http://www.abc.net.au/news/2017-10-16/verrender-corporate-tax-cuts-who-wins/9052600

The announcement sent our own federal pollies into a lather and this week the question again will be hammered out in Parliament as to whether our company tax rate should be cut from the current 30 per cent to 25 per cent.

If you believe the hype, without the proposed cut, Australia will become an economic backwater, capital will flood to rival economies with lower tax rates and any multinational looking to invest will simply look elsewhere.

If only it were that simple.

The problem is that comparing top line corporate tax rates is an exercise not so much in simplicity, but duplicity.

There are so many variations unique to each jurisdiction that comparing the statutory rate alone is all but meaningless.

If you believe the spin from some quarters, Australia charges like a wounded bull when it comes to corporate tax.

The statistics, however, tell a different story.

The US Government’s Congressional Budget Office has compiled this handy comparative study of global corporate tax rates.

What it reveals is that Australia is either the global Goldilocks of corporate tax (not too hot, not too cold) or extraordinarily generous to big business, depending on how you measure it.

While the study is current, the numbers have changed in recent years. Both Japan and Germany have lowered their top-line taxes to around the same level as ours.

But it remains a useful study if only because it highlights the differences in the way tax rates can be measured.

It may get all the headlines, and it will be the only measure batted out in Parliament this week, but the top-line tax rate is just one way of measuring corporate tax rates.

Because of various tax concessions or imposts in different countries, the average tax rate is often a better measure.

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.

The discrepancy relates to a range of things, including how quickly firms can write down or depreciate the value of their investments or where they have sourced their finance.

America’s headline rate may be 35 per cent. But, as you can see from the chart, the statutory tax rate is 39.1 per cent. That’s because American companies pay state taxes as well.

Then there are health costs, which aren’t included in that top-line figure.

It may be the richest nation on Earth, but America’s health system stinks.

So, companies wanting to hire good staff offer health insurance and medical benefits. It’s an attractive lure for employees who otherwise would have to sell the family home to pay for a brief stint in hospital.

In Australia, taxpayers and not corporations pick up the tab for the health system.

Australia’s hidden benefits

We have a unique — OK, New Zealand has it too — system of corporate tax that drastically lowers the amount of tax Australian investors pay.

It’s known as dividend imputation and it effectively lowers the company tax rate for local investors to almost zero.

more in link

Those numbers look very strange.

How does Argentina have an average rate higher than its top rate?
How does the UK have an “effective” rate higher than the average rate?
How does Italy have a high negative effective rate?

Also how come no-one ever points out that reducing company tax doesn’t actually do Australian tax payers any good, because it also reduces their tax credits by the same amount. The only people it helps are those that don’t pay Australian tax.

The Rev Dodgson said:

Also how come no-one ever points out that reducing company tax doesn’t actually do Australian tax payers any good, because it also reduces their tax credits by the same amount. The only people it helps are those that don’t pay Australian tax.

This is pointed out in this very article.

dv said:

The Rev Dodgson said:

Also how come no-one ever points out that reducing company tax doesn’t actually do Australian tax payers any good, because it also reduces their tax credits by the same amount. The only people it helps are those that don’t pay Australian tax.

This is pointed out in this very article.

How come no-one ever reads articles that point the above out?

poikilotherm said:

dv said:

The Rev Dodgson said:

Also how come no-one ever points out that reducing company tax doesn’t actually do Australian tax payers any good, because it also reduces their tax credits by the same amount. The only people it helps are those that don’t pay Australian tax.

This is pointed out in this very article.

How come no-one ever reads articles that point the above out?

They are a bit dry.

dv said:

The Rev Dodgson said:

Also how come no-one ever points out that reducing company tax doesn’t actually do Australian tax payers any good, because it also reduces their tax credits by the same amount. The only people it helps are those that don’t pay Australian tax.

This is pointed out in this very article.

You mean I should have read it before commenting?

Maybe “no-one ever” was a slight exaggeration then.

dv said:

poikilotherm said:

dv said:

This is pointed out in this very article.

How come no-one ever reads articles that point the above out?

They are a bit dry.

Rev seems like someone that likes the dry.

poikilotherm said:

dv said:

The Rev Dodgson said:

Also how come no-one ever points out that reducing company tax doesn’t actually do Australian tax payers any good, because it also reduces their tax credits by the same amount. The only people it helps are those that don’t pay Australian tax.

This is pointed out in this very article.

How come no-one ever reads articles that point the above out?

it’s hard to read the articles when your riding the bus

poikilotherm said:

dv said:

The Rev Dodgson said:

Also how come no-one ever points out that reducing company tax doesn’t actually do Australian tax payers any good, because it also reduces their tax credits by the same amount. The only people it helps are those that don’t pay Australian tax.

This is pointed out in this very article.

How come no-one ever reads articles that point the above out?

I did, and clearly so did dv.

dv said:

poikilotherm said:

dv said:

This is pointed out in this very article.

How come no-one ever reads articles that point the above out?

They are a bit dry.

Who are you calling dry?

… or did you mean the article?

diddly-squat said:

poikilotherm said:

dv said:

This is pointed out in this very article.

How come no-one ever reads articles that point the above out?

it’s hard to read the articles when your riding the bus

snigger

For me, the only question is why does the government support lowered corporate tax rates. They must have access to decent economists.

The thing that is threatening to make Australia unattractive for investors is crummy infrastructure. Giving a nice tax break isn’t going to fix that.

diddly-squat said:

poikilotherm said:

dv said:

This is pointed out in this very article.

How come no-one ever reads articles that point the above out?

it’s hard to read the articles when your riding the bus

How fun is riding the bus.

The weals on the bus go round and round

poikilotherm said:

diddly-squat said:

poikilotherm said:

How come no-one ever reads articles that point the above out?

it’s hard to read the articles when your riding the bus

How fun is riding the bus.

how about the outrage train then?

dv said:

For me, the only question is why does the government support lowered corporate tax rates. They must have access to decent economists.

The thing that is threatening to make Australia unattractive for investors is crummy infrastructure. Giving a nice tax break isn’t going to fix that.

I don’t think our infrastructure is that crummy.

The main thing that would put me off investing in Aus (if I didn’t live here) would be the danger of a major decline in the Aus$.

The Rev Dodgson said:

dv said:

For me, the only question is why does the government support lowered corporate tax rates. They must have access to decent economists.

The thing that is threatening to make Australia unattractive for investors is crummy infrastructure. Giving a nice tax break isn’t going to fix that.

I don’t think our infrastructure is that crummy.

The main thing that would put me off investing in Aus (if I didn’t live here) would be the danger of a major decline in the Aus$.

The problem isn’t that. The problem is that Australian manufacturing is just about dead. Will tax breaks help to revitilise manufacturing? It would have if there was anything left to recussitate. Pity there isn’t.

mollwollfumble said:

The Rev Dodgson said:

dv said:

For me, the only question is why does the government support lowered corporate tax rates. They must have access to decent economists.

The thing that is threatening to make Australia unattractive for investors is crummy infrastructure. Giving a nice tax break isn’t going to fix that.

I don’t think our infrastructure is that crummy.

The main thing that would put me off investing in Aus (if I didn’t live here) would be the danger of a major decline in the Aus$.

The problem isn’t that. The problem is that Australian manufacturing is just about dead. Will tax breaks help to revitilise manufacturing? It would have if there was anything left to recussitate. Pity there isn’t.

There are other industries.

Heck, New Zealand is a world leader in computer generated images for film and television and now they’ve got a space industry.