New Australian PM Kevin Rudd had his first budget yesterday. It stands to reason that the Wall Street Journal would be complaining regardless of what was in it, since Rudd is in that job instead of their beloved John Howard. In fact, the content of their complaint is an interesting example of how they twist their doctrinaire economic positions to match the circumstances. Here is part of their context-setting --
On revenues, Mr. Rudd and his treasurer, Wayne Swan, are lucky fellows. Since 2003, corporate tax revenues have doubled as Australia's resource sector profited from the global commodities boom.
Could this be the same Wall Street Journal which constantly argues that the only way to increase corporate tax revenues is to lower corporate tax rates -- with Ireland as their favourite example? Sure enough, it turns out that they need the point about booming resource revenues to rescue their advocacy of lower corporate tax rates from redundancy --
The government also did little to make its corporate sector more competitive – something that may come back to bite when the commodity boom deflates, and along with it tax revenues. The budget doesn't touch Australia's 30% corporate tax rate – one of the highest in the developed world.
It's tough always believing that lower taxes bring in more revenue for a case like Australia, so they have to make the resource exception and claim that lower tax rates would still be better. But if Australian companies are raking in the A$ simply by virtue of sitting over a big pile of natural resources, that's just as easily a case for leaving taxes exactly as they are -- or even increasing them. Those resources aren't going anywhere. Needless to say, the Journal doesn't much like the resource windfall logic, in another context --
Cue that old Labor standby: raising taxes. Tuesday's biggest revenue items included a A$640 million hike on alcoholic drinks and A$564 million windfall tax on a form of crude oil.
But as their own facts show, you get more revenue with more taxation of resource-based companies. The WSJ may be looking past January 20, 2009, and realizing what a parallel agenda might look like in the USA.