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No matter how much you give the rich, they will always want more

It seems astonishing that, in a country where one in eight adults and more than one in six children are living in poverty, and many of those are living in “deep poverty”, the Coalition’s election focus is on tax concessions and tax cuts for the wealthy – and they seem to be getting away with it.

In 2004-05, the top income tax rate kicked in at a taxable income of $70,000.  Four years later, that had risen to $180,000.  Meanwhile, the tax free threshold remained at $6000 from 2000-01 until Julia Gillard increased it to $18,200 to compensate for the introduction of carbon pricing in 2012-13.

When Tony Abbott got rid of the mining tax, he also repealed many payments to low income earners, including income support benefits to children of soldiers killed or seriously injured in service.

At the time, Abbott said “There are tens of thousands of people who will lose the income support bonus and I don’t suppose any of them will be very happy to lose it … but this idea that the children of veterans are somehow being singled out for mistreatment by government is simply false. It’s an outrageous smear.  Veterans, like everyone else, understand that governments have got to keep their commitments and they also understand like everyone else that you cannot be generous with money that you just don’t have.”

The veterans affairs minister, Michael Ronaldson, said the payment, which cost about $260,000 per year and began in March 2013, would be scrapped “as a necessary consequence” of the changes.

“The government considers that it is not in the interests of the general welfare to continue such bonus payments in the absence of the resources necessary to do so,” and the cut “does not result in payments being reduced to below the minimum level necessary for recipients to meet their basic needs”.

They also delayed/abandoned the increase in the superannuation guarantee, canned the low income superannuation co-payment, reduced the instant asset write-off for small business from $6,500 to $1,000, abolished the schoolkids bonus, and reduced family tax benefit payments.  They even tried to take away pensioners clean energy supplement whilst telling us that old people could not afford to turn on their power.

But try to wind back some of the unsustainable tax concessions for the wealthy introduced during the Howard years and they scream blue murder.

In 2007, the Howard government allowed people to transfer up to $1 million into their superannuation accounts. The effect of this change in the rules was enormous. In the June quarter of 2007, $22.4 billion was transferred to superannuation accounts by individuals. This compares with $7.4 billion in the June quarter of 2006. June 2007 was the first time in Australia that member contributions exceeded employer contributions.  The new superannuation tax treatment led to the selling off of some assets, particularly rental housing, as people sought to take advantage of the opportunity to add funds to their superannuation accounts and claim them back later tax-free.

Prior to Howard’s changes to capital gains tax, overall, landlords had been positively geared.  Within two years of slashing capital gains tax, the size of losses exploded with investors moving their cash into the property market to chase capital gains.  Total rent collections turned negative in 2001-02. They have not been positive since, reaching a record $10.8 billion in 2008-09.  In 2015-16, there were close to three million rental properties around the country.  Of those, 1.8 million lost money.

With all the public furore around changes to excess franking credit refunds, as Tim Wilson’s cousin Geoff is advising his clients, “all you’ve got to do is change from a company structure to a trust structure” to avoid the impact of Labor’s policy.

Investors have the luxury of choosing how and where to invest to take advantage of current laws.  They change their behaviour in response to legislation.  It is no doubt inconvenient for them to have to think about how to maximise their income whilst minimising their tax liability.

But shouldn’t we be focusing on the people who have nowhere to live, on those who don’t have enough food to feed their kids, on those who truly cannot afford to pay their power bills, on those who cannot find a job, on those who are struggling with health issues, on the victims of domestic violence?

My sympathy for wealthy retirees has been sorely tested by their self-serving greed.  They have options.  Many do not.

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23 comments

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  1. New England Cocky

    Now to deal with the about $150 BILLION PER YEAR gifted free, gratis and for nothing to the undeserving wealthy and corporates by governments of every persuasion. The ‘gifts ‘ are tax rebates, allowances, concessions, fuel tax rebates etc, etc, etc.

  2. Kaye Lee

    Very true NEC and the point that MN has been valiantly trying to make amid the election noise.

    We have to blunt their attacks one by one so we can cut through to what is actually best for the country. They try to distract us and have us focus on the wrong stuff.

  3. David Evans

    Trickle Down? Simple explanation, trickle down economics actually works really well, I step in some whenever I walk in my horse and cow paddocks.

  4. Yvonne Robertson

    I totally concur. I find it almost inconceivable on one hand and yet easily understood when the following factors are taken into account. The first was an article I read recently which purported that the greater the wealth, the less compassion people felt for those who had little or were impoverished. People tend to consider there is only so much pie to go around and if we give even a small piece to the hoards at the bottom, there may not be enough for the middle and upper levels to live in the comfort to which they are accustomed and believe they deserve. Think how often you’ve heard people talk about those with a degree of wealth in terms of how hard they work, as though employees could never be guilty of such a thing.

