Sunday 17th of November 2019

sacré bleu …

sacré bleu …

 

There is mass outrage today at the news that Turnbull has pressured the ABC to take down and censor parts of an article by Emma Alberici which analysed how little tax some of Australia’s largest companies pay. This story reeks of a scandalous government intervention in a publicly owned free press. But this isn’t the only story. In fact, it’s not the biggest story. If you look closely at exactly what was removed from the article before it was reposted, you can see what Turnbull was so desperate to censor. And you immediately see where this desperation comes from: a fear that his house of cards is about to come crashing down, blown up by a truth bomb. Because the line that was taken out of this article smashes not just Turnbull’s entire political ideology, his political career and his government’s hold on power; it also smashes the right wing narrative the world over. The stakes are that high.

This is the key line which the public no longer have access to:

There is no compelling evidence that giving the country’s biggest companies a tax cut sees that money passed on to workers in the form of higher wages.

The Guardian reports that ABC director of news, Gaven Morris, gave in to Turnbull’s pressure to change the article because ‘he believed it sounded too much like opinion’. In other words, Turnbull told Morris that Alberici’s statement of fact – that there is no compelling evidence that tax cuts trickle-down to workers – is not a fact, and is instead an opinion.

At this point, we could waste hours of outrage, sending Gaven Morris every ABC news article ever printed, with segments highlighted to show how opinion is inherent in any news article – whether it be opinion about what is important to report, how the report is framed, which ‘facts’ make it in and which are excluded, who is used as a source, what order those sources are used, who doesn’t get a chance to speak, and what prominence the story is given on the ABC news agenda. But, again, this is not the big story.

The big story is Turnbull’s fear of workers finally understanding the truth. Finally understanding how they’ve been lied to for generations. Why else would Turnbull go to such extraordinary lengths to get this so called ‘opinion’ removed, if he didn’t know how damaging this truth is to his neoliberal worldview?

The truth is, Emma Alberici is spot on. The truth is, there is no evidence that tax cuts either increase wages or create jobs. If there was such evidence, Turnbull would be able to point to it, instead of censoring an opposing view. The truth is, the lie that tax cuts increase wages and create jobs has been engineered as conventional wisdom by right wing governments and the compliant media for so long, that workers have fallen hook line and sinker for the lie and punched themselves in the face by turning against unions, the only ones giving them the power to stand up to the liars.

The truth is, Turnbull is terrified the lie is no longer believable. And it’s no longer believable because workers are waking up to the reality that their Point Piper millionaire PM, who uses tax havens to ensure wealth created through the labour of workers doesn’t come back to the community, who uses the power of government to make rules enabling other millionaires to steal wealth from workers, is actually lying to them. These lies benefit Turnbull individually – giving him political power and more money. These lies benefit all the Turnbull’s kind – the one-percenters whose wealth has grown exponentially as compared to the wealth of those whose productivity produces the wealth. Once these lies are exposed, once the game is up, there is no turning back.

I have long said that once workers realise wealth doesn’t trickle down, right wing governments will never be elected again. Turnbull knows this too. So, he can censor all he likes, but editing an ABC news article is akin to pissing in the ocean when the waves of change are building like a truth-tsunami. Bring it on.

sacré bleu

 

slaving under company tax cuts...

There is no compelling evidence that giving the country's biggest companies a tax cut sees that money passed on to workers in the form of higher wages. 

Treasury modelling relies on theories that belie the reality that's playing out around the world.

Since the peak of the commodities boom in 2011-12, profit margins have risen to levels not seen since the early 2000s but wages growth has been slower than at any time since the 1960s.

It's also disingenuous to talk about a 30 per cent rate when so few companies pay anything like that thanks to tax legislation that allows them to avoid paying corporate tax. Exclusive analysis released by ABC today reveals one in five of Australia's top companies has paid zero tax for the past three years

And while the Treasurer and Finance Minister warn that Australia's relatively high headline corporate tax rate means Australia remains uncompetitive and companies will choose to invest in lower taxing countries, the facts don't bear that out. Business investment in Australia has been at historically high levels over much of the past decade despite our comparatively high headline corporate tax rate.

