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Trinkets for the masses and jewels for the rich

Mathias Cormann has always reminded me of a toy I had as a child – a doll with a painted face who had a string in her back which, when pulled, made her repeat one of the limited number of phrases in her repertoire.

This was never more so than when Cormann appeared on Insiders on Sunday.

Regardless of what Annabel Crabb asked, Mathias repeated his pre-prepared lines with his usual deadpan expression and eyes which never seem to join the conversation.

His go-to line was all about bracket creep.  He must have mentioned it at least twenty times in his short interview.  This is where he tries to convince people on low and middle incomes that he is saving them from the financial disaster of moving into the next tax bracket.

But just how much of a disaster would that be and how likely is it to happen?

During the week, the Prime Minister said that the median income is $53,000 pa.  (Some estimates are even lower.)  That means that 50% of the population earn less than that.

With annual wage rises of 2%, it would take someone on the median wage 26 years to exceed the current $87,000 threshold to move into the next bracket.  A more optimistic 3% annual rise would take 17 years to get there.

Even if they did, it would only be the portion of their income exceeding $87,000 that would attract tax at the higher rate – an extra 4.5 cents for each dollar over the threshold – hardly a disincentive for a pay rise.

If you really wanted to remove a disincentive to work, you would be better served increasing the tax free threshold where the jump is 19c per dollar earned over the threshold or the next bracket where the jump is 13.5c in the dollar.  These are the brackets that represent the vast majority of workers and they are getting basically no tax relief.

When the government increased the threshold from $80,000 to $87,000 in 2016, they sold it as a “tax break for middle Australia”, but research by the Australia Institute showed that, in 2015, only 14% of all income-earning Australians earned more than $80,000.

And these 14% have already been very well looked after.

A brief summary of changes to thresholds this century…..

The tax-free threshold has only seen one change when Julia Gillard increased it from $6,000 to $18,200 in 2012 to help compensate for the introduction of carbon pricing.

The second bracket has moved from $20,000 in 2000-01 to the current $37,000 in 2010-11 with an increase to $41,000 to come in 2022.

The next bracket are the biggest winners having moved from $50,000 in 00-01 to $87,000 now and they are bumping it up again to $90,000 in 2018-19, $120,000 in 2022 and then, in 2024, abolishing this bracket entirely, effectively moving the threshold to $200,000

The top tax bracket has also fared well with the threshold moving apace from $60,000 in 2000 to $180,000 in 2008-09 and a proposed $200,000 in 2024.

To summarise the increases from 2000 to 2024:

Tax free $12,200

2nd bracket $21,000

3rd bracket $150,000

Top bracket $140,000

And it’s not only the bracket changes that have inordinately favoured the high-income earners – so have the rate changes.

In 2000, the rates were 17c, 30c, 42c, and 47c for each dollar above the threshold.

The bottom two rates have increased to 19c and 32.5c while the top two have decreased to 37c (and further to 32.5c in 2024) and 45c.

There are also continual calls for the top rate to be further reduced.

The Coalition have adopted the word “aspirationals” to describe those who will be rewarded by these tax cuts.

It reminds me of my father, a teacher, who once laughingly said he aspired to having a tax problem.

These tax cuts are designed to help aspirational politicians buy votes by offering trinkets to the masses and jewels to the rich.

They will exacerbate inequality and be paid for by cutting services to those who need them most and by selling off any assets left after previous Coalition fire sales and “asset recycling”.

It’s not bracket creep we have to worry about – it’s the full-speed gallop towards a society deeply divided into the ‘haves’ and the ‘have nots’.

 


47 comments

  1. Jaquix

    Exactly so Kaye Lee. Cormann is the total automatom. Another IPA clone, apparently. Funny that the 3 top jobs in finance, in Turnbulls government (Morrison, Cormann and ODwyer) seem to be IPA members – Add another 5 of them and you have a total of 8 Ministers in the government being members of Rupert Murdochs pet lobby group. Especially notable is Mitch Fifield, who is responsible for the ABC, which IPA wants to privatise! Im sure Rupert must give Malcolm a “List of Ministers” for him to choose from.

