So, it looks like the Trump effect has gone international. After signing the most extensive tax reform in 30 years into law today, Australia’s treasurer warned his country that the Land Down Under could be left in the dust. The economy risks a one percent reduction in GDP if they don’t respond to our tax package, especially the corporate tax rate. Treasurer Scott Morrison said if parliament doesn’t act, Australian jobs, wages, and investments could be put in the crosshairs. Morrison is prepping a $65 billion cut of his own as well (via The Guardian):
He has seized on Trump’s tax cuts, overhauling his justification for his proposed $65bn tax cuts to say they are now necessary not because they will add 1% Australia’s GDP growth, but because they will offset a damaging 1% hit to GDP that will supposedly flow from the huge tax cuts in the US without Australia responding.
He said Treasury analysis, which was handed to the government this week but not released publicly, has pointed out that Australia may experience a significant recessionary impact and a potential downgrade in revenues if it does not lower its corporate tax rate from 30% to 25% in coming years, in response to Trump’s cuts.
The Treasury analysis, which was given to Morrison’s office, was also given to the Australian, which wrote a story warning that Australia could be “marooned” with one of the highest company tax rates in the world.
Morrison is quoted in the story as saying: “The Trump tax cuts are coming. If we fail to respond, they will take Australian jobs, investment and wages with them.
“Bill Shorten’s refusal to support the government to reduce taxes and support Australian businesses to be competitive will send jobs, higher wages and growth offshore.”
Morrison organised a press conference on Thursday so he could call on Labor to support his tax cuts for the good of the country.
At home, immediate upon news that passage of this tax cut was going to go through, scores of companies signaled that bonuses will be handed out to workers, wages would go up, employee investments would be increased, and philanthropic donations would get a boost as well. Economic growth for the fourth quarter is robust at four percent. Unemployment is at its lowest point in nearly 20 years. Consumer confidence reached its highest levels in 17 years.