If these reforms were being flagged for the first time now, I suspect they'd be bitterly opposed by Labor. As it stands, Labor will go into the next election promising to increase personal taxes.

In its fight against company tax cuts, Labor peddles the myth that company tax cuts are a windfall for big businesses and their shareholders, this week even launching ads suggesting Malcolm Turnbull supports company tax cuts because he'll personally benefit as an investor.

Easily debunked

It's a myth easily debunked. Think about it. What exactly can a company do with the extra money retained from paying less tax? It can only spend profits in two ways: paying dividends to shareholders or spending more on its operations.

Dividends are subject to tax, including withholding tax for foreign shareholders. Suggesting Turnbull or any other investor will get a windfall is a blatant lie.

Labor leaders like Hawke, Keating and Beazley understood the working class aspiration to do better. Fairfax Media

In fact, many shareholders will pay more tax to make up the greater difference between the company tax rate and their own tax rate. That's how dividend imputation works, as Labor well knows.

Alternatively, the company can spend more on things like technology, plant and equipment, funding research and development, expanding its sales force or opening new shopfronts or branches. In other words, more money paid in wages to workers and buying goods and services from suppliers.


All of that spending is also taxed. Workers pay income tax. GST is collected on goods and services. Suppliers pay company tax or income tax themselves.

Lower company tax simply allows a business to use more of its money on something productive before the money is collected by government.

Despite Albanese's pro-business murmurs, Labor no longer sees it this way. Alex Ellinghausen

Pauline Hanson has wavered in her support for tax cuts for companies with more than $50 million turnover, most recently saying she won't support them unless multinationals are "reined in". She also expressed concerns about jobs going offshore to overseas call centres.

But more jobs will go offshore if Australia maintains one of the highest company rates in the world, giving multinationals yet another reason to locate operations offshore.

Except that Australia won't only be competing against countries with cheap wages like India and the Philippines but also with countries like the US and UK where company tax is nine to 11 percentage points lower.

Immediate impact

Donald Trump is another politician who prioritises keeping jobs onshore. Trump beats a big populist drum against cheap undocumented workers and free trade deals.


But for all his tweeting about immigration and NAFTA, his decision to lower company tax to 21 per cent is having a far more immediate impact.

The US economy is thriving, unemployment is almost non-existent and economic confidence is up, including a recent sharp increase in the economic confidence of lower-income earners.

Opponents of company tax cuts often say "trickle-down economics" doesn't work. The phrase was invented in the 1980s by opponents of US President Reagan's tax policies.

If you really want to see an example of "trickling down" look no further than what happens to tax revenue.

Governments collect money from those who earn it and the money then trickles down through layer upon layer of bureaucracy, programs and administration until eventually a portion finds its way into the real economy to do something productive.

Even with all the good intentions in the world, governments don't grow the economy or create new jobs. Supporting company tax cuts means backing business to generate economic activity better than government ever can.

Despite Albanese's pro-business murmurs, Labor no longer sees it this way. But job seekers and small businesses out there do understand the opportunities that come when big businesses expand. Including those in the electorate of Longman.

Nyunggai Warren Mundine AO is author of Warren Mundine – In Black and White and host of Mundine Means Business on Sky News Australia @nyunggai