Ireland is playing the world like a Celtic harp, and perhaps the world deserves it. The US and other European nations have been complaining for some time about Ireland’s impish behavior in international tax. Ireland, it is said, has specifically designed its tax system to help facilitate tax avoidance by massive multinational enterprises (MNEs) such as Apple, Google, and Cisco. But Ireland’s critics have been imprecise about their gripe. They accuse Ireland of enabling “stateless income”, income that escapes taxation because each nation with a claim to tax it ascribes it to another country—like two gentlemen who each refuse to be the first to enter a closing elevator. Stateless income is a catchy phrase with resonating negative connotations and has become a rallying cry for reform. A quick and dirty Google search pulls up 25,000 hits in the last year alone. Statelessness, however, was never the issue. (USC law professor Ed Kleinbard, who is credited with coining the term has always been clear on this.) Plenty of states are perfectly willing to count income as their own without taxing it. We call them “tax havens.” Consequently, it is as easy to be statefully taxless as it is to be stateless. The circumstance is different. The result, however, is the same. Now Ireland is gaming this imprecision. Last week its Department of Finance responded to the literal demands of critics while leaving Ireland’s tax system effectively untouched. It thus threw the world the meatless bone it has been demanding. To help understand what the Irish government proposed, let’s take a quick tour of the existing laws in Ireland and the U.S. Consider, for example, Apple Inc., whose tax strategy does utilize stateless income. Apple’s first tier subsidiary is chartered as a corporation under Irish law, but is managed and controlled in the United States. The U.S. taxes the foreign sales of a company only when it regards that firm as a “resident” of the U.S. for tax purposes. But the U.S. bases tax residency on where a company is chartered. It pays no attention to where it is managed and controlled. Because Apple’s first tier subsidiary is chartered in Ireland, it is not taxed by the U.S. on its foreign sales income, despite the fact that it is managed and controlled in the U.S. For its part, Ireland also taxes only those companies that it regards as resident for tax purposes. But Ireland defines a corporation as a tax resident if it is managed and controlled in Ireland regardless of where it is chartered. Because Apple’s first tier Irish subsidiary is managed and controlled in the U.S., it is not taxed in Ireland, despite the fact that it is chartered there. Consequently, Apple’s first-tier Irish subsidiary is a tax resident of neither the U.S. nor Ireland. Of course, these aren’t the only two countries in the world. But Apple’s first-tier subsidiary has also declined to establish tax residency in any other nation. The subsidiary’s income—which, thanks to careful tax planning, is a substantial portion of Apple’s profits—is thereby “stateless” and, in turn, taxless. But so what? Apple’s top tier subsidiary—free of U.S. or Irish tax residency by virtue of the mismatch between these nations’ laws—might just as well have established tax residency in Bermuda or the Cayman Islands. If it had done so, its income wouldn’t be stateless any more. But it would still be taxless since these island nations impose essentially no tax. And that’s exactly the wedge Ireland exploited. Thursday before last, its Department of Finance proposed legislation that would tax Irish-chartered companies that take advantage of this legal arbitrage and furthermore have no tax residency. Thus, firms that declare tax residency in jurisdictions that do not impose tax—that is, companies that have no-tax residency, rather than no tax residency—would be unaffected by the proposal. In response to Ireland’s clever parry, reform advocates must now revise their message, explaining that, well, they never really meant “stateless” per se. Quite likely, the cause will suffer. It is no easy thing to backpedal without losing forward momentum. Precision can be boring—tax experts relearn this every holiday season as relatives’ eyes take on a turkey-like glaze as we try to explain what it is we do. But international tax reformers might have been better off with a little more precision upfront. Arguably, the rhetorical cost they will pay for having to back away from their rallying cry mid-charge exceeds the rhetorical benefit of choosing catchy over correct.