  2. Matters Not

    Look what’s happening in the the US.

    https://www.youtube.com/watch?v=TcbM070DpE4

    Wealth being redistributed upwards and yet the masses seem powerless. No collective consciousness? Dumbed down via the MSM? Now who did win the football?

  3. Egalitarian

    One would have to conclude that The LNP is a Privatised Private Company whom only serve their shareholders,the wealthy and their benefactors and not most of the people.

  4. wam

    A great read kaye, shame billy couldn’t use these words but somehow ‘median; ie the middle, is too complicated for labor people to understand. He could use the median for small business at $62000 because that is also a long way from 87k.

    It is unusual to be able to generalise but, for the lnp cabinet we can bracket them all as creeps.

    ps
    The corporate tax changes provided a massive incentive for businesses to lay off workers and replace them with new technology and equipment.
    This in turn is a great incentive for the lnp to introduce them here to further undermine labor and the unions????

  5. helvityni

    I’m very interested in the photographs of our politicians; is there an inner man/woman matching the outer…?
    Amongst our right-wingers there seems to be plenty of square chins/jaws…

    Are those people more aspirational, I mean when it comes to money ,to riches and power….? And does a determined jaw also mean: riches for ME and mine, not for sharing…

  6. Sean Crawley

    Did you also notice Mathias Cormann using the phrase “working Australians” at every opportunity?

  7. Ill fares the land

    I now record Insiders and watch it later. That way, whenever the guest is an LNP politician I can simply fast-forward. I can see their mouths moving, so I know that they are either lying, obfuscating, prattling or repeating the same hackneyed phrases over and over to the point where nausea will set in if you are actually listening. Ir is a sad reflection of the modern world and the poor calibre of the people that we all vote into power when the political “stars”, i.e, those marked for bigger and better things, are generally those that are more adept at using weasel words, giving drivelling non-answers to every question or simply repeating their party’s latest hackneyed three (or four)-word phrases (Abbott & Dutton – “stop the boats”: O’Dwyer – Labor’s “debt and deficit disaster”, Turnbull – “hard working Australian families” (stolen from Rudd, but our memories tend to be short) – this list is longer, but I am sure you see my point.

    Moreover, why is “aspiration” so important? “Aspiration” has really become the latest “opiate of the masses”. As long as we are lusting after bigger houses, bigger SUV’s, ever more pretentious holidays, more expensive watches, bigger and bigger TV’s, fridges that connect to the internet; the home extensions we do because we are tired of the last extension we did and want a newer kitchen (much of that debt-funded), the more we are then in the clutches of commercial interests and we are far less likely to take serious note of what our politicians are doing under our noses.

  8. Ricardo29

    I continue to wonder how so many of the so-called ordinary people can’t see the inequity of the LNP’s tax cuts. Those below the median ( except pensioners and other welfare recipients) get a cut of $10 a week while Scott Morrison, the PM and indeed all Ministers will get an extra $140 per week, or more once the new, flatter and therefore regressive, tax regime comes into play. Why wouldn’t all those politicians who ‘aspire’ to still be there support the change?

  9. Peter F

    Ricardo, if you take a closer look, you might find that those below the median get even less than the alleged $10 per week because those on low income already get a refund. This means that if you already get a refund of, say $280/ year, the extra being offered is $250.00, or less that $5.00 per week. Still, what can we expect from these liars.

  10. etnorb

    Why is it that EVERYONE of this inept, lying mob of so-called “liberals” (?) is such an idiot & they all do not seem to be “connected” with what is actually going on here in Australia, at least since they came to power? I am yet to hear a “normal, responsible & logical” reason from ANYONE of these inbred f*cking idiots! The sooner they are gone from being in charge of this country, the better off we will all be, & the better of Australia will be!

