May 12, 2004


Here’s some sophisticated Budget analysis from the SMH’s Tom Burton:

For some it's wine and roses, for others not even a milkshake. Middle and high income earning families are the big winners of tonight's Budget with the promise of tax cuts and benefits worth up to to $117 a week - but if you're single with no kids and earn less than $50,000, you get nothing.

I hate this kind of reporting, which ignores existing tax rates under which the tragic childless sub-$50,000 earners pay tax at a lower rate than those earning more. The fact that this rate isn’t further reduced means, according to Burton, that they get “nothing”.

Satan’s assessment, however, is right on the money. And the Gnu Hunter has Greenpeace’s unique angle:

Greenpeace campaigns manager Danny Kennedy said the Budget failed to address the key threat of national warming.

Global warming is now thinking local. Stand by for neighbourhood warming and frightening increases in living-room warming.

Posted by Tim Blair at May 12, 2004 01:28 AM

I have to wonder if these was part of the design of progressive tax codes... They are set up in a way that no matter how you try to cut taxes, the usual suspects can scream that the rich are getting "more than thier fair share".

Posted by: Ryan at May 12, 2004 at 01:32 AM

Yep, this reporting is about as sophisticated as those wanna-be Marxist students who breathlessly exclaim that the richest 10% of the population in the US gets the largest tax refunds, while the poorest 10% gets little or no refund...

I don't know if it's ideology or simple ignorance of math that makes it impossible for them to see that in order to get money back, one must first pay money out.

Posted by: Kimberly at May 12, 2004 at 01:41 AM

I hate this kind of reporting...

That's not reporting, it's editorializing. There's often little difference in the SMH, which is why I loathed it so. It's difficult to tell from the online version whether this was in the news section or the analysis section. After the first paragraph or so, I didn't see any more editorializing, but it might have manifested itself as what was not reported.

Posted by: Angie Schultz at May 12, 2004 at 02:17 AM

The best way to have equitable tax rebates would be to focus entirely on increasing the tax-free threshold.

For example, if the tax-free threshold were increased by $1000, and the tax rate for the first bracket were 15%, then increasing the threshold would give everyone $150, except for those whose don't have to pay income tax.

Posted by: Andjam at May 12, 2004 at 02:20 AM

National warming. I am quite warm for Australia. I find my national warming growing to alarming rates when I see things like Kylie Minogue videos.

Watch the dogwood bloom! (how crass!)

What? It's spring and the blossoms are lovely.

Posted by: BlogDog at May 12, 2004 at 02:43 AM

It's like Bill Buckley's parable of the diners. Long story short, the ten diners go to a restaurant every week for a meal which costs $100. Most of 'em don't pay anything, a few chip in four or five bucks and the last guy pays $80 or so. Then the restaurant drops the price to $80 and the other nine beat the tenth up because he gets the biggest chunk taken off his bill. The figures represent the fraction of federal taxes paid by the various deciles of the US population.

'No taxation without representation' cuts both ways. If I had my druthers I'd disenfranchise anyone who was a net recipient of 'public money' (i.e. coerced taxes).

Posted by: David Gillies at May 12, 2004 at 03:32 AM

The best way to have equitable tax rebates would be to focus entirely on increasing the tax-free threshold.

No, the best way to have an equitable system is to have everyone pay the same percentage. What is "equitable" about a tax system that burdens some peope and not others?

Posted by: R C Dean at May 12, 2004 at 05:26 AM

I like any system where I can make big bucks, pay little or nothing, and the other guy pays what it takes for the government to do what I want it to. Works for me. Evidently for your Lefties, too.

Posted by: JorgXMcKie at May 12, 2004 at 06:34 AM

I kind of like Dave Gillies idea.
If one does not pay taxes ( or gets their paycheck from taxes ) one should not have a vote.
No taxation without representation.
No representation without taxation.

Posted by: RonG at May 12, 2004 at 07:41 AM

Andjam, one of the issues with just increasing the tax-free threshold and essentially giving most current income tax payers an identical cut is that it just isn't addressing the incentive issue. A 47% rate (plus 1.5% Medicare levy of course) that kicks in at $62,500 is just ridiculous. I wonder what proportion of negative gearing is being motivated by that high rate at such low incomes? And how many people work part-time or cut back on hours purely to avoid that high marginal rate?

The problem of course is that people who are in jobs that pay $25,000 to $35,000 a year see someone on $60,000 or $70,000 as 'rich', because to them it doesn't seem likely they'll ever earn that much. From experience, they often tend to think someone earning $70k pa actually gets twice that of someone on $35k after tax, which is far from the mark. There was some interesting survey results on that suggested when faced with the actual tax take that people face on certain wages, the vast bulk of Australians did feel tax rates were too high (no doubt some of these people still want more government services).

The changes earmarked by the Government are a good start, but still barely enough. Real reform would require a significant cut in government expenditure, which just isn't going to happen. From the Government's viewpoint, I imagine they are aware of the likely 'supply side' issue coming out of these changes, which is that the net 'cost' of tax cuts will be minimised by people avoiding less tax and deciding to earn more. At a financial and economic level, it's a no brainer but still brave politically for them to openly say that $60 or $70k pa isn't 'rich' (and even if it was, how sad that people think that's a good excuse to confiscate such a high proportion of someone's earnings).

Posted by: Troy at May 12, 2004 at 10:00 PM