What is remarkable is how potent this loose coalition has been in the face of institutional power. The federal Treasury, the business community and the economics profession overwhelmingly support lower business taxes, which they argue will increase investment by lowering the cost of capital.

The federal Treasury estimates the cuts will add $20 billion a year to the economy once fully implemented. Even if you don't think that's much, the bigger problem is this: the rest of the world is moving to lower tax rates. To remain attractive to foreign investment, the lifeblood of the economy, experts say Australia needs to at least be in the ballpark of what might be considered competitive.

"Individuals benefit from lower corporate tax rates with higher market wages and employment," says Melbourne University economics professor and taxation expert John Freebairn.

Convincing the public

If the Senate is a gauge of public opinion, the majority of Australians aren't convinced. Only three of the 12 senators who hold the balance of power support the Coalition plan to reduce corporate income tax from 30 per cent to 25 for all companies by 2026-27, which the House of Representatives passed last week.Oquist, who learnt Canberra politics as a chief of staff to Greens leader Bob Brown, says the Australia Institute is fiercely non-partisan. But the think tank is an aggressive political player with a left-wing agenda. It thinks carefully about how to influence the Senate, and briefs senators in person on hot political issues.

The tax cut battle hasn't dented the think tank's financial health. Karleen Minney

Competing organisations like the more economically conventional Grattan Institute and free-market Centre for Independent Studies and Institute of Public Affairs are based in Sydney and Melbourne, making it logistically harder for them to lobby politicians.

The Australia Institute name conveys the impression of a centrist, non-partisan organisation. Appearing and sounding like a middle-class accountant, Oquist communicates clearly and succinctly on television. Its chief economist Richard Denniss is a regular columnist in The Australian Financial Review and has written or co-written four books, including Affluenza, When Too Much is Never Enough.


Taxes not high enough

Oquist says the campaign against business tax cuts began at the 2016 federal budget, when Treasurer Scott Morrison forecast four years of budget deficits. The government didn't have a spending problem, the Australia Institute decided, it had a taxing problem. Taxes weren't high enough.

Proposed by Morrison two years ago, the business tax cut was the perfect target for an organisation with ambitions to become a central player in the national political debate. It also wanted to challenge what it saw was the predominance of free-market economic arguments from Australia's main think tanks, a position that could make the Australia Institute useful to politicians on the left looking for arguments to buttress their policy positions.

Under Denniss, the group set about challenging the conventional economic wisdom on business taxes, which had been built up over decades of careful theoretical and empirical research, with arguments it thought would appeal to sceptical voters and cross-bench senators. They even filmed a video ad attacking the tax.

"We wanted to look at the economic claims and bust some myths around that," Oquist says. "An old economics versus a new economics in an era of inequality and low wages debate."

Think tank-cum-lobby group

Revising economic history, the think tank-cum-lobby group argued that the period of high corporate taxes in the 1960s and 1970s was a golden period for the Australian economy. Foreign investment, wages and employment were all stronger then and countries in general with lower tax rates have lower living standards, according to a 2016 paper that formed the intellectual foundation of the group's tax-cut critique.


Although highly dubious, the message's timing was perfect. A worldwide backlash was under way against transfer pricing, in which multinational companies, including Apple and drug makers, licensed their intellectual property to themselves to generate profits in tax havens like Switzerland.

David Rowe

In Australia, the practice was being squeezed by the Gillard, Rudd and Abbott governments. Economists pointed out that who taxes are levied on, and who ultimately bears the cost of taxes, are often different.

It didn't matter. The perception had been formed that big business was successfully avoiding tax.

Fewer nurses?

Adding to the rhetorical power of its arguments, the Australia Institute cited estimates of the tax reduction over 10 years. Formal federal budget forecasts, which are notoriously inaccurate, are limited to four years. The decade-long figure, which the group said was $65 billion, was framed as a massive cut to social infrastructure funding. It didn't mention that Australia generates more than $1.7 trillion in economic activity a year, and the cumulative benefit of the tax cuts over a decade would nominally be $200 billion, far outstripping its alleged fiscal cost.

It also singled out the alleged benefit to the big four banks of $7.4 billion, also over 10 years. Knowing banks are among the most resented companies, Labor leader Bill Shorten used the figure to frame the plan as a $7.4 billion "gift" to the banks.