  11. nexusxyz

    No one is going to win an argument with the morally and intellectually challenged individuals that infest no only the the LNP but also Labor. The political class in Australia want anyone that is poor, disabled and unemployed to die.

  12. Kaye Lee

    The low and middle income tax offset they are offering concludes in 2021-22.

    If they get rid of the 37c bracket, about 94 per cent of all taxpayers would be paying tax at a rate of 32.5 per cent or less in 2024-25. At the moment about 63 per cent are expected to be paying this rate.

    When Cormann talks about what share of income tax the rich pay, why does no-one ever ask him what share of income they receive and what share of wealth they own?

  13. paul walter

    Nothing has changed since 1492 except the appearance.

    Goes well with Christian Marx’ thread starter.

  14. totaram

    Kaye Lee, I am pleased to see what you can do with a little bit of calculation. Unfortunately, it seems that numeracy of this high order is not available to many of our dear voters, because then we would certainly see a drop in the 38% primary vote of the coalition. I keep seeing this figure and wonder what can be done to change it. The overall swing at a national level should be much larger than this small difference that we see constantly. I am really perplexed. But, please carry on the good work! Like drops of water on a stone, you may yet have an effect.

  15. Matters Not

    Pauline’s on the case:

    Hanson wants to limit the amount of money the government can borrow by bringing back a debt ceiling. … is unfair and unconscionable for governments to borrow to pay for day-to-day spending and leave it to another generation to repay a debt for things they did not receive,”

    … Hanson said governments needed to be prudent during good times to position them to help the economy during the bad.

    “Australia has never defaulted on its government debt, but that is not the same as saying it can never happen,” she said.

    https://thenewdaily.com.au/news/national/2018/06/25/hanson-cap-government-debt/

    She resonates.

    Note that Cormann opposed:

    Finance Minister Mathias Cormann spoke against the motion, arguing it would mean the government would be forced to negotiate spending with the crossbench

    .
    And so does Cormann.

  16. Kaye Lee

    Pauline doesn’t have a clue. It is excrucating having a woman that stupid making decisions about my life.

  17. totaram

    “She resonates.”
    What does this mean? Perhaps you mean that people believe this neoliberal nonsense.

    She “resonates” with all the other brainwashed people who think govt = household, when the govt. is actually a sovereign issuer of its own free-floating fiat currency. It can never default on its debt except by its own deliberate will, as long as all govt. debt is denominated in A$ which the RBA issues. Anyone asking for the bond to be repaid will get A$ as promised and possibly be the worse off because they cannot earn enough interest on the money.

    No, this will not cause inflation because one financial asset would have been exchanged for another. Never mind that the Japanese Central Bank has been buying up all govt. debt and now “owns” around 90% of it. They did this to force interest rates down (into negative territory if I recall). Never mind that all the neoliberal economists have been predicting inflationary doom and disaster for Japan for the last twenty years, year on year, but nothing has happened.

  18. Matters Not

    That the Hanson in question is female is beside the point. That she resonates so strongly with approximately 10% of the voting population is of concern. That this demographic usually aligns with Labor is of greater concern – particularly when it comes to her preference allocation.

    That she is a significant political liability is a wicked problem.

    totaram, that you keep chanting the same MMT mantras is an additional problem. They don’t resonate – politically speaking. She does get 10% of the vote – much more than MMT, I suspect.

  19. totaram

    Notice that Cormann and Co. made a hullabaloo about “debt and deficit disaster”, when Labor was in power, but now he doesn’t want a debt ceiling. So they actually KNOW the govt. debt is irrelevant but used the bullshit to fool the voters. The evidence is clear. But will anyone in the MSM point it out? Very sad.

