The Australia Institute and others have made the point that company tax cuts can only benefit foreign shareholders.

Australia’s system of dividend imputation means that Australian shareholders will not benefit from reductions in the company tax rate.

Australian shareholders would notice any increase in company after-tax profit being matched by a loss in franking credits attached to their dividends. However, foreign owners cannot utilise franking credits so for them there is an unambiguous benefit from an Australian company tax cut.

So why is the Business Council of Australia (BCA) running such a high powered campaign in favour of cutting company taxes?

We examined the BCA membership.

BCA represents foreign companies and investors in the company tax debate. Some of the well-known members of the Business Council of Australia include those shown in the table below — and then there are other less well-known foreign companies.

Business Council of Australia or Business Council of Australian Subsidiaries?

Lots of the Australian companies also have a lot of foreign ownership such as the big four banks whose shares can be bought and sold in America along with a number of other household names from AMP to Westfield. All up 57 per cent of the equity in Australian listed companies is owned by foreign investors.

According to Treasury modelling a cut in company tax actually makes Australian investors slightly worse off.

We can see their argument intuitively:

We have argued and presented the evidence that investment is unlikely to respond so the more likely outcome is just higher incomes for foreign shareholders and nothing for Australian investors or other Australians.