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.
The IMF's country-level fiscal advice has an adding up problem. The IMF (over time) wants most countries to match the euro zone and head toward fiscal balance. That though would leave the world short of demand.
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 international side of the Tax Cuts and Jobs Act was a real reform, not just a straight-forward cut in the rate. It ended deferral, and shifted to a (mostly) territorial tax system. Yet, judging from the balance of payments data, it didn't get rid of the incentive for firms to offshore profits to low-tax jurisdictions. The global minimum is too low—and there are too many incentives to shift tangible assets abroad.
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..