NAB Commentary: Trump, Tax and Australia – August 2016
Big cuts in corporate and individual taxation are key to Mr Trump’s election platform, aiming to boost the business sector and deliver increased spending power across the income spectrum.
Republican candidate proposes big changes in tax system
Big cuts in corporate and individual taxation are key to Mr Trump’s election platform, aiming to boost the business sector and deliver increased spending power across the income spectrum. As the US is such a large global economy and key partner for our trade and foreign investment, changes in US taxes have important potential consequences for Australian based business.
Far reaching tax changes proposed
Donald Trump, the Republican candidate in the November US Presidential election, has set out the latest version of his economic plan in a speech to the Detroit Economic Club. As he repeated trade policies already announced and we have already reported, we focus on his proposals for tax reform.
This tax reform agenda matters for Australia as:
- If implemented as described, it would have a big impact on the US budget and economy and the US is the second largest economy in the world. It is Australia’s third largest export market (worth $22 billion in shipments of goods and services) and a big competitor across a range of commodity industries:
- Cutting corporate taxes is a centre-piece of the proposed tax reforms and we have our own business tax reform agenda. Even if the corporate tax reform agenda outlined in May’s budget were announced, Mr Trump’s proposed cuts to the US tax would take statutory US company tax rates from being well above to well below Australia’s, and
- Changing the tax arrangements for the taxation of the international earnings of US multi-nationals is also part of Mr Trump’s agenda. Australia has a big interest here – the US is easily the biggest direct investor in Australia. US figures show that US multinationals with a controlling interest (50%+) in their Australian subsidiaries employed 310000 staff here in 2013 and there were another 50000 working in US companies with between 10% and 50% ownership.
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