The Turnbull Government

bellenuit said:

17% of what?

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Read the article I posted.

Corporation's pay the wages that allow individuals to be taxed.

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They are increasingly investing in automation and killing jobs.

Companies are the lifeblood of the economy and without them we would have nothing,

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So you are advocating a tax rate of 0% ?

That some may be foreign shareholders doesn't mean anything.

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Yes it does. It's money that is not spent in our economy.

The more companies (in general) the better and we want to encourage them to set up here.

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Companies go where the market is and that means consumers who have money to spend.

bellenuit said:

17% of what?

Corporation's pay the wages that allow individuals to be taxed. They also pay payroll tax and GST on the value they have added. They pay 30% on profits. They also pay super contributions for individuals.

Companies are the lifeblood of the economy and without them we would have nothing, just some government run industries like the old style soviet block. Equating companies with individuals makes no sense. The more companies (in general) the better and we want to encourage them to set up here.

You cannot equate companies with individuals and say the company tax rate is fair or unfair based on what that rate is. The personal tax rate is up to 45%, but that isn't paid by anyone as it is the top rate of a progressive scale. Many people pay no tax and most pay a lot less that 45%.

For a lot of companies that are on the edge, the tax rate cut may be just what keeps them viable. If you believe that tax rate cuts will have no benefit, then you must either hold that the converse is true (increasing the company tax rate will have no adverse effect so we might as well make it 100%) or you must believe that we are currently in the sweet spot.

There will be many who benefit from the tax rate cut. That some may be foreign shareholders doesn't mean anything. Some of the extra cash will go to employees, some will go to expansion, some will go as dividends to direct shareholders and indirectly to almost all people who have super.

It will make companies a bit more competitive and that is positive for all companies.

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Ha!

If cutting corporate tax is to benefit "all of us" - the workers, the taxpayers, the baker and his wife and her investment portfolio... If that's the aim, why go round about to achieve it? Why not just give those benefits directly to the people instead of the corporations.

Trump's $1.5T corporate tax cut didn't benefit anyone beside the corporation and its shareholders. And unless you reckon the average folk own any significant amount or have any influence on corporations regarding wages, environmental concerns, taxes, investment decision... yah, sure, benefits will trickle down.

That's why they have to cut back on social programes, cut back on public school funding, on food aid to the poor, the young, the sick and the elderly... All because, oh yah, tax cuts trickles down too much to those people their few bucks have to be taken away to help reduce the deficit.

Same crap I heard today on the radio. Cut corporate tax but increase individual income tax - it's the budget deficit, stop being irresponsible.


And big deal companies have to pay payroll, pay employees, pay GST.

btw, how are they paying GST really? At the same rate as consumers? GST they collect for goods and services are net against those they paid on buying/hiring goods and services.

Can an individual claim against GST?

Are all expenses necessary for an employee to earn their income deductible. As they are for corporations?

The housing tax deductible? The power bills, the food consumed?

So who's paying more taxes?

And what's this about paying employee. Want people to work for free?

Unless the company hire and pay people to do nothing, it's a bit rich to complain that people who do work for corporations get paid.


If the aim of any tax cut is to increase economic productivity, cut taxes to the masses, not corporations.

It is the masses, i.e. the people, who will spend (invest) all of the proceeds of those tax cuts. And spent it mostly locally.

Such spending as food, a home, a rennovation, a car service, a new(er) car, a few special outings to celebrate an anniversary...

Those are investment that will drive demand. Demand will be met with increasing supply... Supply increase through hiring of people, hiring contractors to expand etc. etc.

Give cash to corporations, particularly multi-nationals where the entire world and all its tax havens are their market and what do you get? You get money being pushed to wherever there are demand.

I mean, why in the heck would any company open a factory to supply goods to people who haven't the cash to buy it?

SirRumpole said:

Read the article I posted.

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Yes, and the 17% isn't on profits as I suspected. Excluding allowable cost deductions and then basing the tax paid on the gross profit without those deductions is just Alberici over again. Then they arrive at average tax rate by averaging this misleading figure across all industries in the survey.

They are increasingly investing in automation and killing jobs.

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Some are. But you solve that by providing incentives to those who provide better employment opportunities. Some companies have no choice but to automate to stay competitive, but even then it can be better keeping them here than letting those business go overseas. Some jobs are better than no jobs and having a portion of profits distributed here is better than none distributed here.

Something that should be considered is the Future Fund investing more in Australian industry (and the Government contributing more to the fund so that they can do that). You can't stop automation and if the Future Fund reaps the benefit of increased automation through increased profits in the industries they invest in, that goes towards mitigating the effect of the tax loss. But that is something worthy of a thread in its own right. It is something we should be looking at getting on top of right now as the trends are showing that is where industry is heading.

