What Economists Really Think About Cutting Corporate Tax

Question 1

The decision of Australian Federal Government in lowering the Australian corporate tax rate to 25% is believed to be a drastic measure conducted by the government in regards to their citizens. the decline in corporate tax rate is estimated to boost current market condition of the business and generate economic boost in the country. However, the decision proposed by the Australian federal government is opposed by maximum of Austrian citizens, as they portray arguments regarding the current business revenues generated by the companies in Australia. In addition, the decline in corporate tax rate, as estimated by the Australian federal government will boost the actual revenue of the organisation in Australia. Donal Trump the President of America mainly indicated to lower the corporate rate for boosting the degrading business in the country. Seeing the decision made by the USA Australian Federal Government also considered and proposed to decline the corporate tax rate for boosting business in the country (Fee.org, 2017).

There are different benefits that could be generated from implementing tax cut, which could boost the economic condition and help in generating high level of returns. The overall benefit of the tax cut might help in boosting job growth percentage, wage growth percentage, high contribution to income growth per person, increment in productivity, and rises GDP value. There are many benefits, which could be enjoyed by Australian citizens and government if tax cut is given, as it might help in increasing foreign direct investment in the country and improve the level of economic boost. Freebairn (2016) stated that tax cut could allow business to retain more income in business, which could help in boosting businesses and improve returns on capital market. However, Irvine (2018) argued that boost provided to multination companies might deprive the common citizens certain right due to low accumulation tax amount by the government.

There is difference in opinion among the citizens of Australia, who oppose the tax cut on the ground of reduced support provided by the government to needy citizens. In addition, there are mainly problems that could arise from tax cut, as the government cannot increase their spending on special activities. The overall capital expenditure, spending on homeless, retirement benefits, and other privileges that are provided to citizens of Australia could be reduced with the implementation of tax cut. Major of the economist mainly indicate that currently the overall progress in economy is adequate low problematic condition is arising, as companies are making high end profits against and again. The problems faced by the current economic condition is adequate, which could be improved over time without the implementation of tax cut, as companies are generating billions in profit. In this context, Fee.org (2017) stated that with declining tax rate the income distribution within the country reduces, as governments are not provided with adequate capital to conduct different level of expenditure.

According to Irvine (2018), declining tax rate reduces the overall revenue of government, which increases problems regarding capital expenditure. In addition, Australian companies are mainly obtaining high level of income from their operations, which allows them to obtain high growth and return. Therefore, any decline in the tax rate would increase revenue over the companies, which decline the actual capital expenditure of Australia. Moreover, the journalist and researchers also indicated that maximum of the big companies in Australia are multinational, where the actual revenue generated in the country is transferred overseas, which does not help the actual citizens of the county. Hence, the opposing party in Austria stated that decline in tax rate could only benefit the rich and make them become richer without helping maximum of the citizens in Australia.

Answer vii:

From the overall evaluation investment in portfolio and BHP stock could be an effective investment opportunity for the investor. Moreover, the beta lower than 1 could be an effective investment opportunity for the investor, as it might help in generating high level of returns from investment. However, the best option for investment is the portfolio, which could help in raising the level of returns from investment with low beta. The portfolio return is higher than NAB, while the risk is lower than BHP, which could help the investor in maximising the returns from investment by generating high return from investment.

Reference

Au.finance.yahoo.com. (2018). In.finance.yahoo.com. Retrieved 3 April 2018, from https://au.finance.yahoo.com/quote/BHP.AX/history?period1=1451586600&period2=1485801000&interval=1mo&filter=history&frequency=1mo

Fee.org. (2017). Fee.org. Retrieved 3 April 2018, from https://fee.org/articles/the-australian-corporate-tax-experiment/

Freebairn, J. (2016). Who Benefits from a Lower Corporate Income Tax Rate? – Austaxpolicy: The Tax and Transfer Policy Blog. Austaxpolicy: The Tax and Transfer Policy Blog. Retrieved 3 April 2018, from https://www.austaxpolicy.com/benefits-lower-corporate-income-tax-rate/

Irvine, J. (2018). What economists really think about cutting corporate tax. The Sydney Morning Herald. Retrieved 3 April 2018, from https://www.smh.com.au/money/insurance/what-economists-really-think-about-cutting-corporate-tax-20180223-h0wj53.html

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