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malcolm's tax cuts will mostly make businesses lazy... making money will be easy as piss...

laziness

Prime Minister Malcolm Turnbull and the Treasurer Scott Morrison are still trying to sell their plan to cut the company tax rate to 25% by 2026-27. The current rate is 30% and has been since 2001.

The tax cut was introduced in the 2016 federal budget. The government indicated small to medium businesses turning over less than A$10 million would pay a company tax of 27.5% initially. The company turnover threshold for the tax cut would then increase over time from A$10 to $25 million in 2017-18 to A$50 million in 2018-19 and finally A$100 million in 2019-20.

But before any of this happens, the government needs to convince the senate crossbenchers to pass the legislation. It seems the government hasn’t won over tax experts and economists with this policy, here’s some articles that explain why.

Don’t expect an instant wage increase

In a national press club address Malcolm Turnbull justified the tax cut by saying, “company tax is overwhelmingly a tax on workers and their salaries.” It follows that cutting it would increase salaries right?

However there’s a whole lot of decisions businesses need to make before they even consider raising wages. It’s not just as simple as the government makes out, as professor John Freebairn from the University of Melbourne notes:

Individuals benefit from lower corporate tax rates with higher market wages. But the higher wage rates will take some years to materialise, and the magnitude of increase attributed to the lower corporate tax rate, versus other factors, is open to debate.

Businesses would need to consider the savings of international investors, what resources the business might need, what the return for investors would be on these. All of this before it would consider a wage increase for its workers.

The enlarged stock of capital, technology and expertise per worker becomes a key driver of increased worker productivity. In time, more productive workers are able to negotiate higher wages. Via this chain of decision changes, employees benefit from the lower corporate tax rate.

Any modelling on how much a tax cut could be worth to our economy is up for debate

Modelling is sensitive to whatever assumptions the government makes and these assumptions can be oversimplified. ANU principal research fellow Ben Phillips points out that tax reform like this inevitably has winners and losers and is influenced by powerful lobby groups.

In thinking about tax reform it is important to keep in mind that the gains from modest tax reform are not likely to be a revolution in Australia. The models themselves only estimate relatively small gains from tax reform.

Here’s a little something to bear in mind when hearing any figures thrown around on how much a company tax cut could be worth:

read more:

http://theconversation.com/what-economists-and-tax-experts-think-of-the-...

 

meanwhile at the human headlice dept...

Key Senate crossbencher Derryn Hinch believes the Federal Government is poised to dump part of its $48 billion company tax cut bill, to prioritise delivering immediate savings to small and medium-sized businesses.

A centrepiece of its economic plan, the Coalition is proposing to cut the company tax rate to 25 per cent for all firms in the next 10 years, arguing the move will keep Australia internationally competitive and attract more foreign investment.

The Government has previously pointed out that giving small businesses a tax cut was the priority and large companies would be given a tax break within a decade.

But the full plan does not appear to have support in the Senate, as Labor is only supportive of a tax cut for small businesses with a turnover of less than $2 million a year and some crossbenchers argue the cuts should only apply to firms earning up to $10 million.

Senator Hinch told Sky News he believed the most expensive cuts, those for larger companies earning above the $10 million threshold, were "off the table for now...

Read more:

http://www.abc.net.au/news/2017-03-23/hinch-to-back-company-tax-cuts-if-...

stone, scissors...

As Turnbull continues to flog his company tax cut dead horse, should he just take Trump's example and move on? Mungo MacCallum reports.

MALCOLM TURNBULL should follow the sensible example of Donald Trump.

No, this is not the message from Cory Bernardi, George Christensen and Pauline Hanson, nor the lunar right of Fox News and the Murdoch Press. It is the sober assessment of pragmatists who are finally ready to move on from the 2014 Budget and the more recent futile policies which have never and will never pass a stubborn Senate.

Last week The Donald – the consummate deal maker – quickly and decisively cut his losses. For most of the last year, he had been committed to the destruction of Barack Obama’s public health scheme — Obamacare, as it became known. This would be his first act in office; the obnoxious, unaffordable socialist menace would be replaced by something else — Trumpcare, perhaps.

It all sounded so simple and straightforward. But alas, Congress – the parliament – intervened; not all his fellow Republicans were convinced and the numbers were not there. So instead of endlessly procrastinating, keeping the bill on the back burner in the hope that something might eventually turn out, Trump dumped the zombie measure and moved on.

GOP breaks the central promise they've made for 7 years - that they would repeal Obamacare - and Trump acts like it's just a flesh wound. pic.twitter.com/l18uATr7Gr

— Jonathan Riley (@JonRiley7) March 28, 2017

Okay, it may have been one of the few rational things Trump has done since moving into the White House, but it was considerably more decisive than the endless procrastination of our own leader, who seems determined to hang on to the great National Economic Plan of 2016 — the plan for massive across-the-board cuts to company tax.

There was a moment last week when both Turnbull and his beleaguered Treasurer, Scott Morrison, appeared to acknowledge reality: that the Senate would not cop it and it would be smarter to pass the cuts for small businesses and confine the rest to the limbo from which they have never really emerged. And there was some encouragement when a massive rejig of the child care reforms – which had been stuck in the system for more than two years – suddenly saw the government ready to compromise to the extent that Turnbull was ready and willing to proclaim a rare victory. Suddenly all the stonewalling about the need for huge cuts to family welfare to pay for the child care melted away.

 

read more:

https://independentaustralia.net/life/life-display/mungo-maccallum-turnb...

a floppy xenophon...

The Government has reached a deal with the Nick Xenophon Team to pass its proposed company tax cuts.

The amended legislation will lower the company tax rate from 30 to 25 per cent for businesses with an annual turnover of up to $50 million.

The ABC understands NXT leader Senator Nick Xenophon has agreed to back the plan in exchange for additional measures on energy.

read more:

http://www.abc.net.au/news/2017-03-31/company-tax-federal-government-nic...

 

Scramble to see some businesses cut themselves in little bits, to lower their general tax threshold...

... and let me do a dodgy deal for yoooooooo!...

South Australian senator Nick Xenophon has defended a deal he secured with the Government in exchange for his vote on cutting tax rates for small- and medium-sized businesses.

Key points:
  • Deal will lower company tax rate to 25pc for businesses that make less than $50m a year
  • Labor says deal is "dodgy", Greens say money would be better spent on health, education or social services
  • Xenophon says the deal, which includes one-off payments to pensioners for electricity costs, will improve energy market's security

The Coalition passed the first tranche of its 10-year corporate tax plan on Friday night after a marathon Senate sitting, with the tax rate for businesses with a turnover up to $50 million a year cut to 25 per cent.

The Government had wanted that tax rate applied to all businesses over the next decade, but it was forced to negotiate with the crossbench and rely on a last-minute deal with Senator Xenophon.

Federal Labor has criticised the deal, which involves a swathe of energy initiatives and one-off payments to pensioners, as a "dodgy deal" that will hurt the budget bottom line.

"Nick Xenophon has sold out the national best interest in return for a dodgy deal with the Liberal Party," shadow treasurer Chris Bowen said.

Read more:

http://www.abc.net.au/news/2017-04-01/xenophon-defends-deal-with-governm...

 

I am sure that Turnbullshittor sold the dodgy deal of the century to Xenophon by making him to visualise himself as a memorable double quote mark in the pantheon of Aussie-thong politics. Poor Xenophon. Not worth the voting paper... He did a dodgy deal with the dodgy used car salesman....