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The Forum > Article Comments > Itís time to abolish negative gearing > Comments

Itís time to abolish negative gearing : Comments

By Philip Soos, published 11/10/2012

Despite the fact that negative gearing has existed for a long time, much assertion but surprisingly little evidence has been made to justify it.

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I agree with the author. As a trade off why doesn't the goverment abolish negative gearing but instead allow the deduction of interest payments on home mortgages on new hopes. This would benefit first home buyers who are the people who need the break.
Posted by EQ, Thursday, 11 October 2012 9:15:13 AM
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Well Philip, you have caught the snake, but it was in its middle, not near its head...

The root causes why this ridiculous negative-gearing exists are:

1. Non-uniform tax rates.
2. Tax-deductions for borrowing money.

As Peter mentioned, the rich are advantaged by a bag of taxation tricks, but they are also disadvantaged in the first place by being hit with higher tax margins. Both humps should be removed.

That some people want to start a business without having sufficient capital, is their own problem - one cannot actually forbid them to take a risk, but the proper way is to work hard and save first, then invest one's own money in business: there is no legitimate justification why the tax-system should encourage and reward the practice of borrowing other people's money instead of using one's own.

Finally, Peter is right that travel to and from the workplace is a genuine working expense that should be tax-deductable (so long of course as one doesn't stop on the way for any private matters). I would argue though that childcare is not - after all, who told you to have children?
Posted by Yuyutsu, Thursday, 11 October 2012 1:44:58 PM
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So here we have yet another lefty tyro, determined to make the same mistakes that so many of his forbears have made, to our detriment.

He's a highly qualified researcher, & will probably, unfortunately, end up advising a lefty government. Unfortunately I suggest, because his method is distorted to find only what he wanted to find.

I have never seen a proposition that was all bad, or all good. When someone tells you that something is all bad, you know they have ignored, or hidden, what they found to negate their proposition. That our Philip has found only certainty gives the lie to his efforts, which then must be treated as tainted by ideology.

From his thumbnail it appears he has his nose deep in the taxpayer trough, & has not ventured into the dangerous environment of business, let alone investment, or even had a real job. This gives us his perspective. He wants government to provide, not go make money for himself.

If we want to quarantine losses from one income stream, from the profits of another, we will have to close all universities. These are huge loss making areas, but we fund these losses in the hope that their product, graduates, will make future contributions to repay those losses.

Sound familiar? It's what we do with investment in rental property. It's superannuation run privately. Does our boy wonder also suggest tax brakes for super should be scrapped.

I suggest young man, you go get a job. Yes a real job, with no tax payer input. It may, just may allow you to get a perspective not tainted by lefty ideals, which may improve your future efforts.
Posted by Hasbeen, Thursday, 11 October 2012 2:03:11 PM
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Sorry Yuyutsu, I don't want to be unkind, but what planet have you just descended from. You can't have been on planet earth very long.

Just how many large employing business do you think we'd have without borrowing? Automotive, & appliance manufacturers would not exist, & mining would be a cottage industry, only producing enough iron for the army's swords.

Do you really think anyone, or even any company could fund a multi billion development just from capital? Is it perhaps private business you want to ban?

We could go back to the tax payer funding the infrastructure, railways & ports for the export of our products, but I rather like the companies paying for it. Without borrowings they could never do it.

Even better was our old much maligned Joh, who made the companies build the rail system they required, [which required them to borrow the money], then give it to the state. Interestingly, some of this stuff Labor sold back to the miners. Talk about a ripoff, but Joh was like that, any thing for Qld, & its people.

So again sorry mate, you'll have to find another thing to knock the landlord with. Interest on money borrowed is a legitimate cost of business.
Posted by Hasbeen, Thursday, 11 October 2012 2:27:20 PM
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They abolished negative for a time a few years ago. It caused a huge fuss because renters began to find it difficult to find a place to live. Most landlords are negative geared, so if that's not permitted any more there's no incentive to be a landlord. Better to sell the property and invest the money elsewhere.

But perhaps you prefer to abolish negative gearing and spend the extra tax revenue on government housing? Now there's a good Soviet idea.
Posted by DavidL, Thursday, 11 October 2012 2:33:59 PM
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Also agree, we need negative gearing and the traditional bricks and mortar mindset, almost as much as we need a hole in the head!
Although, I suppose one or two might serve a useful purpose, particularly if there was nothing up there to hurt?
I mean, the Irish cure for water on the brain, is a wee tap on the head.
Knocking this negative gearing nonsense on the head, would save the budget around 5 billions per, most of which could be rerouted into low cost public housing, or low cost loans, that achieve virtually the same outcome for the less well off?
It certainly wouldn't do any harm to the economy or the new home housing industry, or the tradies, now being laid off in their thousands, or doing it tough?
Rhrosty.
Posted by Rhrosty, Thursday, 11 October 2012 2:41:18 PM
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