Australia Institute economist Richard Denniss participated in a campaign to challenge mainstream economic theory on corporate taxation. Timothy Swanston


The message cut through. Prominent fund manager Peter Morgan claimed a tax cut for banks would take $2 billion from nurses, teachers and police officers, even though these public servants are employed by states.

Ironically, an effort to reveal more about how much tax business pays helped the misinformation campaign. In December 2015 the tax office began publishing the amount of tax paid by 1500 large companies, including foreign and private businesses.

Income confusion

It was unfortunate timing for a well-intentioned transparency initiative. Business hadn't fully recovered from the global recession, and about 63 per cent of all companies on the share market had posted a loss in the previous financial year.

As a result, the number not paying corporate income tax that year was unusually low. Also, the tax office referred to revenue as "total income", which some reporters assumed meant profit.

Many journalists, and readers, couldn't understand why so many companies weren't paying taxes despite generating hundreds of millions in "total income". Instead of illustrating how difficult it was for many businesses to make money, the information was taken as evidence of widespread tax avoidance. Even Emma Alberici, the ABC's chief economics correspondent, believed it.

In a 2000-word article posted on the ABC website on Wednesday morning titled "There's no case for a corporate tax cut when one in five of Australia's top companies don't pay it", the former Herald Sun business reporter launched a blistering attack on the tax-cut plan. Many of her assertions mirrored, almost to the word, the arguments put by the Australia Institute for more than a year.

"The principal beneficiaries of a cut in Australia's corporate tax rate are overwhelmingly foreign companies and foreign shareholders in Australian companies," she wrote. "There is no guarantee at all that cutting the tax they pay in Australia will lead them to increase the level of business investment in Australia."


Expert opinion

Policymakers agree foreign investment is good. It creates employment and economic activity and Australia has relied upon it since the first fleet arrived. Foreign companies will only invest if they expect to make profits. Tax is a component of the equation, although only one and not necessarily the most important.

Treasurer Scott Morrison has been pushing the tax cut since 2016 in a political environment hostile to business. DREW ANTHONY SMITH

Economists blame weak wages growth on declining prices for Australian products, especially iron ore, gas and coal. Historical comparisons with other countries, including Alberici's example of Canada, often focus on two factors – the tax rate and employment or GDP – and don't control for the multitude of other influences at play.

The Alberici piece was so useful for the opposition that Turnbull told Parliament it was "one of the most confused and poorly researched articles I've seen on this topic". The Prime Minister was then attacked for sexism on social media. Even economic commentators like the West Australian newspaper's Shane Wright sided with Alberici.

The inability of the government to deflect the arguments of one hostile TV presenter illustrated how much the political environment had changed from 2010, when a plan to make mining companies pay more tax during a resources boom brought down a Labor prime minister.

"The campaign against the corporate tax cuts is falling on fertile ground which really didn't exist 10 years ago," says Mark Triffitt, a former publicist at the Business Council of Australia who now teaches public policy at Melbourne University. "The position for is falling on fallow ground."

(An ABC spokeswoman declined to disclose how many people read Alberici's article, although a later tweet from her stating "More profits = higher wages? Doesn't look like it" was shared more than 1000 times.)


Bipartisan agreement

Ironically, cutting company taxes has bipartisan support. Labor Treasury spokesman Chris Bowen on Tuesday reiterated his intention to lower the corporate tax rate. The primary difference with the government is timing.

"When the budget has returned to surplus then you can look at further tax reform for both personal and company tax," Bowen told ABC radio.

The Australia Institute was silent on Bowen's plan. No commentators condemned him.

David Rowe

The tax cut battle hasn't dented the think tank's financial health. With annual revenue of about $3.5 million from anonymous donors, it has run large surpluses the past two years.

Oquist says the group will use the money to expand, and is doing more research into industrial relations, climate policy and Tasmania. He acknowledges it played an important role fighting the tax cut, and says it will continue fighting while there is a possibility of tax relief for large companies.

"The debate has not been won by the government either economically or politically," he says. "There is always a chance of the government bringing it back in the future. I don't want to claim full credit for winning the debate."

with Joanna Mather

ABC chief economics correspondent Emma Alberici launched a 2000-word attack on the tax cut. ABC