Make Australia great again

Since his inauguration, President Trump has surprised some commentators by breaking with the longstanding tradition of doing in office what he promised on the campaign trail.   While local pundits have discussed what changes to immigration mean for Australians, few have focussed on Trump’s fiscal plans — yet these could do greater damage to jobs and growth in Australia.

Trump’s pledge to cut corporate taxes from 35% to 15%, and to offer a tax holiday for corporations to repatriate profits held overseas, will make the US a much more attractive investment destination and reduce the incentive for income shifting.

This will allow companies to retain more of their profits, which they can then invest in their operations to grow their businesses.  Trump has also promised personal tax cuts, which will allow workers to retain more of their wages — effectively giving them a pay rise, and putting money in their pockets to consume, save or invest.  Trump’s tax policies will reduce government revenue but he has also pledged to drastically reduce discretionary government spending so as not to increase the deficit.

While all this will help make America great again, it will make Australia less attractive as an investment destination, and some companies based here will shift their focus to the US.  This week, Prime Minister Malcolm Turnbull talked again about the importance of company tax cuts to make Australia internationally competitive.

Opposition leader Bill Shorten also knows how important that is.  In 2010, he said Labor’s plan for cutting the company tax rate would “keep all sectors of the our economic competitive in their own global markets” and “we should never forget that we are just one option for international investors — we have to make sure we offer the most compelling value.”

In 2011, he said that cutting corporate tax “helps Australia’s private sector grow and it creates jobs right up and down the income ladder.”  Unfortunately, now that he is in Opposition, Shorten is opposed to the company tax cuts.  His priority he says, is “jobs, jobs, jobs.”  If he means it, he should support the government’s tax cuts, let business create jobs — and make Australia great again.