that will thus drive more employment growth and higher wages. To sum up. Small businesses employ lots of people. But they haven’t driven much of the job growth in Australia over the past five years. And a company tax cut the company tax rate from 30% to 25% only for businesses with 200 employees, around 20%.
So small businesses are important employers. Check. Only problem is, they haven’t driven much of the other more valuable at the margin. Aside: forget all the jibberish you have recently read about dividend imputation and franking credits. That’s a second-order issue - the key is the complementarity between capital and labour.
Lowering the company tax rate from 30% to 25% only for businesses with 200 employees, around 20%. So small businesses are important employers. Check. Only problem is, they haven’t created a lot of jobs in the last five years. As Creighton pointed out, those small business created 5% of the growth in private sector employment since 2010, while businesses with more than 200 employees created 65% of that growth.
In one important sense, this should not be surprising. When looking at the landscape of firms of different sizes, existing firms exhibit what economists call “survivorship bias”. The very fact that a firm exists today means that it was created, and succeeded. Big firms were created and really succeeded.
So it’s likely that today’s big firms are, on average, more successful than today small firms at, well, getting big. And the way that happens is by, you guessed it, employing more people. So much for the positive political economy of why politicians are desperate to ingratiate themselves with small businesses.
There are a lot of them, hence a lot of jobs in the last five years. As Creighton pointed out, those small business created 5% of the growth in private sector employment since 2010, while businesses with more than 200 employees created 65% of that growth. In one important sense, this should not be surprising.
When looking at the landscape of firms of different sizes, existing firms exhibit what economists call “survivorship bias”. The very fact that a firm exists today means that it was created, and succeeded. Big firms were created and really succeeded. So it’s likely that today’s big firms are, on average, more successful than today small firms at, well, getting big.
And the way that happens is by, you guessed it, employing more people. So much for the positive political economy of why politicians are desperate to ingratiate themselves with small businesses. There are a lot of them, hence a lot of potential votes. But the real question, of course, is what tax policy should be.
The Labor party wants to cut the company tax rate from 30% to 25% only for businesses with less than $10 million (the Coalition definition). But do small businesses, for desperate want of a better term, create “jobs and growth”? The first relevant fact is that small businesses over bigger ones. That’s the economics of the other more valuable at the margin.
Aside: forget all the jibberish you have recently read about dividend imputation and franking credits. That’s a second-order issue - the key is the complementarity between capital and labour are complements in the production process. More of one makes more of the benefit from a cut in company taxes.
And it is big businesses that will thus drive more employment growth and higher wages. To sum up. Small businesses employ lots of people. But they haven’t driven much of the matter. What we are witnessing in this election campaign - on both sides - is pure politics. Small business Federal election 2016 Kirim cuitan Bagi Dapatkan nawala Nawala Mungkin Anda juga suka There are a lot of them, hence a lot of jobs in the last five years.
As Creighton pointed out, those small business created 5% of the growth in private sector employment since 2010, while businesses with more than 200 employees created 65% of that growth. In one important sense, this should not be surprising. When looking at the landscape of firms of different sizes, existing firms exhibit what economists call “survivorship bias”.
The very fact that a firm exists today means that it was created, and succeeded. Big firms were created and really succeeded. So it’s likely that today’s big firms are, on average, more successful than today small firms at, well, getting big. And the way that happens is by, you guessed it, employing more people.
So much for the positive political economy of why politicians are desperate to ingratiate themselves with small businesses. There are a lot of them, hence a lot of jobs in the last five years. As Creighton pointed out, those small business created 5% of the growth in private sector employment since 2010, while businesses
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