So you are advocating a tax rate of 0% ?

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No. We should aim for a company tax rate that is optimal. The company tax rate (and company incentives etc.) should be set at a level that will be optimal for the country as a whole. Equity with personal tax rates doesn't come into play. It is quite possible that for certain countries, a zero company tax rate is optimal. If the country is such that there is no reason for businesses to locate there, providing a zero or near zero tax rate may be the answer. If companies locate there, they will provide employment and infrastructure. Employees' income tax receipts will help the government's tax coffers. You need tax to provide services and it can be better to have good employment producing employee tax combined with low company tax than getting no tax at all if there were no companies and thus zero employment.

Countries like Ireland underwent a massive increase in living standards by providing a low tax environment and investment incentives to attract foreign businesses. It was also one of the reasons for Singapore's early success.

That is not to say that a lower tax rate is always the answer. Countries with natural business advantages (a highly educated population, close access to markets, a well developed infrastructure) can set relatively higher company tax rates as those advantages translate into lower costs for the business which in turn can offset the higher tax rate.

The point is is that the company tax rate is not something that should be viewed as something that has to be in line with personal tax rates. The latter are meaningless if no-one is employed.

Yes it does. It's money that is not spent in our economy.

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If the shareholders are overseas corporations that are extracting profits from their Australian subsidiaries, then increased local profitability is likely to encourage increased investment in those subsidiaries. It's all about the attractiveness of investment choices. It makes Australia more attractive and should mean an increase in investment. Its a numbers game.

Even for non-corporate foreign investors, this is part and parcel of open stock markets. Australians have shares overseas and gain if those companies distribute bigger dividends.

Any decision on corporate tax rates will result in some winners and some losers. As I said you must try to do what is optimal for the country. Just because some non-residents may benefit doesn't mean that a change should be rejected.

Also, the fact that overseas private investors gain more is due to our imputation system. They cannot offset company tax paid so directly benefit from a lower company tax rate.

Companies go where the market is and that means consumers who have money to spend.

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Completely wrong, companies go where they can maximise profits and that is often not where their consumers are. Transportation costs are just one cost factor of the overall product cost and is often overshadowed by the costs saving attributable to the other product cost inputs (company tax rates are also a factor as mentioned). That is the reason companies are locating to Thailand and Vietnam and Eastern Europe.


One part of the referenced article stood out and that was this: And for companies considering investment decisions, the best way to measure corporate tax is through comparing what’s known as effective tax rates…

Our average corporate tax rate, however, is just 17 per cent, and when it comes to effective corporate taxes, companies in Australia pay just 10.4 per cent.

Even if we accept that decisions are made on effective or average rates, it is ignoring that reducing our headline rate will also lower those two figures. And the elephant in the room that both Alberici and that article overlooked is that it is ignoring the impact of the US lowering its corporate tax rate. It may well be that we are currently in a sweet spot when it comes to our corporate tax rate, but will that be the case now that the US has lowered rates (and probably a few other countries following suit).

The fault in the arguments that lowering corporate tax rates will have no effect (or at least no positive effect) is that unless we have arrived at the current rate by miraculous luck, then could the same argument be applied if our corporate rate was 40% instead of 30%. And if so, then we should increase the rate to 40% (and why then not 50%). The true answer is that 30% prior to the US move might be close to optimal, but following the US move we are going to have to re-assess our rate as we need to remain competitive.

bellenuit said:

Something that should be considered is the Future Fund investing more in Australian industry (and the Government contributing more to the fund so that they can do that). You can't stop automation and if the Future Fund reaps the benefit of increased automation through increased profits in the industries they invest in, that goes towards mitigating the effect of the tax loss. But that is something worthy of a thread in its own right. It is something we should be looking at getting on top of right now as the trends are showing that is where industry is heading.

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Basically the first thing you have said that I agree with.

bellenuit said:

The true answer is that 30% prior to the US move might be close to optimal, but following the US move we are going to have to re-assess our rate as we need to remain competitive.

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You are aware that most US States also levy corporate profits tax , ranging from about 4% -12% ?

SirRumpole said:

Basically the first thing you have said that I agree with.

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Well you did say a few days ago that you know little about accounting (or words to that effect), so I am not surprised you disagree with most of what I write.

You are aware that most US States also levy corporate profits tax , ranging from about 4% -12% ?

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It's the relative difference between each countries' overall tax burden (among other things) that is important as to where investment moneys flow. That has now changed due to Trump's tax cut.

bellenuit said:

Well you did say a few days ago that you know little about accounting (or words to that effect), so I am not surprised you disagree with most of what I write.

