Wednesday, June 20, 2018

Australian tax cuts stalled

The Australian Council of Trade Unions analysed data from 2003 to 2016 in 34 OECD countries and found weak or no association between company tax cuts and wage growth. In fact, seven countries experienced statistically significant slower wage growth despite lower taxes. Countries that experienced the largest decreases in annual wage growth despite corporate tax cuts included Norway, Canada and Finland.

“It is clear that the government’s claims on wage growth and corporate tax cuts does not match the international evidence,” the ACTU paper concluded.

The Australia Institute also released further an analysis of stage three of the personal income tax cuts plan showing high-income earners in the top 20% of taxpayers would get 95% of the benefit, while three-quarters of taxpayers got no benefit at all.

“Flattening income tax reduces the tax take from high-income earners, which ultimately means either less government services or high taxes on middle and low income earners.” Matt Grudnoff, senior economist at the Australia Institute, explained.

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