With the USA cutting its tax rate from 35% to 21% and most other OECD countries doing the same, (the UK is at 19%), the question is what effect will this have on Australia. In short, with the global free flow of capital investors are looking for the best return. Australia and every other country in the world is competing for investment and the jobs, wages and taxes that flow from these investments, and foreign investment has been a major factor in Growth in Aus for decades.

As Labor has very vocally advertised, lowering the corporate tax rate would cost the exchequer about $50bn over the next 10 years with the expected levels of economic activity. However, already Australia is attracting about half the portion of foreign investment that it was a decade ago, (partially due to the end of the mining boom) and the signs are that it will drop further.

Adani: $0 tax paid on $724m revenue. Chevron: $0 tax paid on $2.1bn revenue. ExxonMobil Australia: $0 tax paid on $6.7bn revenue. Origin Energy: $0 tax paid on $11.9bn revenue. IBM: $0 tax paid on $3.6bn of revenue.

Australian tax office says 36% of big firms and multinationals paid no tax.

Could not agree more Shadow, let "cut" the corporate tax rate to 21%, particularly for the big boys, and others, who are presently paying no tax at all.

Paul,

Income taxes are paid on profit not revenue. So mentioning the revenues of these companies and not their profits displays either an appalling propensity to distort the facts to suit the meme or an appalling misunderstanding of how the tax system works... or both.

eg

"ExxonMobil Australia: $0 tax paid on $6.7bn revenue". From that $6.7b they paid things like purchases of product, wages, other taxes ($2.4b), depreciation on capital investments etc etc. End result is they made no profit. And (did I mention) tax is paid on profit.

Can anyone show that they did something illegal? Nup.... but why let mere facts get in the way, eh?

__________________________________________________________________

Trump's new tax regime will put enormous pressure on Australia to match or get close to these rates. Of course, given the nature of our politics, we'll try to avoid doing the inevitable and the Labs and left-Libs will be dragged kicking and screaming to the understanding that you can't deny the real world forever. In the meantime, we'll continue the downward economic spiral.

Firstly, you make sure those making the laws, your political cronies, do so, so you do "nothing illegal", how smug we are. The political cronies create enough loop holes in the laws, so the likes of ExxonMobile could drive one of their super tankers through them.
If you still find you are being over taxed at one cent in the dollar, just employ the 'Double Irish tax plan" like the multi national Apple does;

A set of leaked documents from offshore law firm Appleby has revealed that Apple stashed $250 billion in Jersey, a tiny island off the coast of France known for being a tax haven. The tech titan apparently secretly moved its pile of overseas profits to the island.

Then there is the philosophically blinded like mhaze who fall for it all, hook, line and sinker.

Whatever corporate tax cuts do, they DO NOT 'create jobs' as the wafflers claim. The corporations grab the tax cuts and add them to profits.

However poor old Exxon Aus shares crashed to $76 this year and struggled back to $82 pending total collapse and bankruptcy.
"Oil and gas leviathan Exxon Mobil has managed to pay zero tax in Australia for two years, despite making $18 billion in sales.

Exxon is BHP’s partner in the Bass Strait offshore oil and gas fields and a big beneficiary of rising gas prices. While East Coast commercial and industrial gas customers have been getting slugged astronomical prices of $12-$15 a gigajoule for long-term supply contracts, Exxon shareholders have been pocketing record dividends."

The ATO asked please may I have some more and got a champagne raspberry from the street squatters.

The best known of these is Donald Trump’s Secretary of State Rex Tillerson who struck business deals with Russian President Vladimir Putin. Until last year, Tillerson was chief executive of Exxon until last year and holds $2.5 million Exxon shares which last traded at $US82.07 a share.

A little off topic, but that doesn't seem to bother posters who are constantly doing it:- but the 145 or so countries who are bad-mouthing the U.S in the corrupt UN for deciding to treat Jerusalem as the capital of the Jews are in for a bit of a shock.

These countries, who are mendicants, feeding of the largesse and generosity of the U.S, have been advised by the U.S ambassador to the UN that America has noted the criticism, and it will be taken into account next time these countries put their begging bowls out for the US to fill.

The tax commissioners get close to million dollar packages and are the laziest most incompetent performers in a stellar Australian Public Service field.
Perhaps reducing wages here to peanuts would make a difference? Or, much more sensibly, no Company tax. Other taxes are put in and it would not be difficult to work some out and tell the multi nationals if you avoid them "Watch out"!
Then we get proper people to ensure that as you find a loop hole they plug it retrospectively and recharge tax avoided.
A good start would be a simple turnover tax surely?