  20. Matters Not

    Re:

    they actually KNOW the govt. debt is irrelevant

    Are you sure? Can you name one Treasurer or possible future Treasurer who shares that construction of reality? I think you can safely rule out Swan, Leigh, Chalmers, Bowen and Shorten. Do they all KNOW and are simply part of this gigantic plot? Or are they simply in error?

    Why do they reject what might be a political godsend? Stupidity? Why is it so universally shared when humble contributors to this blog know the truth?

  21. totaram

    Matters Not:
    It is not an additional problem.The mantras don’t resonate because there are enough people like you with blinders on, to tell them that MMT is all bullshit, when actually the evidence is clear that it is not. If I keep repeating the mantras, the same way that Kaye Lee keeps pointing out obvious contradictions in the coalition policies, eventually enough people will get it. Until they do, neoliberalism and “austerity” will rule, no matter that Labor wins govt. Labor will still be trying to “bring the budget back to surplus” etc. when that is totally irrelevant. And then the coalition will shout about “debt and deficit disaster” and Labor will sheepishly have nothing to counter that, because they themselves believe it – like Wayne Swan who “promised a surplus” and couldn’t deliver. I’m sure that resonated politically very well with voters!

    Telling people lies “because it resonates” doesn’t cut it in the long term, especially when you yourself believe the lies and the opposition is smart enough to know that they are lies and uses them cynically for political advantage.

  22. Matters Not

    RE:

    Labor will sheepishly have nothing to counter that, because they themselves believe it

    So Labor actually believe it which seems to be in contradiction to the above – which I will repeat: KNOW the govt. debt is irrelevant.

    Perhaps one of us is confused? Is Labor knowingly part of this deception or just an ignorant participant? It’s a simple question.

  23. Kaye Lee

    I agree her gender is irrelevant. I should have said person. But f*ck me, look at her history of appalling judgement. She just is not capable of understanding but even worse, she cannot judge character so doesn’t know who to trust to advise her.

  24. johno

    Isn’t she still taking advice from Malcolm Roberts… sigh..

  25. totaram

    Matters Not: I have had enough of your “construction of reality” nonsense. If my construction of reality says the earth is not spheroidal that is fine, but I do have a fundamental problem. There are “constructions of reality” and the contradictions with the “current observations of reality”. If they are not in consonance, there is a problem that needs to be resolved. That is how science progresses. If you don’t believe that, we have nothing more to discuss.

    “Are you sure? Can you name one Treasurer or possible future Treasurer who shares that construction of reality? I think you can safely rule out Swan, Leigh, Chalmers, Bowen and Shorten. Do they all KNOW and are simply part of this gigantic plot? Or are they simply in error? Why do they reject what might be a political godsend? Stupidity?”

    There is no plot. Many of them know, but feel it politically too “dangerous” to reveal these beliefs at the moment. The rest is “groupthink”. People have been believing this stuff for so long, it’s hard for them to stop. These beliefs were actually valid when the currency was backed by gold. The shift to fiat currencies was taken around 30 years ago, with hardly any understanding of what the govt. were really doing. So it’s not surprising that people continue to think in the old ways. How long did it take before people in Europe accepted that the earth was spheroidal?

    It’s not a “plot” or conspiracy, except by those at the highest levels of govt., who clearly, from their behaviour, seem to know. I cannot PROVE that they know any more than Kaye Lee can PROVE that Pauline Hanson is stupid. I point to the evidence and ask you to make up your own mind.

    MMT is not a godsend. Unless MMT is properly understood, it leads people to say stupid things like” taxes are irrelevant since they don’t fund anything”. You may have come across this statement from commentators on this blog. That leads others to ridicule MMT.

    Please remember, in case you don’t, that in science, no hypothesis can be PROVED. Hypotheses can only be disproved. We can only gather evidence in support of a given hypothesis. That does not prove it. So even asking if I KNOW something shows you are on the wrong track. You did this before also, and I let it pass. Clearly you have little idea of science and how it works.

