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The Forum > Article Comments > Global financial collapse: What’s happening to us? > Comments

Global financial collapse: What’s happening to us? : Comments

By Bryan Kavanagh, published 27/4/2012

The GFC is the inevitable outcome of a pathological tax system.

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This proposal would simply drive up rents and impact most negatively on the poorest most vulnerable members of society; any additional costs would simply be passed on. Moreover, those just able to carry the current burdens imposed by home ownership, rates insurance and mortgage repayments etc/etc; would likely find themselves, with nothing left to sell; and facing the bailiff and forced auctions; and a lifetime struggling with extremely high and quite grossly unfair rents; and or join the ever swelling ranks of the homeless or squatters, who by the way pay neither rent or land tax!
Besides, we already build 160,000 less houses per annum than our population and economy needs. Ideally, we should embark on building these homes on resumed land as very low rent public housing high rise projects hugging already existing urban rail links. The bottom 2 levels could incorporate all manner of commercial enterprise including cottage industry and the rents could progressively rise with levels, or be means tested or both.
This would remove the possibility of these projects simply becoming post code poverty traps or no go lawless ghettoes?
As public projects they would contribute to Inland revenue, but particularly once the capital outlays were recovered; over say the first thirty years. Currently unavailable thirty year bonds, could be created to raise all the necessary capital.
These reinforced concrete towers would last or have a useful life of over 80 years; given concrete reaches its maximum strength in 80 years.
Median house prices used to absorb an average wage for around seven years, now the average is 30. The Authors obsession with a "GREEN" land tax would push it out beyond the average income earners' working lives; increase and widen the gap between the haves and have nots, decrease discretionary spending the domestic economy relies exclusively on,[which by the way is around 70% of our entire economy,] create a recession, which could only ever progressively deepen; and for all those reasons, is quite grossly and inherently unfair!
Conversely, an stand alone expenditure tax, which I've explained at length elsewhere, would do exactly the opposite! Rhrosty.
Posted by Rhrosty, Friday, 27 April 2012 11:02:34 AM
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Someone doesn't understand his benefits of land taxes compared to expenditure taxes. Rates and land tax are already situated in the gross rent paid by a tenant and can't be ‘passed on’ again to the tenant, as indicated here:-

1 Though the landlord is in all cases the real contributor, the tax is commonly advanced by the tenants, to whom the landlord is obliged to allow it in payment of the rent.
- Adam Smith "Wealth of Nations" Book 5, Ch 2

2 A tax on rent falls wholly on the landlord. There are no means by which he can shift the burden upon anyone else... A tax on rent, therefore, has no effect other than the obvious one. It merely takes so much from the landlord and transfers it to the State. - John Stuart Mill (1806-1873) "Principles of Political Economy" Book 5, Ch 3, Sect 2

3 The power of transferring a tax from the person who actually pays it to some other person varies with the object taxed. A tax on rents cannot be transferred. A tax on commodities is always transferred to the consumer. - Professor James E Thorold Rogers "Political Economy" 2nd ed Ch 21, p 285

4 A tax levied in proportion to the rent of land, and varying with every variation of rents... will fall wholly on the landlords.
- Walker's "Political Economy", p 413

5 A tax on rent would affect rent only: it would fall only on landlords and could not be shifted. The landlord could not raise the rent, because he would have unaltered the difference between the produce obtained from the least productive land in cultivation and that obtained from land of every other quality. - David Ricardo "Principles of Political Economy and Taxation" Ch 10, Sect 62
Posted by freddington, Friday, 27 April 2012 12:36:08 PM
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Landlords can't pass on increased charges, rates, insurance, land tax? Ha ha ha ha, oh my aching ribs. Why can't they? Because some academics say so in books! Really? Oh ha ha ha. You mean we should believe academics, which a 20 year study conducted by an ivy league university, demonstrated that their averaged accuracies are no better than a dart throwing monkey. Or are able, it would seem, to routinely set aside the immutable law of cause and effect, hence the endless boom or bust nature of most economies.
Economics is hardly an exact science!
We already have the highest median house prices in the English speaking world, and now rate Sydney as the most expensive city, where rents are higher than NY or London, the previous record holders?
A land tax as proposed would simply further exacerbate affordability issues; and, anyway, onerous stamp duties are already a de facto land tax? We should simply get rid of these charges.
We could replace stamp duties as revenue raising, with a very harsh harsh annual capital gains tax on all undeveloped rezoned land; to virtually cancel out any unearned and therefore undeserved profits.
The world is in the state it is today and the GFC was caused by people accessing unearned profits; that were in no way tied to productive effort or enterprise.
This is what we must get rid of unless we want to almost endlessly repeat the unlearned lessons history provides us, as opposed to the untested untried and implausible intellectual concepts of ivory tower dwelling academics; or indeed, those who seemed to have taken up permanent residence in dream castles in the clouds, replete with strange or unusual echo effects? Rhrosty.
Posted by Rhrosty, Saturday, 28 April 2012 9:30:12 AM
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Bryan,everyone is arguing about the effects of the GFC and not the fundamental causes.

Since 1913 with the Instigation of the US Federal Reserve the West has been consumed by debt,recessions,depressions and war.Prior 1913 the US Govt created the money to equal inflation + growth and did not have to borrow from private banks.Here too in Australia the Commonwealth Bank when instigated in 1911,created from nothing some of the money to eaqul our productivity which helped keep our Govt out of debt.In 1914 the income tax bill was initiated to pay for WW1 war debt.Who financed this war and loaned money to all sides? Yes the bankers of Europe who now have the power of money creation over the USA.Bankers now control Italy and Greece.