Mhaze,

The mental contortions or simply staggering stupidity that left whingers need in order to scream blue murder when the coalition won't stump up another cool $1bn p.a. of taxpayers' money to keep a wildly unprofitable car industry, yet howl like banshees when some companies don't make sufficient profit to pay one of the world's highest corporate taxes.

That these companies pay vast amounts of royalties, GST, payroll and other taxes, and employ 100 000s of people who pay tax, is well known by these left whingers. However, to avoid their entire argument collapsing in an illogical heap they choose to pretend that they morons and lie through their teeth.

Putin and Trump buy power from corporations and UN voters. China buys votes , dirty commie rats but the UN is Trump's property and Beijing Inc may be sacked for disrespect.

".. wildly unprofitable car industry, yet howl like banshees when some companies don't make sufficient profit.."

So car companies leave Oz but the zero tax companies stay and do business. They must be trading while insolvent and bankrupt . That's a worry.

Paul1405,

So you've decided to ignore the revenue v. profit issue? Is that because you don't understand the difference or because admitting they're different would make your clueless whine appear to be a ...ahem, clueless whine. Companies that don't make a profit don't pay income tax. Throwing tantrums and wishing it was otherwise won't change that.

Exxonmobile Aust is part of the "Voluntary Tax transparency code" initiative with the tax office which ensures that there is no transfer pricing to avoid tax. So they have done nothing illegal, are completely open with the tax office about their processes but are, apparently, avoiding tax because of Apple (or something). Dill.

Then we have nick-etc who also demonstrates that he knows next to nothing about how this all works by dredging up some data on the US company's dividends to show why the Australian company should pay tax. Sit down while you're reading this nick-etc but Australian companies only pay tax on their Australian operation, not on the earnings of their overseas parents and siblings. But I guess that's another of those concepts which is too hard and can be overlooked in the overall tantrum.

tbbn,

"Whatever corporate tax cuts do, they DO NOT 'create jobs' as the wafflers claim"

The best economic analysis shows that corporate tax cuts result in the following changes after 3 years of settling in:

1. Increased dividends to owners - 20%
2. Reduce prices to customers - 30%
3. Increased wages and staffing- 50%

Your assertion is mere assertion - ie free of fact or understanding. In the US, tax cuts announced 2 days ago are already seeing companies announce wage increases and bonuses and plans to expand operations with the consequent increase in jobs. Indeed over there, job growth has been booming on the mere expectation of tax cuts.

Shadow, just have to agree with you, these poor multinationals are on the bread line, doing it tough, barely surviving. Trump cuts tax for the big end of town to 21%,including for Trump Incorporated, Tories in Pommyland have it at 19%, Turnballs should cut it to 17%. Then Trump could hit back with 15%, the Tories 13% etc etc, a race to zero tax for the big boys, but most are paying ho tax anyway. What did I say about having your political cronies looking after you. Then there are the useful idiots who go on about the big end of town are creating jobs for us, the poor undeserving.

Shadow, they might have you brainwashed, but not us thinkers.

Definition of thinker, Paul style;

Regurgitator of ideological clap trap, pontificated from on high, by the "leaders".

Paul,

There is a treatment for thinkers that suffer from mental bulimia like you. From Ritalin for mild cases to prozac for committed Greens.

When conditions are adverse, companies don't just fire everyone and close, they cut costs and run lean until the market turns as the commodities market is now doing.

Preliminary models show that a failure to act on interest rates could cut the economy by about 1% or $18bn p.a. with a loss of tax revenue equal to any loss in tax revenue from cutting the company tax rate.

If just about every country is cutting corporate tax, either they are all idiots, or the left whingers are.

Shadow,
Though Australia's headline company tax rate is now high by international standards, the effective rate is much lower, so we needn't be too worried about what the Americans are doing. We do have a lot of exemptions, and I think it's fair to conclude that in the petroleum sector at least, those are both too numerous and too generous.

Lower company tax rates are one of the many factors that boost business investment. Considering the cost to the government of cutting them is very high, I say it should be a low priority objective. Meanwhile it would be better to invest in infrastructure and education. I'd also like to see a policy of keeping interest rates permanently low; this would encourage business to make long term investments, but it would require fiscal policy to be used to control inflation.
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mhaze,
An economic analysis is only as good as the assumptions it makes. If we ignore the macroeconomic effects and the government's response to them, the 20–30–50 split is credible. Yet if the government competently manages fiscal and monetary policy, the problem of underinvestment would be avoided, so almost 100% of the benefit would go to the shareholders.

mhaze,

Unless you can produce "The best economic analysis" to prove me wrong, I'll stick to my assertion, thanks.

mhazing
Gee whiz thanks I sat down , spat the dummy and had a tantrum when reading this Financial Review comic book:
"ExxonMobil Australia chairman Richard Owen said last weekend that 2017 looked to follow suit in the stretched east coast gas market.
Exxon said in 2016 it made a $34 million profit before tax from continuing operations."
Follow us: @FinancialReview on Twitter | financialreview on Facebook and all good Trump tweets , twits and loop holes.