  26. Matters Not

    KL, Hanson is just plain thick but cunning as the proverbial sh@thouse rat, particularly when it comes to the dollars involved. But dumbness is not a political liability. (Dare I mention Trump at this point?)

    That our democracy can spawn such conceptually challenged individuals should cause us to look seriously at our education system. (And yes I know we must ensure they can spell better. LOL.)

  27. Matters Not

    Totram re KNOW

    Can I direct your attention to your post at 8.40

    they actually KNOW the govt.

    Seems to me that the emphasis on know came from you.

    As for ‘science and how it operates’ I am but a novice but which philosopher do you wish to discuss for openers. Kuhn, Popper, Lakatos, Feyeraband … and yes I am a little out of date.

    But keep up the good work!

  28. paul walter

    Sorry, I cannot see where anyone mentioned Hanson on the basis of gender.

    When it is said she “resonates” I believe the reply, in this case, is pointing out her “resonating” as a populist politician rather than as a woman.

    I certainly believe Kaye Lee cannot be blamed for resenting the position such an ignorant person as Hanson holds and believe she would batch Hanson with people like Abbott, Cormann and Dutton as mentally unstable rather than as someone destructive due to her sex.

  29. L.Newbury

    Am I being overly sensitive when I hear, ‘working Australian’s,’, ‘mums and dads investors’ and ‘ ordinary Australians’, as a tad condescending at best, and outright patronising at worst. Cormann, Turnbull, and Morrison champion these expressions at every opportunity.

  30. John Lord

    Not an original word is spoken by so many of them.

  31. Kaye Lee

    L.Newbury,

    It drives me bonkers too. Stop telling me what “ordinary Australians” want. They don’t have a clue what real life is like. They don’t care about lying to us to further their own ambition. It’s all a political game to them.

  32. Matters Not

    One of the basic rules of political communication was that a politician should have an absolute maximum of three messages to transmit, but could package those (3) messages in any number of creative ways. Hawke was rather good at it but these days there seems to be no creativity. What makes it worse (for me at least) is that I watch the TV, listen to the radio and sit at a computer for a significant part of the day.

    The banality is most annoying but I suspect they have research that shows – it works! But for me – it infuriates! Where are the journalists with penetrating questions? Why don’t journalists co-operate and attempt to elicit some admissions? Or is the news business so competitive that co-operation is out of the question?

  33. helvityni

    MT, journalists fear losing their jobs, ABC its funding…

    Some lucky country indeed…

    Sometimes I wonder who or what are they referring to with their ‘lucky’, the country or the people….?

  34. Kaye Lee

    Part of the problem is that, if the questions get too tough, the politicians just boycott the show and head over to Sky or 2GB or the Murdoch press. They choose whose questions they take at a press conference. Alice Workman tends to get shunned since she dobbed on them about tipping off the media about the AWU raids. And Sarah Ferguson was punished because she asked Hockey some real questions about his 2014 budget.

    This is a quote from a review of the ABC about the budget interview…..

    “While stressing that the issue was subjective and her view related only to a “potential perception”, Colleen Ryan suggested that some questions were asked in a way that might raise perceptions of bias because of tone and phrasing. While acknowledging that all the questions were accurate and appropriate, and that Sarah Ferguson had a reputation as an interviewer who asked equally tough questions of all sides, she nonetheless wondered whether enough respect was shown to this interviewee.”

    http://www.abc.net.au/news/2015-02-17/sunderland-in-defence-of-sarah-ferguson-and-open-scrutiny/6130606

    And Emma Alberice had to get her lawyers to force ABC News director Gaven Morris to reinstate her article on tax cuts after he bowed to pressure from the Coalition politicians. She was in trouble for pointing out the truth that “The principal beneficiaries of a cut in Australia’s corporate tax rate are overwhelmingly foreign companies and foreign shareholders in Australian companies” and that the evidence suggested increased profits is not flowing through to increased wages.