There's more to investment than corporate tax rates

Before Donald Trump cut the US corporate tax rate earlier this year, it was 5 to 9 percentage pointshigher than Australia's. That hasn't deterred Australian companies from seeking opportunities in America instead of Ireland, where the corporate tax rate is less than half ours (12.5 per cent), or Singapore (17 per cent).

In truth, businesses make decisions about where in the world to park their money based on myriad reasons, possibly least of which is the headline corporate tax rate.

Will I be closer to my main customers? Where is the best talent located? What are the labour costs? How onerous are the regulatory hurdles to investment? Is the culture and language easy to navigate? Is the country politically stable and is there respect for the rule of law?

When Incitec Pivot chose to build a $1 billion factory in Louisiana rather than Australia, it did so due to America's strong productivity levels and its speedy approvals processes. Tax was insignificant on the pros and cons list.

Tax rates don't matter if you're not paying tax

High-profile chief executives like Qantas chief Alan Joyce are adamant that investment decisions rest largely on the rate of a country's corporate tax. But it's hard to see how a lower tax rate is an incentive for investment when one in five of our biggest companies haven't paid any corporate tax at all in at least three years.

Qantas is about to clock its 10th year tax free. Qantas won't pay tax again until its profits exceed the tax losses recorded since 2010. Only when all the accumulated losses are offset will a lower tax rate mean a higher cash flow. Besides, regardless of where the corporate tax rate sits, the airline has already indicated an intention to invest $3 billion across 2018 and 2019.

The overwhelming benefit of higher profits flows to shareholders. A zero corporate tax bill at Qantas has certainly seen one significant wage rise at the company — the chief executive's. The benefit to workers has been less pronounced.

According to the Australian Services Union, representing just under half of all Qantas workers, the average pay rises for staff since the airline has returned to profitability have barely kept pace with inflation.

Alan Joyce, on the other hand, has seen his total salary close to double from $12.9 million in 2016 to $24.6 million last year thanks to a huge jump in the value of shares provided as part of a bonus scheme.

Linda White, Assistant National Secretary of the Australian Services Union told the ABC she is far from convinced about the value for workers of a corporate tax cut:

"While Qantas workers have seen pay rises of less than 3 per cent on average over the past decade, we've seen the CEO's salary balloon to almost $100,000 a day — much more than most workers earn in a year. It doesn't trickle down — it trickles up, and the rules need to change to give workers a better deal in this country."

The apples and apples comparison

When drawing comparisons with experiences in other countries, Canada provides a good like for like profile.

Australia and Canada share a similar history and are both resource rich economies. Our financial and political systems are also on par.

Canada cut its corporate tax rate from 42.4 per cent in 2000 to about 26 per cent in 2011, where it has remained. In 2000, Australia cut its corporate tax rate from 34 per cent to its present 30 per cent.

Business investment rose in both countries during the mining boom but it rose more in Australia, despite a corporate tax rate that's four percentage points higher than Canada's.

Economist Saul Eslake says:

"It can be argued that the mining investment boom was bigger in Australia than Canada but now that it's over in both countries, it's worth noting that business investment as a share of GDP was 2.4 per cent higher in Australia in 2016 than in 2000, as against only 1.5 per cent higher in Canada, despite Canada's massive cut in company tax."

It is also worth noting that wages have risen by about 20 per cent more (in nominal terms) in Australia than in Canada since 2000, despite Canadian companies having had a much bigger corporate tax cut.

Do workers really win?

The White House claims the recently legislated cut in the US corporate tax rate will translate to higher wages for the average worker of between $4,000 and $9,000 a year, but there is no credible evidence to support that boast.

