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How will we pay for this? Vote Labor

Before the last election, Labor detailed a suite of policies that Josh Frydenberg said would amount to $387 billion in “new taxes” over the next decade.

Like everything Josh Frydenberg says, this was a lie.

$230 billion of this figure came from Labor’s opposition to the Coalition’s plan to raise the 19% tax bracket threshold from $41,000 to $45,000 from 2022, then flatten tax brackets from 2024 so all taxpayers earning between $45,000 and $200,000 pay a marginal rate of 30%.

The foolishness of locking in tax cuts years in advance is now being rammed home. Labor sensibly said at the time that we should wait to see how the economy was faring to see if we could afford it.

Opposing tax cuts can hardly be described as “new taxes”.

The next largest revenue measure was $57 billion from ending taxpayer funded cash rebates for self-funded retirees with excess franking credits. This does not amount to anyone paying more tax. It just means the tax paid by companies would actually go to the government rather than being handed back as a gift to shareholders who pay no tax (pensioners excluded).

Labor also looked to raise $34bn through changes to superannuation tax concessions including lowering the high income super contribution threshold to $200,000 and lowering the annual non-concessional contributions cap to $75,000.

An end to negative gearing for existing properties – the ability to claim a tax deduction from a loss-making investment property (grandfathered so existing investors are not impacted) – and halving the capital tax gains concession from 50% to 25% for assets purchased after 1 January 2020, would have raised another $31 billion. Negative gearing deductions would still apply to new properties thus helping to encourage construction.

Labor wanted to raise $27 billion by imposing a standard minimum 30% tax rate on discretionary/family trust distributions, which are often used by wealthy Australians to minimise their tax. You would be hard pressed to find a Coalition politician who does not use this tax loophole.

Another $6.5 billion would be raised by extending Abbott’s deficit levy, effectively increasing the top marginal rate to 47%.

Capping deductions for accountants’ fees and managing tax affairs would raise another $2 billion. It is particularly galling to see very wealthy people pay accountants millions to reduce their taxable income to nothing.

These were all responsible suggestions aimed at getting rich people to pay their share – something that will never happen under a Coalition government.

You can be certain that, when we come out the other side of this crisis, it will be the little people who will be hit again with austerity measures and attacks on welfare whilst the wealthy will have all their loopholes fiercely protected.

Or we can vote Labor.

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20 comments

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  1. Harry Lime

    Lies,damn lies,Shouty, Murdoch and Palmer.One can be confident the “snap back”,”other side of the bridge” and “bounce” will amount to a world of shit for us plebs.Vote for Labor? Yeah, vote for anyone except these pricks and their Parliamentary puppets.

  2. David Stakes

    In 2022 the fear wagon will be rolled out right on cue, with the Murdoch press flogging the horse to death pulling it.

  3. pierre wilkinson

    Ah but will New labor under Albo adhere to what were well reasoned fully costed policies?
    meanwhile the murdoch controlled MSM continue to sing the praises of PM promo, so scotty from marketing can expect a dream run..
    how soon we forget >sigh<

  4. Marcus Champ

    There is absolutely no doubt the LIES came thick and fast in the last election cycle, with the Corporate media rarely questioning the LNP stories, and in the case of Murdoch media repeating them for the consumption of the masses with wild abandon. Furthermore, there is also no doubt various sectors of the private sector have viewed the economy as their private cash-cow to be milked at every opportunity with socialism for the rich and, as we once again experiencing bailing out when they get into trouble.

    Having a housing sector die-hard for a PM certainly hasn’t helped, but from negative gearing, franking credits and superannuation giveaways sadly both side of politics have been exceedingly generous to their benefactors and donors. To given them credit, ALP put forward numerous good policies to start to clean-up this gross inequality and as usual, were punished for it.

    Of course there are a number of other deeper misunderstandings that are being perpetrated that we need to be aware of. The idea a sovereign fiat currency Government cannot “afford” policies that actually help its people is nonsense, as is the idea we have to “tax the rich” to “pay” for services.

    The real debate, largely reflected by Kaye is how we want our resources to be deployed…not how do we “pay” for it. I for one am gob-smacked at the way private companies are subsidised and supported by state funds or massive give-aways, yet we have thousands living on the street. How is it we have hollowed-out our economy that we cannot make ventilators? or masks? or numerous other basic supplies crucial to the health and well being of our own people?

    Why is it we import hundreds of thousands of cheap labour every year while we have double digit underemployment and “punish” the unemployed with starvation wages? Let alone now when we have a massive health crisis and small businesses and individual workers getting pittance compared to big corporations? How is it we have these massive give-aways to rich, yet cannot provide child-care, public housing, or jobs for everyone that needs one?

