Wearing o' the Green

While we are celebrating St. Patrick’s Day, let us not forget to celebrate the Irish economy. Ever since its landmark economic reform the Irish economy has been showing a lot of green, and not just on St. Paddy’s Day.

The Irish economy doubled during the 1990s, with economic growth hitting 15 percent. Now growth is down to a modest 6 percent annual growth. And Ireland’s per capita GDP is $34,100, ahead of Britain, France, Germany, and Italy.

How did it happen? Well, we supply-siders point to a simple fact. The keystone of the economic reform was a modest reduction in income tax rates and a cut in the corporate tax rate from 50 percent to 12.5 percent. It all started in 1989 “with economic reform, tax cuts, welfare reform, more competition and a ban on borrowing to fund current spending,” according to Wikipedia.

Hmm. 1989. Could the US tax cuts of 1981, introduced by Ronald Reagan, a son of Ireland, have inspired the Oirish?

In fact here are the tax cut numbers, as we published here in June 2005.

IRELAND TAX FACTS 1985 2002 % change Top corporate tax rate 50% 12.5% -75% Top marginal income tax rate 60% 42% -30% Top capital gains tax 60% 20% -67%

The Wall Street Journal has its own little feature today on Ireland’s booming economy. And the Tax Foundation moans that while Ireland booms along with its 12.5 percent corporate tax rate here in the US We're Number One in corporate taxes.