In this report KPMG's Brendan Rynne, Partner, Chief Economist, and Grant Wardell-Johnson, Partner, Economics and Tax Centre, discuss the legislated tax reforms in the United States of America (U.S.), through the Conference Committee H.R.1 Bill, and explore why they are a global-game changer.
Global macroeconomic modelling by KPMG Economics suggests Australian GDP will be permanently reduced by 0.3 percent (or $5.1 billion in today’s dollars) in the medium term, equivalent to about 25,500 jobs, as a direct consequence of the U.S. tax reforms.
These are likely to be conservative estimates. Depending on how aggressively global firms, in particular U.S. firms, behave given the incentives contained in the legislated tax reforms, there is a real risk that our modelling has under-estimated the amount of capital that would otherwise have come to Australia will now get allocated to economic opportunities elsewhere.
The remainder of this report briefly discusses: