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The Forum > Article Comments > Can we build a great Australia with taxes that are fair and just? > Comments

Can we build a great Australia with taxes that are fair and just? : Comments

By Everald Compton, published 4/11/2011

Negative gearing, superannuation and stamp duty are three tax issues that need to be addressed.

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I'd like to see one additional tax, at least. Call it a wealth tax, death duty or probate. Call it anything, but there are very few sensible arguments for frictionless transfer of wealth between generations and very strong social reasons to re-introduce a tax in this area.

The answer to your question "Can we build a great Australia with taxes that are fair and just" is "Yes."

The converse is also true. A great Australia needs also to be founded on a tax system which has fewer unfair and unjust taxes, as you have indicated.

We elect politicians to sort this stuff out, then when the Henry Report hits the deck, politicians from the right of the Speaker rush to avoid implementation of all but a handfull of over 100 recommendations, while those from the Speaker's left ignore it entirely. We need our politicians to spend more time on enacting good legislation and much less on image management. Vision, agenda and backbone are in short supply, it seems.
Posted by JohnBennetts, Friday, 4 November 2011 9:50:19 AM
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Everald Compton

The incumbent president of the US of America during his election campaign got in the habit of saying “Yes we can” and soon will go, having found out that ‘he cant’.

Of dreamers I have known many and the ones of them who are still alive continue to dream.

When I migrated to Australia in the sixties I saw many doers.

In your posts to this publication I picked two points.

The first is where you say that most of the doing in this country came to halt when Chiefly went.

The second is when you mentioned that a Lawyer accused you of “trying to take the bread and butter business away from the legal and accounting profession”.

I knew little English when I landed here, yet I was able to fill my tax return. Now I can write to you in a hopefully clear manner but I have to go to an accountant to have my tax form fixed and to a lawyer to make my will.

The gist of my reply to all your posts Sir is that your “I reckon we can!” may be a dream.
Posted by skeptic, Friday, 4 November 2011 9:52:50 AM
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Any new taxation system needs to comply with one of the basic principles of Australian democracy:

"No taxation with or without representation, with any deficiency in government finances being made up from the sale of politicians' assets"
Posted by plerdsus, Friday, 4 November 2011 3:21:53 PM
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We don't have to increase taxes.Just eliminate the fractional reserve system of banking and taxes can be reduced by $ 9000 for every worker.
Posted by Arjay, Friday, 4 November 2011 4:26:15 PM
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Sory Arjay - are you proposing that banks must hold ALL their money in cash reserves or that no percentage of reserve must be kept.
Also, how would this cut tax?
Posted by J S Mill, Friday, 4 November 2011 5:38:09 PM
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Jake's faith is unbelieveable. How accurate these men who replicated life on earth 4 billion years ago. Talk about swallowing a load of codswallop. Any fairytale to avoid the fact that one day you will be held accountable to your Maker.To think this nonsense is taught in part to kids in schools. No wonder we are where we are.
Posted by runner, Friday, 4 November 2011 6:54:16 PM
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Death duty causes real problems in business. I understand the desire to create better social equality by imposing death duties on the "wealthy" but for those whose wealth is tied up in running a business it can be enough to cause the business to falter for many years. This is generally not the case where the business is publicly listed (the owners are not expected to borrow to fund company operations), but many if not most unlisted businesses are interdependant with the wealth of their owners. This does have serious implications for the health of businesses, thus employment opportunities as well.

I dont understand the aversion to stamp duty, particularly on real property. Sure, I dont like it when I have to pay it myself, however its at its base a wealth tax. If you can afford to buy property, you can afford to pay stamp duty. The assertion that it is causing property price pain is false - the market sets property prices and takes stamp duty into consideration. If you remove stamp duty, property prices will simply increase by a similar amount - right to the brink of what people can afford. The impact of negative gearing is very similar.

The problem with superannuation is that people really dont care enough. They cant touch it for years, so its out of sight, out of mind. Give them the ability to draw out some of the earnings and you'll have a sharp increase in interest from a much earlier age. Or to make it less risky for people, make the default option cash - the tax concessions will mean that for most people it will still perform better than investments held outside super.
Posted by Country Gal, Friday, 4 November 2011 7:20:54 PM
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Re-doing the tax act is the easy part, the difficult part is getting consensus on what's "fair". I have never really understood why it's fair to take from those that have, by threat of violence (see what happens if you don't pay your tax bill) and give it away to others. Perhaps if there was less welfare and more infrastructure I might be interested ? A decent place to start might be to abolish Income Tax itself, that relatively recent innovation is anathema, perhaps a property and/or GST style tax, combined with a death tax seems a more appropriate means of revenue raising.

As to the Lawyer anecdote, the System of Law we have in Aus. is broken, completely, that Bob Brown was extolling how much legislation was pushed through a supposedly moribund Government simply reinforced the inane nature of our Politicians. We need the judicial system wiped, and to start again, a model based on the Napoleonic System seems a good place to start.
Posted by Valley Guy, Friday, 4 November 2011 7:57:41 PM
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JS Mill.Private banks should only loan out money that already exists.Money only represents human potential and toil.You are suggesting that private banks should assume ownership of our toil and loan it back to us as debt?

