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Tag Archives: Work

Skip the work and save part and go straight to invest, you’ll be better off

Today Australian Industry Group chief executive Innes Willox is giving a speech in which he will assert that broadening the base of the GST and raising the rate must play a “central role in a [tax] reform package”.

Mr Willox, whilst saying tax reform should not be about “individual self-interest”, advocates the company tax rate be cut to “no more than 25 per cent” in the next couple of years, a reduction in the overall number of taxes, a reduction in personal income taxes that “reduce the incentive to work” and broadening the land tax base to reduce duties on residential properties.

If that’s not individual self-interest I don’t know what is. Mr Willox is paid a lot of money to represent the interests of big business and any pretence otherwise is laughable.

“Tax reform cannot simply be about taking the burden off the rich and placing it on others. But neither should it be about shifting all responsibilities for paying tax to the wealthy,” he will say.

The absolute chutzpah of these people, in the face of the mountain of evidence of tax avoidance by the wealthy and by companies, is astonishing.

Whilst it is true that the top 10% of Australian earners pay about 50% of the total income tax take, they also take home an astonishing 30% of all income with about a quarter of it coming from sources other than wages, salaries and pensions. The share taken by the top groups has been climbing since the early 80s.

As for reducing company tax, almost a third of Australia’s largest companies are paying less than 10¢ in the dollar in corporate tax as is. It is also worth noting that the corporate tax rate in the US is 35% as compared to our 30%.

Between 2004 and 2013 some $80 billion was lost through ‘legal’ corporate tax avoidance through the use of subsidiaries in tax havens and so-called “thin capitalisation”, where local entities are saddled with huge debts to reduce tax liabilities in Australia. An overseas arm of the company borrows money at very low interest rates and then lends it to the Australian arm of the company at exorbitant rates.

Almost 60 per cent of the ASX 200 declare subsidiaries in tax havens.

Data suggests that if all ASX 200 companies paid the full 30 per cent rate of company tax, the budget would gain around $8.4 billion more revenue a year.

Turnbull’s three word slogan, “work save invest”, is poor advice. As our taxation system stands, you are far better off to skip the work part, forget saving – just borrow the money, then invest it and sit back. Your ‘hard work’ and willingness to ‘take a risk’ will be rewarded. And if things go bad, declare yourself bankrupt so your creditors wear the loss and start fresh with some new risk funded by other people’s savings.

 

Work Is Not Just a Four Letter Word!

As a professional actor on the dole once told me that she couldn’t use an audition as proof of looking for work – it had to be an actual job interview.

Now, I have a lot of trouble in working out the distinction between trying out for work in one’s normal line of work and trying out for a job in an area where one isn’t likely to be employed. It could be argued, I suppose, that she was unlikely to be successful in the audition, but then, she was unlikely to be successful in most of the job interviews given that she had very little experience in anything other than acting.

But that’s the way we look at things. If you’re unemployed, you should be suffering.

I spent some time unemployed, in between some casual work as a teacher. And writing. I was reasonably content at the time. The casual work meant that I earned enough. The unemployment payments were handy when I didn’t get work.

“Someone like you should be working!” I was told. (And this is a true story, I’m not making it up to prove some point!)

Why, I wanted to know, when I’d be taking a job from someone who desperately wants it.

“Why should my taxes support you?” they retorted.

Mm, given I’d actually paid some tax as well received unemployment benefits, I reckoned that I was about even, but in order to compare, I asked them: “How much tax did you pay last year?”

Well, it seemed that the business they were a partner in hadn’t actually done that well. and they weren’t all that sure how much tax they’d paid, and anyway that wasn’t the point. The point was that I WASN’T WORKING and I SHOULD BE.

Now, I considered both the teaching and the writing to be work. But something like writing, well, if you’re not being paid, it’s not work. I thought about suggesting that as the business hadn’t made a profit (on paper anyway) that therefore they hadn’t done any work either.

But that’s not how some people perceive work. If you’re doing a potential money making activity that you don’t enjoy, that’s work even if you don’t enjoy it. On the other hand, if you enjoy what you’re doing, it has to make money before anybody will concede that it’s actually work too.

To oversimplify for a moment, both the Left and Right view having unemployment as unfair. The Left feel that it’s unfair that the unemployed don’t have the same opportunities as the employed. The Right feel that it’s unfair that we support them when they’re not making “a contribution”.

But that was the thing that my period of unemployment taught me. The sort of people who are able to use their time wisely are the ones who are often less likely to be unemployed. And if people discover someone who is using their time to pursue their interests and seems quite content not to have a job, it’s a cause for outrage.

Yes, I’m generalising and – as I’m fond of saying – generalisations are always wrong. But I think that we need to start as a society to look at unemployment as part of an economic choice. When governments decide to reduce tariffs, remove subsidies and slash services, unemployment will result. The idea that somehow this crept up, or caught us unaware is ludicrous. The real question is how we manage the situation.

If we take the Holden situation as an example, there is a managed transition for the workers from the jobs that are disappearing to something else. (At least, in theory.) But when we lowered tariffs opened our borders, and embraced technology, we didn’t seem to regard rising unemployment as the direct result of those policies. It was like an unexpected rainstorm, who could blame us for not having an umbrella ready?

As we move back to a ‘work for the dole’ scheme, some will argue that people have an obligation to give something back in order for our support. Others will argue that work is “good for them”. However, I think it’s about time we actually started looking at the unemployed, not as a group, not as the other, but as individuals who have different capabilities and needs. Rather than making decisions for them and about them, perhaps, we could even ask them for some ideas on what should be done.

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