One Rule for Me and Another for Everyone…

Leaving crises to Prime Minister Boris Johnson’s management skills will never disappoint…

Give us a break

By 2353NM  A week or so ago, we discussed the union bashing disguised…

The Hollow Man

We have a Prime Minister who has no idea how to lead.In…

A letter to Michael Sukkar from a Deakin…

Dear MichaelI saw you on the 9 news last Saturday evening telling…

How deep does corruption in high places go?

There might be a 'fine, fine line between pleasure and pain' but…

Budget Cockups in the Time of Coronavirus: Reporting…

Hell has, in its raging fires, ringside seats for those who like…

Not so Covid Safe

By John Haly  The CovidSafe app has triggered innumerable privacy and security concerns amidst the…

We are being conned if we believe the…

In my recent article I concluded with:Confronted with the fact that no…

«
»
Facebook

Joe Hockey fights to claw back a little for the overburdened wealthy

Joe Hockey (image from afr.com)

Joe Hockey (image from afr.com)

If Joe Hockey’s first budget wasn’t enough to convince people that the government was going into bat for the nation’s wealthy, then Joe himself has surely confirmed this with his recent suggestions that the rich have already done their share of heavy lifting. But as Warwick Smith reports, Mr Hockey certainly isn’t playing with a straight bat.

Recent reports show that the government knew beforehand that the federal budget would hit lowest income earners hardest. Treasury modelling predicted that low income earners would lose $844 and high income earners lose $517 per year. Treasurer Joe Hockey’s response demonstrates that he thinks the rich are doing too much of the heavy lifting and are unfairly burdened by the tax and transfer system.

Hockey has criticised the Fairfax reporting and claimed that the figures from the Treasury modelling don’t give a complete picture. Here is a breakdown of some of his statements in support of that claim:

“It doesn’t take into account the fact that higher income households pay half their income in tax.”

For a start, the factual basis of Hockey’s statement is false. If you’re on $180,000 per year (often cited as the threshold to be considered high income) and you make no deduction claims you pay less than one third of your income in tax. Now, if your taxable income is $20 million per year, you do in fact pay close to half your income in tax. The reality though is that people who earn that much use complicated financial and accounting arrangements which result in them paying much less than the marginal tax rate of 47%. The genuinely wealthy don’t pay much income tax, that’s largely reserved for wage earners.

So, factually what Joe says here is just plain wrong. Make no mistake, he knows it’s not true. He may not be the best Treasurer we’ve ever had but I’m fairly confident he knows the difference between marginal tax rates and average tax rates. Now, onto the relevance of the remark for the point he’s trying to make. The assertion is that the budget measures hit low income earners hardest. The response is that high income earners pay lots of tax and low income earners pay little. The Treasurer’s response has no bearing whatsoever on the assertion he is trying to refute.

I think we should make logic classes mandatory for politicians. See, what Hockey says can be true (though the specifics are certainly false) and the reported Treasury modelling figures and Fairfax’s comments about them can be true. This means that what Hockey has said is not a refutation of the figures, it’s just an unrelated assertion.

OK, Hockey’s refutation of the Fairfax story continues:

“Every dollar that lower income households receive comes from higher income households”.

I don’t want to spend too long repeating myself but, once again, what Hockey says here is both factually incorrect and irrelevant to the question at hand. Welfare payments and funding for concessions come from consolidated revenue, of which a bit less than half comes from individual income tax. So, only every second dollar comes from higher income households. Again, Hockey knows that but he’s not one to let facts get in the way of a good argument – or, in this case, a bad argument. Does the fact that high income earners support low income earners refute the validity of the claim that low income earners suffer more under the budget measures? No, of course not. Again, it’s just another unrelated assertion meant to serve as distraction.

I could go on citing and refuting Hockey’s statements but I think the point has been made.

Hockey failed to meaningfully respond to the Treasury modelling. What he does say though is very revealing. His response is a continuation of his “lifters and leaners” narrative of the budget. He’s effectively saying that low income earners deserve to suffer more than high income earners because the high income earners are already suffering so much. Their suffering is caused by the tax office taking from them to give handouts to the bludgers at the bottom of the social pile. This is the only possible interpretation of Hockey’s words that I can come up with. He’s saying that the budget measures are not unfair, they’re just correcting a little bit of the unfair burden that the rich already bear.

