ireland’s 2014 GDP was €189 billion, so “Irish” companies spent the equivalent of 19% of the country’s GDP acquiring or expanding US companies. That’s a lot of reciprocity.
Correction: An earlier version of this article noted that new Irish foreign direct investment in the US was equivalent to 27% of the country’s GDP. It has been changed to note that the figure is 19%.