    The electorate needs to wake-up and realise the ONLY way things change is if we vote for them to change. Either that, or a real revolution will eventually come about…and no one wins one of those.

  5. Keitha Granville

    Albo has already walked away from so much of that. It is up to US to make sure it comes back on the agenda, and up to US to get them into government.

    The poor will lose out yet again unless we do.

  6. Stephengb

    Kaye Lee

    Today the leader of the ALP said in parliament that a generation will be paying for the coronavorus stimulation.

    Where does that leave your conclusion
    “You can be certain that, when we come out the other side of this crisis, it will be the little people who will be hit again with austerity measures and attacks on welfare whilst the wealthy will have all their loopholes fiercely protected.

    Or we can vote Labor.”

    So whilst the leader of the oposition votes to appropriate money from thin air, he still finds time to set us up for austerity.

  7. Marcus Champ

    Stephengb: Well that is disappointing…and they should know better. Having said that, LNP have already made similar statements, and have seen numerous media pundits who claim the same thing as well. Sadly, most people including the morally bankrupt Corporate media have ZERO idea how the monetary system or economy works…even while the LNP is demonstrating how it really works right in front of them. LNP know full well the state is ISSUER of the currency, and use it as a weapon to retain power in any way they can while also LYING to the Australian people at the same time.

  8. RosemaryJ36

    I strongly suspect that as soon as possible after the Covid-19 restrictions are listed, the Coalition will call a snap election, hoping to catch Labor unprepared, and hoping to be voted back in as the saviours.

  9. Kaye Lee

    Marcus,

    The recent actions of the government have shown that we can find the money for whatever we want when needed as MMTers have always said.

    Even without embracing MMT, interest rates are so low now they would be mad not to be taking advantage of them. If you can’t find an investment that returns greater than 0.25% then you shouldn’t be in charge of the nation’s finances.

    It is the redistributive nature of Labor’s policies that makes them so sensible. Limiting negative gearing to new properties (grandfathered for current investors) would help increase the supply of housing and create construction jobs. Reducing property tax concessions would also direct investment money towards more productive enterprises like building infrastructure.

    And we should get back to making polluters pay through some form of carbon-pricing. It’s amazing how resourceful they then become in actually reducing emissions.

    Taxes can change behaviour.

  10. whatever

    Does everyone on the ABC really HAVE to gasp before they say “130 Billion dollar Jobkeeper scheme…”. And that tired old ABC hack asking Scotty “How do you sleep with all this to worry about?”
    I mean, if you really must destoy the credibility of ABC journalism by turning the whole organisation into a vanity project at least don’t be SO FREAKING OBVIOUS ABOUT IT.
    They have Smokin’ Joe Hockey on ABC24 right now, FFS!
    LNP24 would be a more apt station identifier.

  11. wam

    a major reason abbott won was juliar and the carbon tax at one point even the rabbott said ETS but he got on the morning shows and ut became carbon tax again for a few days it became ETS but that is hard to say hard to understand so tax it became.
    A great read kaye I heard frted’s version many times on the morning show’s autocueists and sales but must have missed the labor pollies giving your tax take.
    What a lovely finish but watch the tv, read the papers, listen to the radio and hear why vote labor.
    What does smirko’s mob do keep it simple and pose the case against labor what does labor do flounder trying to make complex answers simple
    solution albo et al make your answer pose questions for the autocuists to ask smirko or fryden
    arm the grass roots members with answers to the high tax big spenders slogan work on the right have extremists like pauline and fanning and labor has the loonies
    Albo can take heart that the 61% for smirko is for his hot air can albo prick the bubble??

    ps the reef $440m is probably still earning interest for the 4 recipients how long will the $ stay with the bosses and will it drip down??

  12. Kaye Lee

    Shane Wright has an article in the SMH today:

    University of Western Australia macro-economist Jakob Madsen says federal and state governments will have to look at higher taxes, including a revamp of mining taxation

    George Gear, a Keating government minister and now mayor of the Perth council area of Melville, said, spending cuts should include franking credit reform and the end of negative gearing for established houses.

    Deloitte Access Economics director Chris Richardson said the superannuation sector is one where years of tinkering could be resolved with a major overhaul to make the tax on super more equitable, particularly for low income earners. Capital gains tax, particularly its interaction with negative gearing, should also be on the agenda.

    “We could finally resolve the question of whether health and education should be state or federal responsibilities,” he says.

    The Australian National University’s Centre for Social Research and Methods last year released research into a system that includes 20 welfare payments and 55 supplementary payments. It came up with ways to cut poverty by 11 per cent (the unemployed would likely get the biggest gains under its proposals) at no cost to the overall budget.

