Economy

Dec 4, 2017

Company tax cuts won’t work in the US, and they won’t work here

Optimistic tax models put the average Australian at being 0.1% better off under the proposed company tax cuts. And the good news is they'll only have to wait 25 years for that tiny benefit to appear! Economist John Quiggin reports.

John Quiggin

Economist

It now appears certain that the Republican majority in the US Congress will pass a massively regressive package of tax cuts, with a cut in the rate of company tax as its central feature. Unsurprisingly, this news has produced a revival of the Turnbull government’s proposal to offer similar cuts here.

The primary claim put forward in support of company tax cuts is that they will lead to an increase in investment, or at least prevent the loss of foreign investors to the lower-tax regime being proposed by Trump and the US Republicans. According to Scott Morrison, quoting research from the Commonwealth Treasury, if we fail to follow the US lead we will be a less competitive destination for foreign investment.

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