tbbn,

"Unless you can produce "The best economic analysis".... "

Well you could look at:

'Arulampalam(2010), “The Direct Incidence of Corporate Income Tax on Wages” which looked at 9 EU countries over a 7 year period and found that for every $100 reduction in corporate tax, wages increased by $59.

or

Gravelle (2010), “Corporate Tax Incidence: Review of General Equilibrium Estimates and Analysis” a meta-study of 4 other analysis which found that some 60% of company tax falls on capital and 40% on labour over the long term (5yrs).

or

Felix (2007), “The Direct Incidence of Corporate Income Tax on
Wages” which looked at 30 countries over a 30 year period and found that wages went up by 7% when corporate taxes were reduced by 10%.

Its comforting to rely on mere assertion but rather silly to do so in the face of data and a current real world example.

Aidan,

The above studies are based on empirical historic data. In a free market system, even one as dirty as our own, there is no way that 100% of the benefit will go to shareholders except, perhaps, in the extreme short-term.

Nick-etc,

See a little nudging and we get closer to the truth. We've gone from $6.7b in revenue and large dividends to $34m in book profit and no dividends. Now if only we could understand the difference between book profit and taxable income we'd see why no tax was paid in that year. But baby steps, eh?

Baby steps by work experience kids in ATO has Exxon in crosshairs for 'shifting profits' - The Australian
www.theaustralian.com.au/..
Dec 8, 2017 - The Australian Taxation Office is auditing oil and gas major Exxon over eight years of its tax returns as revenue officers try to lock the resources sector into paying healthier returns.

Exxon is a registered charity offering petrol services to battler motorists. Canteen ladies cook the books on Tuesday evenings using type writers donated by church groups in Wall Street.

Aidan,

Firstly I thought your philosophy was the government could pay for everything by printing money?

Secondly, the deductions that the Aus government has is pretty much the same as the deductions that every other government has.

Finally, Ireland and Singapore with company tax rates of 12.5% are doing fabulously well.

Shadow,
>Firstly I thought your philosophy was the government could pay for everything by printing money?
You did indeed, but it was never ever my philosophy. It was as if your brain switched off every time I tried to explain it!

The ability to print money means the government never has to worry about running out of money. But taxation is still needed to give that money value.

>Secondly, the deductions that the Aus government has is pretty much the same as the deductions that every other government has.
Source?

>Finally, Ireland and Singapore with company tax rates of 12.5% are doing fabulously well.
They are doing well, but there's a lot more to it than the tax rate.

Book profits of multi-nationals , Bitcoin and amphetamine suppliers face headwinds . Profits can disappear at the flick of a pc , directors' bonuses are anyone's guess and tax is death. People should share more.

Aidan,

Firstly you admit that the currency has value based on revenue by taxation. It follows then that if more is issued than is received in taxation either debt is accumulated or the currency devalues, which is reflected in reality.

Secondly, If you want to challenge me then the onus is on you to show that I am wrong.

In accountancy (which I have done as part of an economics degree) the basis is what is known as GAAP or generally accepted accounting practise which is the foundation of all all accounting world wide, and is used to determine profit and loss for taxation purposes. While different countries allow different write offs, these tweaks account for only a small fraction.

Finally, the argument from the left whingers is that the loss of income from lowering the tax rate is not compensated by an increase in tax from investment and wage growth. However, the fact that none of the countries with very low tax rate are suffering from massive deficits or unemployment blows a hole in that argument.

Shadow and co, don't you realize if the Coalition lackeys cut tax for the big end of town, there will be less crumbs falling of the rich mans table for you poor sods to feed on.
I would hate to see you go hungry, holding onto your empty begging bowl.

Paul,

With your thinking still mired in 1950 I see that this is a difficult concept.

With more investment, there will be more demand for engineers to build plants, and more jobs for people to run them. This compares favourably to the highly taxed industry and jobs slowly sinking into the socialist swamp as envisioned by labor and the greens.

Not so long back genius USA caused the GFC. Following that country's republican financial strategies shouldn't be high on anyone's agenda. It doesn't go round the world picking fights for nothing. Making weapons and it including surveillence is just about the only thing it has left to sell. We're just stupid enough to keep buying it. The only smart thing I've heard from Trump is revitalising USA's manufacturing sector. If a country does not make the finished product it will never get ahead. We should be holding on to our minerals and using them for our own makings. When our industry is gone China's prices will go up.

DD,

So the relaxation of the banking regulations by Clinton "to make loans accessible to all" that fuelled the GFC was a republican financial strategy?