Plan to use Trump tax cuts to boost Australian case backfires
As advocates of cutting corporate taxes have attempted to cast Donald Trump’s tax cuts as a reason for Australia to follow suit, analysis of the plan has exposed more evidence of the flaws in the economic case for the Coalitions’ planned big business handout which would cost the budget $65 billion dollars.
The report from The Australia institute’s Senior Research Fellow, David Richardson, was delivered to federal Senators on Friday.
“Australia is likely to have nothing to fear from the cuts in headline tax rates, but other elements of the Trump plan could have negative effects,” Executive Director of The Australia Institute, Ben Oquist said.
“Many respected economists in the world are lining up to argue that the Trump plan will not work to increase either jobs or economic growth in the US.
“The devil is in the detail of the Trump plan. For example, import protectionism and territorial tax treatment pose significant risks to Australian revenues and trade.
“US companies with Australian operations could have new incentives to move those operations out of Australia.
“Even the IMF is warning of the dangers of a company tax ‘race to the bottom’. Additionally, the evidence from previous cuts, in a number of comparable countries, to the corporate rate shows that it is does not create major capital inflows,” Oquist said.