I think it’s important that we see these statements for what they really are. Joe Hockey wants the poor to be largely left to fend for themselves so as not to be a burden on his wealthy mates and campaign contributors. He either doesn’t understand or doesn’t care about the mountain of evidence that shows that the country as a whole will be much worse off if we allow wealth and income inequality to grow.

Warwick Smith is a research economist and social commentator. He blogs at reconstructingeconomics.com and tweets @RecoEco.

19 comments

Login here Register here
  1. Ricardo29

    Bluff, bluster and repetition from smokin’ Joe in the hope he can overcome the negativity his budget has generated. Keep it up Joe, more and more of those negatively affected are seeing through your bullshit.

  2. Rob031

    That was a well-chosen image of Hockey. I suppose as the mess continues we’ll see more and more unflattering images appearing. I wonder what image-choices will be made for Shorten and others in opposition.

    “Sex is better then logic – but I can’t prove it”

  3. Dan Dark

    Sloppy Joe is starting to morph into the Grinch who stole Christmas
    I can’t get me pic to work of the grinch lol

  4. twistie1

    Thanks for this article which refreshed my memory about yet another of the Liberal’s long list of ridiculous comments this week. I wrote a post for my blog this afternoon in which I described the LNP’s week as their Septimana Horribilis. Given the fracas surrounding ditching the repeal of section 18C, the definition of metadata, the claim that abortions cause breast cancer and finally, the buying of domain name abbottlies.com.au by the Libs, I plain forgot about Monday’s tirade by Hockey. This mob are the greatest bunch of morons who have ever been handed the keys to power in Canberra! You can read my post on the week’s debacles at http://abbottprooffence.com/2014/08/11/the-nlps-septimana-horribilis/

  5. Pingback: Joe Hockey fights to claw back a little for the overburdened wealthy | Reconstructing Economics

  6. Pingback: Joe Hockey Despises the Poor | The Abbott Proof Fence

  7. Florence nee Fedup

    I was told tonight at the Senior Citizens, that many have stopped spending, seem to be worried about the future. Only anecdotal evidence I know, Why would this be so. By the way, was also asked where Abbott was, why has he gone overseas
    Just a aside, it is only the last few week, have I heard anyone raise politics at all. That is a fact.

  8. Cindy

    Perhaps we should make the loss affecting the low and high income earners the same so each earner losers out the same. And while we are doing that let’s do the same with taxes! Now that would be fair everyone could contribute the same amount of tax. Then everyone could stop whining that someone else who puts in the hard yards and studies or takes the risks and starts their own business or who works away from family fly in fly out of mines earns more than them. There are many in welfare or low income jobs because they couldn’t be bothered to do anything else.

  9. jeremy..

    You sound like a typical miner Cindy.

  10. darrel nay

    Morning everyone,

    If Joe Hockey is considered a leader then I, for one, am not a follower.

    Scumbag pollies, like Joe Hockey, love to use divide and conquer policies to dis-empower us. They know that if we are mired in partisan issues then they can focus on their never-ending series of wars. These sickos have deliberately destabilised Iraq – they have killed millions of good people and they have fomented sectarian division. Modern ‘leaders’ are so gutless.

    Peace

  11. oldfart

    Joe hockey may well be correct that high income earners pay more tax and that it is a larger percentage of their income. However, what he fails to state is that their net income after tax is also much larger and allows far greater discretioanry spending by those households. A man earning $40,000 pa pays approx 30% tax roughly $15,000 pa A man earning 400,000 pa pays approximately 50% tax leaving a net income of $250,000 pa. Yes Joe you are right it is inherently unfair the low income earner still has more than $25,000 left to support himself how did that happen? Must be an oversight due to the unfair tax system. Gee I’m glad you are at the helm of treasury, so reassuring to see a man who paid his own way through Uni to get where you are today. i wonder when it will happen?

