Swan – Corporate Tax Cuts Won't Create Jobs

Wayne Swan has been savage in his criticism of corporate tax cuts. He points to a 2015 IMF report that dismisses the efficacy of trickle down economics. He observes  the growing recognition globally over the past few years of the problem of multinational tax avoidance. 

Swan also points to tax transparency reports, legislated by Labor in 2013 and released earlier this year, which show that thanks to a combination of deductions, deferred losses, minimisation and evasion, public companies in Australia pay an average of 24% on their taxable income and private companies pay an average of just 19%.

In short, companies in Australia are already enjoying an effective corporate tax rate of under 25%. Swan rightfully asks: “If jobs and growth aren’t materialising at Australia’s effective company tax rates of 24% and 19%, how will a cut in the headline rate make a difference? And will those companies who currently pay no tax, at any rate, suddenly be inspired to hire?”

Swan, despite his past enthusiasm for a 1-2 percentage point cut in the corporate tax rate, he opposes Turnbull’s proposed 5 percentage point cut. 

Explains Swan: “Along the way in a long political life, you learn a few things, and this has got to count as the biggest thing I learnt: corporate tax cuts are yesterday’s solution to today’s problems – their economics don’t work, and arguably their politics never did.”