Mathematically it is inevitable that debt exceeds increases in productivity.If increases in productivity get expressed as debt,then the more porductivity you have,the more debt you incur.It is happening right now.

In 1976 our total debt was 3% of GDP,now it is in excess of 53% of GDP.That is the reality.
Posted by Arjay, Friday, 4 November 2011 8:03:35 PM
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Now that we have generations of welfare dependants thanks to failed secular dogma we need to tax more and more to support the bad habits formed by the éntitlement'mentality. This current Government has squandered billions in wasteful spending and now are introducing mining tax and breathing tax.To think that more tax will solve anything except for Public servants payrises is highly debatable. Its not fair that some work hard for what they get in order to be given by those who refuse to get off their bums.
Posted by runner, Friday, 4 November 2011 8:24:56 PM
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Thanks for your observations of the Summit, Everald

Totally agree with you and the majority on negative gearing on property - it would have to be a major cause for the property price bubble.

I agree also your observations the falsity of the 'trickle down' theory. For it to be true there would have to be a greater 'multiplier' when the rich spend than when the poor do which is obviously not the case as the rich 'spend' on such things as speculation, company takeovers and saving which have very low multipliers compared to essential goods and services. Also it ignores the true theory of marginal benefits of additional income being greater for those who have little than those who have a lot.

But stamp duty - surely this acts against rampant speculation and given the exemptions for first home buyers, is a progressive tax?

Super - it would be interesting to know more about how you intend to change it. I think ramping it up to 12% is not a good thing; many would like to use it to pay off their houses rather than have it locked away.

Flat rate of tax- how would this work and how would it ensure wealthy avoiders will pay tax? Wouldn't it be better to eliminate the tax avoidance options they currently have?
Posted by Roses1, Friday, 4 November 2011 8:28:49 PM
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Of course we can build a great Australia with tax reform especially a flat tax.
Problem is the people don't want to change to a fairer tax.
Posted by individual, Saturday, 5 November 2011 9:50:18 AM
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Maybe its time Australia introduces a range of new taxes such as Super profits Bank Tax and a Death Estate Tax and clean up the mess of some non profits organizations paying no tax at all. Earlier this year the IRS revoked the status of 275,000 organizations that now have to pay tax why not take similar steps in Australia. Although my ideas are not new the millions of dollars in political donations by banks to the major political parties means my wish is simply that a cold hearted wish.

http://www.irs.gov/newsroom/article/0,,id=240239,00.htm
Posted by Ms S, Saturday, 5 November 2011 1:54:37 PM
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I can't believe you guys calling for more taxes. Talk about the slaves applauding as the chains are put on.

Talk of a fairer tax system will continue to be vain while ever no-one is able to say what would constitute a fair tax in the first place: http://www.lewrockwell.com/rothbard/rothbard149.html
Posted by Peter Hume, Saturday, 5 November 2011 4:04:32 PM
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Ms S
So governments are under the control of banks, and therefore we need more government control to protect us?
Posted by Peter Hume, Saturday, 5 November 2011 4:07:06 PM
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Methinks you answered your own question, Everald, when you observe that stamp duty is still being collected despite solemn commitments from all the States to eliminate it. If politicians can’t gather that low-hanging fruit, how should we expect them to fare with far more challenging ‘reforms’?

Negative gearing attracts a great deal of talk. I’m no expert, but I recall that when NSW Labor abolished it, rental properties became inordinately scarce, and rents went WAY up. At a time when it’s already bloody hard to justify any sort of long-term investment, making investment in property less attractive could have a serious downside. I wouldn’t touch that with a barge pole until we know LOTS more about the effects of arbitrary town planning, slow land release, complex building approvals, developer ‘contributions’ to infrastructure, and a good deal else. With housing prices so high relative to average annual earnings, buying a home is one of the very few ways the demos can accumulate valuable assets that aren’t heavily taxed; having paid off most of a $450,000 mortgage doesn’t mean you’re taxed as if you had nearly half a million in the bank. Not yet, at least, and don’t you start!

Compulsory super is a great idea, but it’ll take another 50+ years to wash through the system. There can be no such thing as ‘excess contributions’ until the balance is well over a $1,000,000: how much cash does one need to be retired for 30 years, starting, say, in 2020? Thirty years ago, average annual earnings were under $30,000. By 2050, average annual earnings will probably be ... $300,000? People need incentive to save for a more expensive future.

‘Death Duty’ is strong incentive for sick or elderly people to make sure they die broke. Does Australia suffer if parents pass on their house and savings to children, or charities? Forget it.

Australia doesn’t tax too little: we spend too much. Too many bureaucrats produce nothing for six-figure salaries, and the BER wasn’t a one-off. Leave be until AFTER minority government, okay?
Posted by donkeygod, Sunday, 6 November 2011 1:19:14 PM
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"Australia doesn’t tax too little: we spend too much."

Bingo! Or rather, "we" don't spend too much - the government does! Is there any field of human activity they are not sticking their noses in? Is there any competence they do not pretend to have on taking office?