    The second intersecting factor is the philosophy we’ve imported from the US – that those who are doing it tough have brought it on themselves somehow and do not deserve our sympathy or compassion. In fact, the theory continues, that to offer a helping hand in any shape or form is just to encourage sloth to which the poor have an overt tendency toward anyhow. I listened to Christian Porter explain, that it was really quite a caring thing to do, to push people off of welfare in that case. The whole ‘having a go to get a go’ mantra supports the notion that you need to prove yourself worthy in order to be deserving of government handouts, even if that success is firmly embedded in the wealth a person inherited, or the schools and opportunities that were provided for them by well heeled parents.

    Our mainstream media outlets are owned by the wealthy and the ABC lays quivering in a corner as their experienced staff are sidelined into non existence and the vacancy created is filled with a former Sky News contributer friends and staffers of Rupert or the Liberal Party. This is the how and the who of where the public gets their information and understanding of what’s going on from.

    Every party has a platform on which they create the motives and foundations which inform their actions. It has been untrue that the Liberals have no policies. They have them but they’re either not telling the public or actively lying to them about their intentions or both. Their policies involve the systematic dismantling of social welfare safety nets and the promoting of a user pays, thoroughly inequitable society.
    The ALP is nowhere near as egalitarian as I would like or at least their policies still involve a degree of kowtowing to those who have no need, because without them, they fear they’ll never get elected and they may well have a point. However, philosophically and at their core, they are the only party which will not leave the poor stranded by the roadside.

  5. Keitha Granville

    The Labor party needs to run ads comparing 2 things – a wealthy retiree complaining about losing refunds having paid no tax, and a single mum trying to manage on benefits. There are no end of similar comparisons they can use and this will resonate very strongly with MANY people

  6. OldWomBat

    As one of those who was able to put away super to fund our retirement I don’t want a cash payment that effectively gives me a “bonus” for reducing my tax to bugger all. I’d rather any such “bonus” go to someone much more needy than me – and with this government there are a hell of a lot of people in that position.

  7. Paul Davis

    Agree Yvonne Robertson, no way Dear Leader and his gangsters could possibly tell the truth about their policies and intentions, the peasants would come with torches and pitchforks. Imagine a sane intelligent person sitting in a pew at Hillsong trying not to burst out laughing. But at least there one can just get up and walk out, somewhat bemused but otherwise undamaged. These criminals are our government, owned by the oligarchs and protected by their paid army, police and media to keep the peons in place. Imagine another two terms of this LNP misery. OMG

  8. Kronomex

    I believe that once you get above a certain number of millions it becomes, for some people, an obsession to accumulate more and more. “Just another million then I’ll stop.” Then another million, and another million, and on it goes. You could say it is a form of mental illness, a compulsive disorder.

    What would you do if you suddenly had $30,000,000?

  9. terence mills

    Remember the outcry from the coalition over Mediscare ?

    Recently I had to go into hospital for day surgery. I was advised that if I had private healthcare insurance I could be fitted in to a Ramsay Healthcare day-surgery facility within thirty to forty-five days but if I went public on Medicare the waiting list was more like six months.

    When I raised my eye-brows the receptionist carefully explained that it was government policy to encourage all Australians to have private health insurance cover and that the government subsidised the premiums (to the tune of some six billion dollars a year).

    As we have a public hospital in my regional area but no private hospitals I decided to wait the six months rather than travel to a private facility and make it an overnight stay.

    Now, I don’t have anything against the late Paul Ramsay who became a billionaire out of running private hospitals and was good mates with John Howard and Tony Abbott and who, coincidentally, benefited enormously from coalition policy granting private health insurance subsidies. What I do object to is the coalition telling us that the erosion of Medicare and the Mediscare issue was all in our imaginations.

    they have degraded universal healthcare in this country don’t let them fool you !

  10. Zathras

    I remember reading about a discussion between Kurt Vonnegut Jnr and Joseph Heller at a party hosted by a billionaire.
    Kurt told Joseph that their host – a hedge fund manager – had made more money in a day than Heller had earned from his wildly popular novel Catch 22.
    Heller responded, “Yes, but I have something he will never have . . . enough.’”

    Also the phoney argument about “But they’ve paid tax all their lives..” annoys me.
    Firstly because it may not be the case and secondly because they have meanwhile enjoyed the benefits created by previous taxpayers along the way but now think it’s unfair for them to do the same for those yet to come.

    “Poverty exists not because we cannot feed the poor but because we can never satisfy the rich.”

  11. Kaye Lee

    Two great quotes Zathras.

  12. Kronomex

    And the ultimate winners if NAB replaces Thorburn and Henry will be Thorburn and Henry because you can bet that the pair will get a platinum handshake for their troubles. Then they will just move on to another overpaid position either within the banking/finance sector or elsewhere.

    https://www.abc.net.au/news/2019-02-07/nab-trading-halt/10790670

  13. RickyBobby

    “What would you do if you suddenly had $30,000,000?”

    Solid. Gold. House.

  14. Kerri

    This question has plagued me for years Kaye Lee. What more does Gina need???
    Seriously?
    Theories claim that once a person has more wealth than they can use they tend to turn to charities a la Bill and Melinda Gates.

