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Who are the real villains when it comes to tax — short-sighted governments or greedy corporations? Will cutting company taxes increase wages, or merely line the pockets of an idle rich? Are all company bosses baby-eating imperialists, or are the vast majority honest Australians doing their best to get by? All these questions and more will be answered in the new Crikey series “Beating the bandits: who’s robbing whom in the great corporate tax heist?”

Part One

Swan: Australia's great corporate tax heist

Once again Labor’s 2013 tax transparency legislation has proven that sunlight is the best disinfectant. Last week the ATO revealed that one in three public corporations paid no corporate tax in the 2015-16 financial year, echoing the results from the previous year and exposing the maliciousness of companies that engage in corporate tax evasion.

While there are legitimate reasons for some companies to pay no tax – operating at a loss, for instance – when companies like Chevron, Exxonmobil and Shell record a combined $13 billion in revenue but contribute precisely $0 in tax, it is clear that the Turnbull government is not interested in walking the talk on corporate tax responsibility.

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Part Two

Australia shouldn't follow the US on company tax cuts

The Business Council of Australia (BCA), and its proxies in parliament, currently find themselves closely aligned with US President Donald Trump in making the case for massive tax cuts: US$2.4 trillion over 10 years in the case of Trump, and over $60 billion over 10 years under the Turnbull government’s tax-cut plan. Neither are funded, although the Republicans are looking for tax breaks to close down to provide some offsetting savings.

Both Trump and the Turnbull-big business alliance here insist that the benefit of the cuts will primarily flow to workers through growing wages, stronger employment and higher economic growth. That’s despite real-world evidence that, to the contrary, corporate tax cuts mainly benefit shareholders and corporate executives. The Trump tax-cut agenda has prompted some key institutions and highest-profile economists to challenge the claims being made by Trump and the White House about the claimed benefits of massive tax cuts for the world’s biggest companies. Here’s a sample of how the US debate has proceeded in recent months.

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Part Three

Three ways to cut company tax while improving welfare

The US Congress recently passed tax bills through the House of Representatives and the Senate that cut the US headline company tax rate from 35%, the highest rate in the world, to 20%.

The US Internal Revenue Service collects very little revenue from its current company tax. The system is broken, with a high rate, narrow base, and loopholes that permit its largest multinational enterprises – Google, Apple, Amazon and big pharmaceutical companies – to keep trillions of dollars offshore, out of the tax base. Half of US domestic business investment now goes through “pass-through vehicles”, like limited partnerships, which avoid company tax.

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Part Four

Not every CEO is a fat cat, child-eating imperialist

Eyes seem to roll when business and business groups like the Australian Chamber of Commerce and Industry (ACCI) call for tax cuts — which is a pity. It’s not like many (or any really) of Australia’s 2 million-plus businesses are fat cat imperialists who like nothing more than to exploit workers and eat small children.

There is bad behaviour certainly. Unethical and illegal behaviour, and our society — the media and other businesses — rightly calls them out. We should continue to work together to weed out these individuals.

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Part Six

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

So, the Republican majority in the US Congress have passed 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 Treasurer 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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33 thoughts on “Beating the bandits – who’s robbing whom in the great corporate tax heist?

  1. And how much and whom is Trump’s ‘NASA distraction’ going to cost?

  2. I broadly agree with this article, but why do we need to have revenue neutrality? We want more revenue (than we are currently raising due to corporate tax fraud). I applaud the suggestion of abolishing dividend imputation, but why does there need to be a discount discount? I mean the purpose of abolishing imputation would mean the company pays the tax rather than shareholders, many of whom would be foreign, so why discount the dividends AND lower the corporate tax rate?

    And I guess disallowing deductions for interest payments is OK if it works, or maybe allowing a deduction for interest paid at some notional market rate.

    Finally, what’s the point in lowering the corporate tax rate when 1 in 3 companies manage to not pay ANY tax? Isn’t that what needs to be fixed? The 3 measures you speak of here go some way towards that end, but I’m sure that’s not all that could be done.

    1. Yes Rupert Murdoch NewsCrap organisation does not pay tax so taxes cannot be cut in that instance. Even Scott Morrison knows that half of nothing is nothing.

      Scott did see clearly the need for gifting taxpayer monies to the failing and flailing Rupert Murdoch NewsCrap organisation; Morrison knows if the LNP gifts NewsCrap taxpayer funds from time to time it is as payment for continuing being pro LNP no questions asked, helps to win elections. It works every time.

  3. One of the Roman philosophers said ” With taxation you buy civilization”, so each time you whittle a bit away it’s death by a thousand cuts.

    1. And it is still true today

  4. Unfortunately I was unable to read Adam Carr’s article fully. Trigger phrases include “hardworking Australians” and “Mums and dads”; concatenated as above I was forced to move on

  5. “Company tax cuts = higher wages = piffle-dust economix”

  6. ABC’s the science show has a great 5 minutes story “Why are the wealthy so wealthy and the poor so poor?”
    The work of Martin Scheffer would suggest that income disparity will accelerate unless we change our thinking.

  7. What happens when these company tax reductions are compared against CEO salaries only?

  8. Seriously, let’s not lose sight of the fact of the impact of these corporate tax cuts on those companies paying “$0tax” now through such things as ‘an intricate labyrinthine web spun to borrow money from overseas subsidiaries’ to pay $millions to the likes of lawyers and accountants/firms hired to find ways around tax laws; executive living expenses (from homes, to their children’s private school education fees, overseas holidays) and their other little necessities of life?
    Think “670(?)” companies, including Murdoch’s Limited News Empire*, Glencore, Adani, Chevron etcx666.
    Think big donors (in monetary and kind/trade*) to the Limited News Party?
    Morrison-Turnbull, “we” stand to make anything from twice to a billion times what we get from them now?

    (* I choked on my can of baked beans, spraying out the candle, watching Q&A last night – there was Sheridan and Hunt whining about “China and left third parties (GetUp! and unions) influencing/buying influence over our political system”, how the right was disadvantaged – when it was pointed out that banks and miners do the same thing as unions. But no one pointed out that GetUp! does what (American) Murdoch’s Limited News does and has been doing for decades (dispensing positive PR for their Limited News Party), to influence voter perceptions? That while GetUp! stands condemned : Limited News is all right?)

  9. high tax countries are also high wage countries, low tax countries are low wage countries, the more workers earn, the more they spend the faster the economy grows, the more they spend the more companies profits go up the more tax they pay, the more workers wages rise the more tax they pay, dropping wages and increasing prices are a recipe for recession, any intelligent person knows this but still the conservatives follow the calls of the greedy 1% to continually cut incomes and services and thereby destroying the economy and forcing people into the working poor, U.S style

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