Some commentators claim corporate tax cuts will lead to higher wages, more jobs and more foreign investment. Research by The Australia Institute highlights historical data showing :
- Wages and mixed income has declined as a share of GDP as corporate taxes have been lowered.
- Average unemployment rates have risen as company tax rates have lowered.
- Growth in foreign investment as a share of GDP was strongest when Australia’s company taxes were highest.
Changes to macroeconomic indicators are driven by many factors, not just corporate tax rates. Across many indicators, however, there is no support for the idea that cutting the company tax rate will lead to tangible benefits in the wider economy.