Most of their programs are at cross purposes with some other program, all of them are wasteful, and they are a natural prey to the special pleading of vested interests. Politicians don't even both disguising that the democratic process is just a scramble for mutual plunder.

If any business did what the states have done with GST and stamp duties, the directors would be in prison for a very long time for fraud. And if any business did what the Commonwealth and States routinely do with tax, the directors would be imprisoned for collusion and anti-competitive practices. How about "misleading or deceptive conduct, or conducted likely to mislead or deceive"? Oh that's right, that's illegal "in trade or commerce", not "in goverrnment or politics".

We don't need a discussion on how the government can raise more tax, can blight more areas of voluntary society for gossake. We need a discussion on how the coercive sector keeps getting away with claiming justification for government activity that has no basis in reason or evidence.

I kinda liked practice in one of the old Greek city-states. Anyone wanting to propose a new tax had to do so standing on a stool in the agora with a noose around his neck. If the motion was not carried, the stool was kicked away.

We need to recognise these people are violent frauds and should be treated as such.
Posted by Peter Hume, Sunday, 6 November 2011 7:08:21 PM
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When the US Federal Reserve (private banksters) came into being in 1913,the following yr the income tax act was initiated.The the ATO and IRS are nothing more than agents for the private banksters since banks own your increases in productivity and loan it back to your as debt.
Posted by Arjay, Sunday, 6 November 2011 10:07:23 PM
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And no mention of a finacial transaction tax.

Meanwhile the banks are making billions profits WITH OUR MONEY.

This tax must be implemented, even on a very low trial basis.

NG, here we go again.

So tell me, wher are people going to live?

If you take away the investor, you also take away the security blanket that allows banks to lend, knowing ther is always a buyer out there.

The result, no NG will most likely see the return of the min 30% deposit. Good luck!

Collecting tax is one thing , the way it is spent is another.

First we should find ways to stop it being wasted, then we may have a chance.
Posted by rehctub, Monday, 7 November 2011 6:05:00 AM
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I've made my point a number of times previously about the fundamental unfairness of an income tax system that makes people more responsible for contributing to society if they work extra hours and make a bit more than if they are able to meet their needs from a more relaxed income stream. It may be difficult to do a lot better but talk of fairness while we tax peoples earned income on that basis is nonsense.

Stamp duty should go, at the very least it should protect those changing homes to meet family circumstances.

R0bert
Posted by R0bert, Monday, 7 November 2011 7:39:41 AM
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Yes Robert, the more you earn, the more taxes you pay, but the less rewards you get when you retire,I.e pension and benefits.

You know it's a sad world when one has to decide whether or not it is worth while doing this extra hours,due to taxes and reduced benefits, if any are claimed.

The entire logic behind the tax system is in fact a dis incentive to work harder.

Watching Barnaby Joyce today, he said the libs ar not against more tax from miners, just not in the form of the proposed mining tax.

His alternative, which has been my alternative all along, is to increase royalties.

Why is this so hard to grasp.

I know one reason is because the likes of Victoria won't get the lime share, but then again, they have never cared much about us in QLD.

I say again, tax the eggs, not the chickens.
Posted by rehctub, Monday, 7 November 2011 1:33:57 PM
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The juggle is always between simple (desirable) and fair (also desirable). Unfortunately I think the two are mutually exclusive, and some compromise in the middle needs to be reached.

From a tax accountants point of view, I would welcome simplification (I could then get on with work that actually adds value to businesses). I am very aware though that to do this to a large extent compromises on fairness - most of the depth of complexity in the current systems (yes, there is more than one!) has arisen from the desire to be fair to people who have differing circumstances. Eg given tax concessions to small businesses, or giving tax rebates (offsets) to those with particular personal circumstances.

For example it is easy to propose that a wealth-based tax is ideal, as it taxes the "rich" more. However, this quickly becomes a disincentive to save (and we dont want to end up like Greece). Income tax can discourage people from working harder (not good when we have a productivity decline anyway). Financial transaction tax we had and it was scrapped (the banks just pass it on anyway - remember FID & BAD).

I have yet to see a proposal that is truly "fair" or doesnt have unintended consequences (like a wealth tax).
Posted by Country Gal, Monday, 7 November 2011 6:32:37 PM
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I agree JohnBennetts, the first thing to do is virtually eliminate hereditary wealth. Then make the wealthy and self-employed actually pay their fair share of tax. Then stop the tax evasion, negative gearing and superannuation and share-option wroughts the wealthy enjoy. Then up the GST on luxury goods. But nah, let's just slap a wealth and assets cap on every individual.
Of course a percentage of manufacturing and production, and thus the economy, would collapse because it has evolved to cater for gross inequalities. The bogan bourgeoisie is only there to drive technological development to service the wealthy. They're like a sophisticated version of the King's tasters. The king's tasters new they were putting their lives on the line, but the bogan bourgeoisie actually think it's all about them--that they have cultivated palates!
Ah, new money..
Posted by Squeers, Monday, 7 November 2011 8:03:44 PM
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