This paper reviews the implications of the latest Trump tax plan for Australia; in particular that part of the plan that involves changes to the company tax arrangements. The present plan would bring the tax rate down to 20 per cent at the national level. With state taxes, that means that the total American rate would be around 25 per cent.
Treasurer Scott Morrison and head of the Business Council, Jennifer Westacott have said this is a challenge for Australia and if we do not meet Trump’s plan jobs will go from Australia. However, calls for Australia to cut its rate on the basis of Trump proposed cuts have failed to acknowledge:
- analysis from top US economists arguing that the Trump plan will not work to increase either jobs or economic growth,
- details of reforms in the Trump bill, beyond the headline figure, that could adversely harm Australia
- IMF warnings about the dangers of a company tax ‘race to the bottom’.