In fact, the opposite has been true in practice when you compare business activity in Britain and America. Between 2006 and 2013, while British businesses were paying increasingly less in tax (from 30 per cent to 19 per cent), wages went down not up. UK wages have started to grow over the past four years but at a much slower rate than in the United States where corporate tax rates had remained high.

Some commentators have seized on a study from Germany to support their theories about corporate tax cuts trickling down to workers. Saul Eslake makes the point that the German economy is not all that similar to Australia's:

"Among other things, workers' representatives sit on the 'supervisory boards' of large German companies so there is probably a different debate within German boardrooms as to how the benefits of any cut in the corporate tax rate in Germany might be shared among employees and other stakeholders."

In his speech last week, the Reserve Bank Governor Philip Lowe reiterated the need for Australia to pursue an internationally competitive tax system but he did not specify which, if any parts of the Tax Act, might need amendment. He kept his comments on the topic vague:

"The issue of how the tax system affects the competitiveness of Australia as a destination for investment is one of ongoing political debate."

The headline 30 per cent rate is misleading

Adding to this debate is the issue of average and effective tax rates. Effective tax rates are said to drive investment decisions and take account of what companies actually pay once deductions, depreciation and other tax minimisation strategies are considered.

According to a report published last year by the US Congressional Budget Office, Australia's effective tax rate, at 10.4 per cent, is among the lowest in the world.

The average rate paid by American companies in Australia is just 17 per cent.

The Treasurer's office takes issues with these figures, claiming they are out of date because they are based on data from 2012. The Government prefers a study by Oxford University that puts Australia's effective average tax rate at 26.6per cent and at the higher end of the scale.

Several analysts consulted by the ABC disagree. Managing director of Plato Investment Management, Don Hamson says:

"Whilst the data used in the 2017 CBO report is from 2012, it is the best analysis available and I don't believe the Australian company tax landscape has changed significantly since 2012."

Dr Hamson has worked in banking and finance in Australia, as a university professor in Australia and the United States and has served on the ASX Corporate Governance Council.

Regardless of which effective tax rate you prefer, both the Oxford and the CBO data demonstrate the folly of focusing exclusively on the headline corporate tax rate of 30 per cent.

Do tax cuts boost investment?

Chris Richardson from Deloitte Access Economics told the ABC's Q&A that there was a "consensus" from the experts about the macroeconomic benefits of a corporate tax cut.

He said the cut represented $20 billion a year in growth for the Australian economy with two out of every three dollars showing up as higher wages. Those figures (and experts) came from Treasury who provided modelling on behalf of the Government.

The numbers are based on the widely, but not universally, accepted theory that cutting the company tax rate will raise investment, which should in turn boost productivity and lift wages.


Apart from the obvious point that all else is not equal in practice, not all investment boosts labour productivity.


According to other Treasury-commissioned modelling, if the rate is lowered from 30 per cent to 25 per cent then gross domestic product will double by September 2038 as opposed to December 2038 without the cut. Both models predict that in 20 years' time the unemployment rate will be 5 per cent regardless of whether we spend $65 billion on company tax cuts or not.


In truth, it is hard to find real-world evidence to support these economic theories, so the Government might be wise to heed the words of Plato: "A good decision is based on knowledge and not on numbers."


Dividend imputation often overlooked


The other issue often overlooked is the impact of Australia's dividend imputation system. Australia and New Zealand are the only two countries in the OECD that grant companies the right to attach tax credits to dividends paid out to investors.


In most countries, companies pay tax and then shareholders pay tax on their dividends. Australia taxes just once. Cutting the company tax rate therefore doesn't result in a higher after-tax return on investment to Australian shareholders in Australian businesses so Treasury's theoretical model doesn't hold.


Experts including economist Saul Eslake estimate that Australia's 30 per cent corporate rate with dividend imputation raises about as much tax for the government as a 20 per cent rate without dividend imputation.


The principal beneficiaries of a cut in Australia's corporate tax rate are overwhelmingly foreign companies and foreign shareholders in Australian companies. There is no guarantee at all that cutting the tax they pay in Australia will lead them to increase the level of business investment in Australia.