    EY chief economist Jo Masters said a stimulus package with infrastructure projects should be considered.

    https://www.smh.com.au/politics/federal/virus-fight-leaves-australia-with-a-mountain-of-debt-so-how-will-we-deal-with-it-20200408-p54i9j.html

    Funny how everyone is now suggesting Labor policies.

  13. Marcus Champ

    Kaye: meanwhile the Bank of England has announced they will dispense with “raising funds on bonds market” and go to direct funding by “marking up” the Government account with “effectively unlimited amount” to help address the COVID-19 crisis…YET AGAIN proving MMT is right, Governments in fiat currency system do not need to “borrow from anyone” to spend in their currency…taxes DO NOT “pay” for anything.

    So people like Jacob Madsen (and he is not alone) that claim the Govt will have to “increase taxes to pay for spending” simply does not know how the macro-economic monetary system works. Yet he is meant to be an “macro-economist”. Let that sink in. Link: https://www.ft.com/content/664c575b-0f54-44e5-ab78-2fd30ef213cb?fbclid=IwAR3gvXGbSUsuzr_WkxtppHBYJphPaB4g23SXb0jrrQgCFkEqc3LOaaphczg

    An important implication with all this of course, is that any policies not implemented have nothing to do with the “budget” but because they don’t want to. Period.

    Furthermore, superannuation is a massively FAILED policy and better off it be abolished, but if we are going to keep it…it definitely needs far reaching reforms to cut the rent-seeking and giveaways to the rich and wealthy. As for Mining tax, there is no doubt our resources are being extracted with very little to show for it and even the super profits tax put up by the ALP was a very small start in that process.

    In closing however I do agree with your observation and I have made the same, I have found it VERY interesting many of the ALP policies that were supposedly “bad for the nation” have been systematically implemented by the LNP. Very interesting indeed.

  14. Matters Not

    Perhaps Shane Wright could try thinking outside the box. With the Budget underwater, why not immediately cancel those things designed to go underwater – you know those soon to be obsolete submarines yet to be designed. Who’d notice? Then there’s those planes that don’t fly particularly well. Not to mention a Tobin tax or its equivalent.. As for multinational corporations legally obliged to pay tax but don’t. The there’s religious organisations with massive wealth … Then there’s the non-inclusion of the ‘family home … Then there’s so many natural resources that could be developed and then owned and run by the State.

    Doesn’t take too much imagination.

  15. Kaye Lee

    Marcus,

    That’s very interesting about the BoE. I have for years said why not just credit an account at the RBA with whatever and record it as e-seignorage on the balance sheet. As you may have gathered, it is really just the accounting that has always bothered me. (And the fact that I don’t trust politicians to spend money wisely)

    Not sure why you feel super is a failed policy. I can accept that having a higher wage when young would help in wealth creation but too many people are too ill-disciplined or too short-sighted when young. An overhaul – yes. I would love the government to also put restrictions on how they invest eg some form of compulsory investment level in local infrastructure so contributors feel some benefit now through employment and increased productivity. Divestment from polluting industries and investment in sustainable ones should also be mandated.

    MN,

    I completely agree.

  16. Matters Not

    Are you aware that there’s a new economic/monetary/financial concept that’s yet to be explained. Even though it’s at the heart of the matter.

    “It is a technicality,” concedes Dr Oliver. “It’s a fine line .”

    EY Oceania’s chief economist Jo masters agrees.

    “It is quite a fine line . If you get a central bank buying bonds directly from the government, you blur the lines of [independence].”

    Yep it’s those fine lines that’s now beyond the non-expert reader. And it would seem also beyond journalists (including the one who wrote this article) and also Shane Oliver, and Jo Masters. Seems we might have to wait for a flash of lightning from above. Or is economic theory beyond mere humans?

    https://www.abc.net.au/news/2020-04-09/coronavirus-economy-printing-money-quantitative-easing/12134560

  17. Kaye Lee

    I disagree with what is written in that article.

  18. Matters Not

    You’re not Robinson Crusoe there. Taylor provides no insight other than to say: It’s all too complicated for mere readers. – Including me, the writer, David Taylor.

    As for the formula at the end – why include it when he admits he doesn’t know what meaning to give.

    (Guess I will have to stop writing tongue-in-cheek,)

  19. Kaye Lee

    Why?

    The formula was obviously included to intimidate we mere mortals into thinking it is too tricky to understand.

    He uses the same old lines, that a secondary bond market is necessary to influence overnight interest rates when the same thing could be achieved by the RBA offering overnight deposit rates.

    He also conflates the RBA and the Dept of Finance, something that always annoys me.

    And I very much doubt the RBA are just adding zeroes to their bank account.

    I would be interested to read more about what the BoE are doing. Marcus’ article was paywalled.

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