    I see interviews in the US and the UK where they really pursue politicians. Sadly, if you do that here, you get shunned.

    As Peter Dutton said in his best Godfather way – the ABC and the Guardian are dead to him. Zis is KAOS!. Zere vill be no criticism here!!

  35. helvityni

    I loved Sarah Ferguson on 7.30, tough with all…where’s Emma?

  36. Kaye Lee

    helvetyni,

    Some insider gossip. When Leigh Sales was coming back from maternity leave, she insisted that Sarah Ferguson be replaced for a while so the comparison was less stark. They put limp lettuce leaf Chris Uhlman in the job for a few weeks. Then Leigh came back, all giggles and smiles, ready to embrace the puff pieces we now endure on what used to be a valuable program. I miss Kerry O’Brien.

  37. Topenda

    Any time I hear or read the stock phrases such as “mums and dads”, “working Australians”, “ordinary/everyday Australians”, “Aussie battlers” etc, my brain automatically translates them to “the little people”. Puts it all in context.

  38. helvityni

    Kerry was the very best…when my daughter,( totally not interested in politics) saw Leigh for the first time, she said: she looks bitchy….

  39. Matters Not

    Re:

    where’s Emma?

    Keeping her head down. Self censoring. A result – expected by the attacking politicians which materialised. QED.

    Now she is expected to show her balance by providing a criticism of some Labor policy. So don’t be surprised at her next outing.

  40. Gra Gra

    Apparently Annabel Crabb and Leigh Sales are working on a Live pilot show called The Penthouse Club for polititicians.There will singing and dancing and showgirls and a lot and lots fun and games and smiling faces.Oh! and there will some inteviews and games like bobbing apples and getting Pollies to play Twister etc. It will be Fun Fun Fun!

  41. helvityni

    Gra Gra, can’t wait to see Bill and Mal do the Sixties’ Twist, double fun!

  42. Gra Gra

    Yes it be a wonderful chance for Annabel to showcase all her great talents.Her and Leigh are working a that great old tune “Hey Big Spender” It’s sure to get a chuckle of on The Insiders Insiders. You know, only people in the know, know.And for team balance sake Amanda Vanstone will head up a harding hitting segment Called “Hardball”.And she’ll talk to the odd polly and she may even get the odd football player on there as well.As she knows a bit about that.Should be great fun.

  43. paul walter

    Annabel has been hosting Backsliders on Sunday mornings and a viewing is not an experience I would will upon my worst enemy. Bad panels, unwatchable.

  44. Peter Ridgewell

    Thanks, Kaye, for yet another good one.

    In all of the talk about the evils of bracket creep, and that special evil of people going to great lengths to ensure their taxable income doesn’t make it into the next bracket (a silly exercise anyway, as they don’t seem to realise that they pay the higher tax on only the marginal income), I do wonder why the idea of introducing more brackets has not arisen.

    If there were, say, seven or nine, or even more brackets, there would be no big jump to the next bracket if a person were to increase their income, so none of this so-called disincentive to earn more, and no more angst about hitting the next bracket. Bracket creep would no longer be the big evil that it’s claimed to be.

    Now, I can hear the cries of “increased complexity” but hey, more brackets would require only a little more simple arithmetic, and most of that would be done for us by some machine anyway.

    So, I suggest that truly progressive tax system would have many tax brackets, not the few we have.

  45. Kaye Lee

    Peter,

    I read a really interesting article once which looked into the possibility of tax rates going up (fractionally) for every extra $1000 (or so) earned (I forget the details) – a more linear approach rather than steps. In the same article, they suggested eliminating welfare by paying a universal basic income to everyone and for the tax to kick in on anything they earn above that starting out very small (like 0.5% for the first thousand earned). We would save a fortune on compliance costs. Means testing and work requirements would be unnecessary. Disincentives to doing extra work are removed.

    I can’t find it currently but will keep looking. It was certainly worthy of discussion.

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