Can Australia afford to spend $65 billion?

The last time a government splashed around cash in the form of tax cuts the treasurer was Peter Costello, who had no debt and no deficit to contend with, thanks to oversized profits and attendant corporate tax flowing from the mining boom.

In 2018's Australia, it's hard to imagine how a government could ever again manage to give away the equivalent of Mr Costello's $170 billion worth of tax cuts while still protecting the surplus.

It's been 10 years since the Australian budget was last in surplus. With a debt of more than $600 billion, many are questioning the merits of prioritising a $65 billion giveaway to big business in the form of a tax cut.

Back in November 2016, the president of the Business Council of Australia, Grant King was warning the Government not to put the country's AAA credit rating at risk by ignoring budget repair. He told ABC's AM program:

"We are seeing indications that the deficit is deteriorating so it is going to be a challenge."

Yet today the BCA and its high-profile members like Mr Joyce are insisting on a company tax cut that would blow a massive hole in the Government's revenues and push the budget and national debt further into the red.

 

 

Read the original article here, before it disappear again:

http://webcache.googleusercontent.com/search?q=cache:3elBukmgznYJ:www.ab...

 

 

 

The battle over company tax cuts is hotting up and the response by the government and the business sector to analysis by ABC’s Emma Alberici – on the impact of such tax cuts and evidence that one in five of the largest corporations in Australia paid no tax over the past three years – shows how worried they are that they are losing the fight.

On the same day Alberici’s article was published, the prime minister referred to it during question time as “one of the most confused and poorly researched articles I’ve seen on this topic on the ABC’s website”. Meanwhile, the Qantas chief executive, Alan Joyce, argued in the Australian that there were good reasons why the airline hadn’t paid tax in the past and that whether it did or not was irrelevant when it came to the issue of arguing for a lower tax rate.

read more:

https://www.theguardian.com/business/grogonomics/2018/feb/18/turnbulls-a...

 

See also: 

http://www.yourdemocracy.net.au/drupal/node/33609

http://www.yourdemocracy.net.au/drupal/node/23824

fact check should send shivers...

The claim

Australia's new Prime Minister and Treasurer have both been keen to trumpet good news about the economy in the wake of recent political turmoil.

In early September, the Australian Bureau of Statistics released National Accounts figures, showing the economy expanded by a seasonally adjusted 0.9 per cent in the June quarter and by 3.4 per cent over the year.

Treasurer Josh Frydenberg said it was the strongest annual growth since the September quarter of 2012, when the economy was riding high on the mining boom.

Labor also leapt on the figures, claiming the economy was growing in spite of not because of the Government, with low and middle income earners battling stagnant wages, insecure work and cost of living pressures.

...

Blah blah blah...

....

"There is more to the story than Dr Chalmers's claim suggests."

blah blah blah...

...

Dr Oliver said it was not a fair comparison to compare total profits to average wages per employee.

"It is fair to say that profit growth has been stronger than wages growth, but it is certainly not fair to compare the total profit pool for non-financial enterprises to the average wages growth because you are comparing apples with oranges."

Fabrizio Carmignani, the Dean of the Business School at Griffith University, said a more useful approach would be to measure wage and profit growth over a period of several years, or report average growth over a period of at least three to five years.

 

Read more:

http://www.abc.net.au/news/2018-09-24/fact-check-are-profits-growing-fiv...

 

This "fact check" should send alarm bells in your pay-packet. Actually while trying to "defend the right of companies to make profits", it is an attack on your hip pocket, especially if your are on "penalty rates" (no more). But because it is so slanted towards the right, unlike the article by Emma Alberici (see at top) which to say the least proved that "trickle economics" is bullshit and supported by many economists, this "fact check" isn't raising a ripple in the sea of turd from the commentariat. 

Would the article by Emma Alberici be the first wedge-politics that slowly led to Guthrie's sacking — without warning — to satisfy the rightwing government?