  12. Dame Lacey Bra

    They are not even trying to hide their class agenda, pushing to create greater gaps between the wealthy and the destitute. What will this gain for our “great nation”? Crime and punishment for the poor who step out of line. Supper prisons made for profit and more wars so they can use the poor as fodder. This is what you unthinking voters have bought on your fellow citizens and if your not in the top1% they will be coming for you too!

  13. Kaye Lee

    JAMES GLENDAY: Alright. The mining tax is likely to again be at the centre of Senate debate during the next sitting of Parliament. Joe Hockey says his critics shouldn’t count their chickens on this measure. Are you close to doing a deal with the Government on the tax and other spending measures?

    CLIVE PALMER: Well, in the last Parliament we objected to losing the Schoolkids Bonus; we objected to taking over low-income support and low-income super. Now, we’ve moved amendments in the Senate to remove them from the mining tax legislation, and we’ve said to the Government we’d pass the abolition of the mining tax and we’d pass the other $5 billion of measures, which would have saved the Government $5 billion.

    But of course, the Treasurer or the Government said no, we want all of it or nothing. So we’ve said rightio, you’ve got nothing.

    http://www.abc.net.au/worldtoday/content/2014/s4065598.htm

  14. John Armour

    An excellent article Warwick but I’m going to nitpick and come at this from a Chartalist/MMT perspective.

    Welfare payments and funding for concessions come from consolidated revenue, of which a bit less than half comes from individual income tax.

    This statement presupposes that taxation is a part source of government spending.

    But if the government is the monopoly issuer of the currency and can (and does) create its own currency (out of thin air), then this statement cannot be true.

    So why do we have to pay tax if the government doesn’t need it to fund its spending?

    The simple answer is that it must tax, after spending, to manage demand and keep a lid on inflation.

    This becomes rather obvious when you trace the flow of government spending through the economy in a thought experiment and realise that in the limit every cent of government spending is taxed. And by “taxed” I mean “destroyed”.

    We have to understand this to be able to reject utterly this fairy story of the “lifters” and “leaners” and disabuse the rich of their conceit that they carry the poor: we tax the rich to take away their spending power. The taxes of the rich pay for nothing.

    Taxpayers do not fund anything

  15. amelinixon

    Shall we talk about tax breaks and how ‘ the rich’ get every penny back from the poor? Benefit payments go right back into the system e.g. rent, now there’s a talking point, negative gearing, what about tax relief for luxury cars and houses through fringe benefits, food, lets see what tax rate is applied to Coles for example or Woolworth, gas and electricity. Benefits are not enough for anything other than day to day living. Lets pull the system apart and pull any form of support from everyone, including the paid parental leave element. Lets get down to basics and see a society fall apart at the seams.
    GST will shrink, businesses will close. When people cannot afford goods then there is no need for business is there. Good luck with that one. Scorched earth policy if ever there was one.

  16. Florence nee Fedup

    They do not at any time, pay a bigger percentage of their income. All excise taxes are regressive.

  17. Greta

    Great article. To be fair, if you don’t lie in party politics then you don’t reach senior positions or get elected. So I don’t blame Joe for being a conniving obfuscator like most of them. However, the attack on the poor looks like cronyism and corruption on behalf of his rich allies filtered through legislation (or attempted legislation).

    The 6-months-no-dole policy guarantees more street crime and house breakins, more suicides, more girls (and boys) going into prostitution, more young people learning to become criminals, more policing costs, more legal and court costs and more prison costs. How does incurring those costs – plus turning ten percent or more of our youth into dysfunctional saboteurs – help society as a whole?

    The dole savings would be a drop in a bucket by comparison. The motivation for impoverished unemployed to find work means little because the economy relies on a pool of unemployed to keep wages down. Employers are already being swamped with applications for even menial positions. Motivation is not the problem. The unemployed should not be punished for being the inevitable by-products of the system.

  18. Billypot

    This article , if I am correct is authored by an ex liberal parliamentarian ,from Launceston ,in Howards Cabinet !! If ex Liberals are writing articles like this ,It just proves how inept they see this Abbott government ?

Leave a Reply

Your email address will not be published. Required fields are marked *

Return to home page
Scroll Up
%d bloggers like this: