Why foreigners will be the big winners from company tax cuts

Monday 30 July 2018

Ever since the Turnbull Government announced its company tax cut package in the 2016 Federal Budget, MB has been opposed on the following grounds:

Foreign owners/shareholders would receive the lion’s share of benefits because they are not subject to dividend imputation;
The cost to the Federal Budget would be enormous (around $4 billion a year), which would need to be made up via higher personal taxes or cuts to government services; and
Treasury’s claimed benefits to ‘jobs and growth’ are miniscule and uncertain, even with spurious modelling assumptions adopted.

Yesterday, The Australia Institute (TAI) released analysis confirming point number one: that foreign shareholders will be the major beneficiaries from any further company tax cuts:

Summary:

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About the author

Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.