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A lot of economists disagree with you about the effectiveness of corporate tax cuts, as do you also apparently.

bellenuit Post #2726 said:

but to attack attempts to reduce the company tax rate (which btw I don't agree with, at least not as a priority).

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SirRumpole said:

A lot of economists disagree with you about the effectiveness of corporate tax cuts, as do you also apparently.

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As I said, they should decide what is optimal for Australia under the new circumstances. My gripe is mainly with the ABC and their unbalanced analysis of the issue (using only their go-to economists that hold similar views) and in particular Alberici's misleading use of the wrong figures in her first article. My response to your posts today were based on your suggestions for increasing the corporate tax take, which almost every accountant knows would cause thousands of small businesses and many large business to collapse and others to simply give up, if implemented.

Death and taxes.

If it's anything like the "good economic managers" they self process to be, the real simplistic focus will be on magic bullets.

One thing for sure will be the public service continuing to bloated, to be over paid and us over governed.

Basic purposes and objectives of taxation with current score sheet:

1) pay for the public service (tick)
2) balance of payments (strike)
3) income inequality (strike)
4) dampen perturbations and deep cycles (tick)
5) inflation price stabilisation (tick)
6) employment/productivity headline/underemployment rate (meh)
7) economic development (strike)
8) debt mitigation (strike)

7. economic development means infrastructure which business uses to make their activities more efficient. Business should contribute to this instead of running away from their obligations.

On the tax thing Ken Henry has wayed in saying corporate tax cuts on their own is BS, (more example of lazy Liberals Keating quote) it can be done but needs to be a part of tax reform (includes a resource tax and more )to fix the current mess so that the system works to generate growth and efficiencies.

LNP talking corporate tax cuts generating jobs and wage growth is really quite appalling.

SirRumpole said:

7. economic development means infrastructure which business uses to make their activities more efficient. Business should contribute to this instead of running away from their obligations.

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QIC invest overseas because it can't find enough viable projects to sink its billions into.

What kind of self-destructive state of mind would you need to be in?

Has Barnaby any concept of how hurtful it is to question the paternity of the child?

https://www.smh.com.au/politics/fed...-of-vikki-campion-s-baby-20180303-p4z2ob.html

Logique said:

What kind of self-destructive state of mind would you need to be in?

Has Barnaby any concept of how hurtful it is to question the paternity of the child?

https://www.smh.com.au/politics/fed...-of-vikki-campion-s-baby-20180303-p4z2ob.html

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I think there's plenty of hurtful stuff done before this that the child will read in due course. I haven't got too much empathy for the two adults who betrayed the vows of trust in marriage.

I wonder if will be found out, to be a miss quote, just to drill in another nail.lol

dutchie said:

I assume Turnbull is ready to resign when he hits 30 negative Newspolls (he's at 27 at moment).

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28
2 to go Malcolm.

The latest score card on relaxed penalty rates results are in : no extra jobs, no trickle down.

I guess supply and demand really are intertwined after all and the LNP aren't so clever.

That's more income tax dollars the treasury will miss out on.

This, I think this is the LNP's biggest failure = the preoccupation with slurring Labor instead of explaining and delivering their own agenda:

I have to agree, Turnbull as was expected, has become a backseat driver in a car crash.

Some more ill thought out legislation in my view.

No thought of banning political donations from foreign companies, but the ordinary citizen and charities get caught in a trap.

http://www.abc.net.au/news/2018-03-...nder-coalition-anti-interference-laws/9549052

sptrawler said:

I have to agree, Turnbull as was expected, has become a backseat driver in a car crash.

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So far as future planning and the economy is concerned, the last decent leadership we had came from Keating and before that Hawke with Keating as Treasurer.

I didn't like the man as such, Keating was way to arrogant and not really PM material in my view, but his thinking and determination exceeds that of Howard, Rudd, Gillard, Abbott and Turnbull put together.

It'll take a serious recession, financial incident, war or major natural disaster to focus our leaders I think. Sad but I can't see anything else that will do it.

Recession = a proper one where no twisting of statistics can possibly hide the fact that the country and every state is in recession and where the economic situation is the overwhelmingly dominant theme of public debate.

Financial incident = something on the scale of one of the major banks actually does collapse or the ASX drops 80%.

War = I mean a real one where Australia is credibly threatened by a foreign power or at least one where we're sending tens of thousands of troops off overseas and with conscription either in force or at least seriously debated.

Natural disaster = one on the scale of a capital city CBD hit by a major earthquake or something that leaves a million people homeless.

I most certainly don't wish for any of those things but it'll take something of that magnitude to get any real focus I think. Until that happens we'll just muddle along with weak leadership from both of the major parties.