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The Forum > Article Comments > 2012 Federal Budget: better late than never > Comments

2012 Federal Budget: better late than never : Comments

By Tristan Ewins, published 28/5/2012

For Labor stronger action is necessary to place class fault lines in clearer relief.

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Two facts strike me about this whole issue. First, (and I am quoting from memory here) in 1966, one person in Australia was on welfare. Today, the number is 1 in 5. And that presumably doesn't count the carers and the bureaucrats who service those on welfare. My question here is where does it stop? Is it really good for those involved, or for the nation, to have so much welfare dependency?

Second, (and I may not have this exactly right either) 60% of the people pay 10% of the tax. 40% of the people pay 90% of the tax. In a democratic country, it is pretty clear where this will be heading at the ballot box. Governments come under more and more pressure from the voters to spend somebody else's money.

As is often said, surely the right answer is to grow the pie rather than to tax the rich more. We should be encouraging entrepreneurs here to innovate and create businesses (instead of driving 65 businesses to the US as was recently reported) that deliver jobs and taxes. We need lower, not higher company taxes. We need much less red tape and green tape. We need much less regulation and bureacratic complexity. And we need ways to marshal and allocate venture capital.

Complaining that the rich don't pay enough tax doesn't cut it for me. Sorry.
Posted by Herbert Stencil, Monday, 28 May 2012 9:10:07 AM
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Herbert - what you say about more people on welfare is probably because: a) We have an aging population; b) We now have a disability pension; c) We need have higher structural unemployment.

The unemployed barely subsist with amongst the lowest unemployment pensions in the world; While they face very rigorous active labour market tests and 'work for the dole'. The criteria for disability pensions is tough, meanwhile, and aged pensioners have been paying tax all their lives...

Finally the wealthy pay more tax as they have MUCH MORE wealth... Gina Rineheart is now worth about $30 BILLION on her own. Yet I made the point that $10 billion in superannuation TAX CONCESSIONS go to the top *5%* of income earners. Again that's worth $10 billion. How are average workers - or single parents being forced to leave 8 year old kids on their own - supposed to feel about that?

Also it's Abbott who wants to use a 1.5 Company Tax levy to support women on $150,000 a year. I want to spend it on those who really need it.

The bottom line is that you're arguing against the economic interests of the vast majority of Australians.
Posted by Tristan Ewins, Monday, 28 May 2012 10:44:39 AM
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*Finally the wealthy pay more tax as they have MUCH MORE wealth... Gina Rineheart is now worth about $30 BILLION on her own*

Well, this is how people become suckers for media headlines. BRW
who made that claim, clearly made it sound huge, but its just about
playing with numbers, highly optimistic price forecasts for iron
ore whilst prices are actually dropping, etc. Bloomberg shaved
off around 10 billion from that figure. Then Gina does not actually
have that yet. Nor has she yet paid tax on what are speculative
forecasts about values of the future.

The Financial Review in early May did a far more detailed analysis
of wealth. To be included in Australia's richest 1%, you need to
earn something like 264'000 Dollars. Take close to 50% tax out
of that gross figure and you don't need to be rich to be classed
rich.

Top professions in terms of income are surgeons and anaethetists.
I guess they train for about 15 years to get to that point, I am
hardly going to begrudge them their money
Posted by Yabby, Monday, 28 May 2012 11:02:56 AM
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First - apologies for the typos in my first comment; Secondly, Yabby _ I don't know exactly how much tax someone on $250,000/year is paying - But the average wage is closer to $60,000/year (before tax) and some people work full time in demanding areas like cleaning for perhaps under $30,000 a year. And then workers on lower incomes pay tax as well.

So what should we do? Should the poor pay more tax? Or should we axe the National Disability Insurance Scheme or say 'to hell with aged people'?

Clearly making the vulnerable pay is not fair or right. In any case I don't imagine these people you mention would be having a hard time of it living on 'only' $125,000/year after tax... And again - when you consider super taxation concessions for the top 5% - that's $10 billion/year. Public education is faltering; people are suffering dehumanisation in sub-standard aged care; the working poor cannot afford basic dental care. What are our priorities?

"Cutting tax across the board" is no solution either - as tax can comprise a means of "collective consumption" that actually gives consumers/taxpayers a 'better deal' for health, schooling, pharmanceuticals, infrastructure etc.
Posted by Tristan Ewins, Monday, 28 May 2012 11:17:25 AM
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*I don't imagine these people you mention would be having a hard time of it living on 'only' $125,000/year after tax..*

Well its clearly not enough to convince a great many Australians to
bother with gaining an education. We are short of thousands of
mining and other engineers. We are short of GPs. The list of
specialists which we are short of, is quite long. People do the
calculation of what is left after tax and vote with their feet.
They don't bother to educate themselves. Pay them less and even
less would bother.

But my real point was that you don't need to earn much to be in
the top 1%. There are far less so called rich people around then
many think. But of course people read a few newspaper headlines
and imagination does the rest.

Swan did in fact limit what can be paid into super, which will
give the Govt another billion to spend on the welfare bill, which
is already around 130 billion $.

What is wrong with people using the value of their home, if they
want to enjoy a cushy retirement? Plenty of people in Sydney and
Melbourne live in houses valued at 6-9 hundred thousand, yet refuse
to draw on that value, as they want to leave it to the kid or kids.
Do we really need so many future rich kids? They are already going
to inherit more then any generation before them.Its always the
same. People seemingly want everyone else to pay, but eventually
spending other peoples money kind of runs out.

I do agree with you that Abbott's suggestion of paying women earning
150'000, is crazy. I can only guess that he was trying to buy the
female vote, even only a few % would take him over the line. Its
poor policy IMHO
Posted by Yabby, Monday, 28 May 2012 12:03:19 PM
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Yabby,

The number of medical students is limited by the number of university places the government is prepared to offer, not by the number of qualified people who apply. The tertiary entrance rank cut-offs for the more lucrative and prestigious courses are far above the level of performance needed to succeed in the course. For example, see these cut-off scores for the University of Western Australia.

http://www.tisc.edu.au/static-fixed/statistics/cutoff-ranks/2012-cutoffs-uwa.pdf

That is why the cut-off scores can be significantly reduced for full fee paying students.
Posted by Divergence, Monday, 28 May 2012 12:50:00 PM
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