It ultimately offered a staggering $1.25 billion package of tax breaks that includes sales tax abatements for the next two decades, 10 years of property tax abatements and nearly $200 million in transferable tax credits that Tesla could sell to Nevada companies that wanted to lower their own tax bills. Although Elon Musk, Tesla's chief executive, insisted that at least one of the other states had offered an even richer tax package, it is clear that the tax breaks Nevada came up with played an important role in landing the Tesla factory.

In reading this week about Apple's tax dealings in Ireland, I found myself reflecting on the tax deals that U.S. states cut all the time with companies they are trying to lure. It's not all that different. In a sense, what Ireland has been doing is the global equivalent of what the states do to attract business. And that is especially true in the case of Apple.

Ireland has long had one of the lowest corporate tax rates in Europe; it's currently 12.5 per cent. That low rate, the Irish believe, helped attract industry and create the country's boom in the years leading up to the financial crisis.

But it did a lot more than simply offer a low corporate tax rate. It set itself up as a kind of European tax haven, so that companies like Google, Facebook, Microsoft and others could, in effect, buy an Irish address to which they could transfer a great deal of their intellectual property and route profits accrued elsewhere through the Irish subsidiary. This is called transfer pricing. Companies could also take advantage of other loopholes in the Irish tax code to get their tax bill considerably lower than 12.5 per cent.

Read more