Treasury estimates reducing the company tax rate to 25% will increase GDP permanently by 1% – or $17 billion a year in today’s terms.
One per cent might not sound like much but it's twice as big as the lasting economic benefit of the landmark tariff cuts of the 1980s and 90s.
Increasing the size of the economic pie by $17 billion every year will also provide more money for hospitals, schools and essential services.
Treasury modelling confirms company tax is the most damaging of all federal taxes because of its damaging impact on job-creating investment.
And that’s the international consensus too with the International Monetary Fund and the Organisation for Economic Co-operation and Development both pointing out that company taxes harm economic growth.
Independent Economics director Chris Murphy estimates that for every $1 of cost to the budget, a company tax cut delivers a gross benefit to Australian consumers of $2.39.
It is hard to think of any other use of taxpayer dollars that would produce such a large economic payoff.
And a larger and stronger economy will help shore up the long-term sustainability of the volatile corporate revenue base which has become increasingly sensitive to the profitability of relatively few companies – just 12 companies account for around one-third of all company tax.
The only way to get Australian wages growing strongly again is through productivity enhancing investments.
A competitive company tax rate will primarily benefit workers and wages.
While one-third of benefits from a company tax cut go to shareholders (many of which are Australian superannuation accounts), Australian workers receive around two-thirds of the total gains because higher investment means more jobs and higher wages.
This isn’t just theory. Labour productivity has been the main driver of higher real wages in Australia over time.
And it’s not so-called trickle-down economics but a straight line from increased business investment to higher productivity to higher incomes for workers.