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2010-05-24

Swan's faulty line of argument

http://www.businessspectator.com.au/bs.nsf/Article/UPDATE-1-Australian-treasurer-rebuts-mining-tax-my-5QAQ6?OpenDocument&src=hp7

The problem with Swan's argument is that if what he says about the effective tax paid by miners in Australia is true, then why does not the government remove those concessions and get the tax to the level it is supposed to be?

Why not do the first best as opposed to the second best to start another line of argument of the super profit tax when normal profit is not taxed properly?

That is the fault line in Swan's argument.

I suspect that Swan may have used the wrong data, i.e. use BHP's profits from all countries as the base to calculate the effective tax rate in Australia. Alternatively, he may have used only parts of mining companies’ tax in Australia, as he and the government did when they misrepresented the picture in their false claims earlier.

That would certainly be wrong, wouldn't it?

But that does not and will not help to advance his case.

To the contrary, his mistakes or distortions will come back to haunt him in the future.

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