Ireland

American pharmaceutical companies are skilled at using transfer pricing to shift the profit on their U.S. sales out of the United States. That is why the United States' trade deficit in pharmaceuticals is now bigger than the United States' trade surplus in aircraft.

Ireland's tax authorities have made the job of Ireland's statistical authorities almost impossible.   The distortions in the Irish data are now so big that the impact the data for the entire euro area.   

Tax is often the biggest factor in the balance of payments. U.S. firms operating in Bermuda paid $229 billion in dividends back to their U.S. parents in 2018. That’s more than the United States earned from exporting to China before the trade war, and more than Boeing and GE generated by exporting aircraft and their engines even before the new 737 was grounded.

Turns out a small and very green island dominates financial flows from "other euro area countries."  Ireland's impact, of course, is a case study in the role that "trade-in-tax" plays in driving global trade and financial flows in today's global economy.

The pharmaceutical industry's tax strategies appear to have a large impact on the trade data. There isn't any other obvious explanation for why the (goods) deficit in pharmaceuticals exceeds the surplus in civil aircraft..

I wanted to follow up on a few points that I didn’t have space to explore in my New York Times op-ed on the international provisions of Trump’s corporate tax reform. The first is that, well, there…

Irish tax distortions have a material impact on aggregate eurozone economic data.