  15. Kaye Lee

    Gina needs the one thing she will never find – contentment.

    These uber wealthy people have such torrid lives. I almost feel sorry for James Packer…..almost.

  16. New England Cocky

    THE $150 BILLION SUBSIDIES TO WEALTHY CITIZENS AND CORPORATIONS

    Joe Hockey has set the standard: “The age of entitlement is over and the age of personal responsibility has begun. … Everyone has to help do the heavy lifting here”. YET, NONE of these government handouts to the undeserving wealthy and corporates were touched!!!

    Excessive tax cuts to filthy richest $15.8 BILLION
    Fossil fuel subsidies $12.0 BILLION
    (24 times the car industry subsidy that
    returned 200,000 jobs and $30 BILLION)
    Superannuation tax concessions in FY15 $36.0 BILLION
    Negative Gearing $ 6.8 BILLION
    Capital Gains discount on home to FY18 $19.0 BILLION
    Capital Gains discount (CGT) $ 9.1 BILLION
    CGT discounts for persons & trusts in FY18 $28.3 BILLION
    Imputed Rent Exemptions $ 9.6 BILLION
    Mining Industry Subsidies $ 4.5 BILLION
    First Home Vendors Grants $ 1.0 BILLION
    Private School Subsidies per year 09-13 $ 9.0 BILLION
    Private Health Insurance Rebate per year $ 5.0 BILLION
    Overseas housing for boat refugees per year $ 4.0 BILLION

    TOTAL GOVERNMENT HANDOUTS $160 BILLION

    Thank you R Ambrose Raven for this compilation. The Conversation 030514

    Old data now, but little has changed since.

  17. Shaun Newman

    New England Cocky hit the nail on the head with the first comment, solve that and we solve everything else. Trouble is we need another Whitlam Labor government, a government prepared to do battle with the forces of evil and be determined to win for the people. Trouble is I can’t see another politician with “the balls’ that Whitlam had in the Labor Party, except perhaps Senator Doug Cameron.

  18. Zathras

    A couple more thoughts about the Uber-wealthy.

    “Their Meaning of Life – whoever dies with the most toys, wins”!

    “It doesn’t matter how many bedrooms are in your house, how expensive your car may be or the number of zeroes in your Bank Account. In the end, our graves will be the same size.”

  19. Judith W

    Surely the tax refunds to retirees are notional, and if their share portfolios had no returns they would lose nothing. Ironically, if government policy meant their shares did well, even though their portfolios would have grown, they would cry about losing more (notional) rebate, forgetting, of course, the much greater gains to their portfolios.
    I think the ALP should be talking about ways a buoyant economy will offset these ‘loses’.

  20. Kaye Lee

    We hear so much about how people have worked (or invested) hard to fund their own retirement and good on them. But they shouldn’t then expect government handouts so they can keep their nest egg untouched when others are suffering such hardship.

  21. David Bruce

    The insatiable greed of super wealthy people is matched by our own Treasurer-in-Training and his department! What a rotten bunch of scumbags!

    Having specifically excluded investigations into the STRUCTURE of our banking system, the Treasurer-in-Training and his department have included sections in the report by Commissioner Hayne to specify that structural separation of the Retail and Commercial banks from the Investment banks is UNNECESSARY.

    The Australian Treasury has played dirty tricks on the public in the final report of the Hayne Royal Commission (HRC). This was probably why Kenneth Hayne refused to shake hands with the Treasurer Josh Frydenberg on its delivery. The public does not know that the HRC final report was not written entirely by Kenneth Hayne (KH), but substantially by the Treasury.

    Neither the Treasury nor the regulators acknowledge the cancer of our financial system—the $40 trillion worth of over-the-counter derivatives, which are growing and could potentially hide substantial losses off the balance sheets of Australian banks. At current levels, one per cent loss on this derivative exposure from investment banking will wipe out the entire equity of the system, potentially hurting many innocent bank depositors—banking separation is urgently needed to avoid crisis for the safety and stability of our financial system.

    When the SHTF, expect to see the number of homeless people, living in poverty, to sky rocket.

    What you can do:

    Don’t accept a rigged outcome! It is clear that banking separation is the defining issue, so get behind the fight to break up the banks. Don’t allow your MP to hide behind this report as an excuse not to break up the banks, but demand they support the Banking System Reform (Separation of Banks) Bill that Bob Katter introduced into the House of Representatives in June 2018, and which will soon be introduced into the Senate.

    http://cecaust.com.au/releases/2018_09_11_Former_APRA_Analyst_P.html
    http://cecaust.com.au/releases/2019_02_07_Wilson_Sy_Treasury.html

  22. Andrew Lamplugh

    I still say there are large companies/multinationals who are not paying their fair share of taxes in Australia because of the lop holes which allows them to avoid paying a decent amount of taxes in the first place. The Governments have given permission to the big four Accounting firms to shift untaxed funds via complicated trusts untaxed off shore year after year and in many case at the same time receiving annual government subsidies.

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