How much corporate tax cutting before we get the jobs and wages?

You don’t have to be a socialist to pick the bull-dust and self-interest  behind corporate tax cuts. The SMH and even US “bond czar Bill Gross” can see the danger in Trump’s proposed 15% corporate tax rate. But Malcolm Turnbull seizes the opening to peddle the line that cutting corporate tax rates is good for everyone, because lower taxes lead to more investment and “more investment makes workers more productive, it means greater demand for workers, it means more jobs and over time higher productivity [which] as we all know, everybody knows, is the foundation, the bedrock of higher wages.” He argued that if Australia’s corporate tax rate is higher than other countries, then capital will not invest in Australia.

I can only laugh and then feel angry to hear Turnbull argue that after 25 years of continuous growth in the Australian economy that “Australians will have to accept policies that create short-term ‘winners and losers’ [um, who could they be?] in the interests of strengthening the economy for all.” But “to overcome disquiet we [he’s talking to the Business Council of Australia] must ensure that the benefits of open markets deliver, and are seen to deliver for all Australians, not just a few.”

If growth is meant to create jobs and higher wages, and we’ve had 25 years of growth, then when are the benefits meant to arrive?  In 2016 we have:

  • 1.1 million part-time workers wanting more hours, i.e. 8.7% of workers
  • wages growth at a record low of less than 1.9% a year
  • prevalent insecure employment – only 48% of people in work or looking for work have full-time jobs with paid leave entitlements
  • inequality increasing – the growing Gini coefficient is 0.446 compared to 0.417 in the mid 1990s (0 is perfect equality – 1 is total inequality)
  • unemployed people driven into deeper poverty (graph from ACTU submission)

There’s no value (except to the Business Council of Australia) in allowing Turnbull to take Australia into the global race to the bottom for corporate tax rates. That must lead to further cuts in benefits, in public services and public sector jobs. So, after 25 years of economic growth we have such poor results for the majority.  And it is inevitable that growth will end, leading to even worse employment and income conditions, and less tax revenue.  If we need to wait for so much more growth before we get the jobs and higher wages, we are waiting for Godot.

So let’s raise, not lower, the corporate tax rate. And let’s not be blackmailed – a workers’ government would retaliate by taking fleeing capital’s property into public ownership for continued productive use. Alternatively, how about producing and sharing the goods and services we need without private capital investment at all?

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