With the instigation of the US Fed in 1913,they got their income tax bill in 1914,so we soon followed in 1915.The income tax was needed since Govt in the USA had no longer the power of money creation.This gave private banks the power to own our increases in productivity + inflation and loan it back to us and our Govts as debt.We became their debt slaves since we longer owned our increases in productivity.

By 1922 Billy Hughes had scuttled the power of our Commonwealth Bank to create new money that kept our taxes low.Finally the Commonwealth was buried by Paul Keating.

Private banks should not have absolute power over us by expressing our productivity as debt.Private banks should only be allowed to loan out money that already exists.This is the fundamental cause of the GFC.Bankers have too much power and the free market has not been allowed to operate.
Posted by Arjay, Saturday, 28 April 2012 10:00:47 AM
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Dear Rhrosty,

Landlords hate land tax because they can't pass it on. So they campaign against it - by pretending that they *can* pass it on! If you scoff at the authorities who declared that land tax can't be shifted, see if you can refute the logic at http://blog.lvrg.org.au/2011/08/why-land-tax-cant-be-shifted-onto.html . And here is a mathematical argument (admittedly oversimplified) explaining why land tax reduces the ratio of the annual cost of home ownership to the annual cost of renting: http://www.grputland.com/2011/12/how-tax-causes-financial-crises-and.html .

Your "expenditure tax" looks suspiciously like a cascading turnover tax, which I debated with its leading proponent at http://forum.onlineopinion.com.au/thread.asp?article=12914&page=0 . See also http://www.prosper.org.au/2005/11/07/critique-of-the-debits-tax-and-turnover-tax/ (posted in 2005, but written in 2001 if memory serves). Fortunately, a cascading turnover tax is one of the few tax reforms that has less chance of being implemented than an all-in land tax.
Posted by grputland, Saturday, 28 April 2012 8:11:02 PM
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This whole idea is just too stupid for words. What, treat land, all land, as a national resource (as against private ownership), with rent payable to the state? So, would this be irrespective of usage of the land, or would drug dealers, pimps and madams pay higher land-rent according to profitability? As also would high-tech, highly profitable small business and real estate agents? Or will it be a level playing field, so that a landlord of an average two-bed house in the burbs will cop the same as someone owning and living in that same property?

Pooh-ha-ha. How can any land-rent scheme relate to productivity and profitability as company and private income taxes do under our current system? We have a Carbon Tax and a proposed Mining Resource Rent Tax, aren't these already enough of a nightmare of confusion and division as to implementation and impacts?

Tax land beyond current Council Rates and Land Tax and food will have to become more expensive, and residential and commercial rents, and the costs associated with owning your own home - and could never equate with the GST and tax on profits, at least not without the most convoluted piece of Big Brother oversight, and a helluva lot of pain for all concerned. Give over, gentlemen, someone has their wires very badly crossed.
Posted by Saltpetre, Sunday, 29 April 2012 1:07:21 AM
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I didn't realise the meaning of poor until I found I couldn't afford to rent a house in Cooktown, Far North Queensland or Canberra. Having moved house just too many times, I'd hope the move from Far North Queensland to Canberra would help - given Canberra is Australia's capital?

There comes a time when sharing rental accomadation just doesn't work. After three rental arrangements that appeared on the outside to be alright, given the affordable price, I found I had to flee all three. Lower-rental share housing with people you don't know can be risky.

The point is, no housing options... leads to 'at risk' living, a cycle of desperation where poverty begins. Few ever recover from an experience like this. A persons mobility is everything. When it comes to having confidence. Once you feel you can't move, find a suitable place to rent... [or even share rent] a platform and means to rebuild - take calulated risks.... life becomes a bit narrow.

The burden of this housing obscenity in Australia points to the heart of Australia. As a public we have no-one to blame but ourselves. Our core values fall sharply when it comes to what we are doing as individuals in our own lifes that in turn adds up to be the downfall of our society in reality. Using housing to sustain profit has to be among the lowest of all human values. We can quote history twenty million times and it makes little difference. We are entering an era of major division of human time that is a subdivision of an eon ago now being subdivided beyond return. Our fate rests with ourselves. While so many use the housing market to accumulate profit we light the fire that bedevils the same crisis as those in the lesser developed nations.... an equation we watch and allow comfortably, only now we are too, doing it to ourselves.... as if we didn't know! While we play this horrid game of individualisation, the game will bite, less we get more of those comfortable standing up against this horror-stricken baseline, scenario.

http://www.miacat.com/
Posted by miacat, Sunday, 29 April 2012 1:59:24 AM
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It is not a game of" individualism" Miacat.It is a game of "collectivism" for a few elites.They have been telling us for decades now that the individual must pay more taxes for the greater good and give up their rights as an individual.

You see big business, bankersand Govt work against the individual. Why is there so much debt? You're increases in productivity get expressed as debt.Our Govts should be creating your increases in productivity and you should not be paying any income tax or GST or Carbon Tax.

The collectivists have taken away from the individual the right to keep his own money thus nearly all of us are now looking at poverty.It is not for the greater good, but for the greed of a few that this collectivist lie is being spun.They all do it whether they be Socialist, Capitalist, Communist or Nazi.

Our Govts are also limiting to supply of land to keep prices high and taxing developers so much that they don't want to buld more houses thus creating a scarcity.
Posted by Arjay, Sunday, 29 April 2012 7:27:09 AM
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miacat, see this short clip by comedian George Carlin, he sums it up like no one else ever before. http://www.youtube.com/watch?v=i5dBZDSSky0
Posted by Arjay, Sunday, 29 April 2012 7:37:58 AM
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A visiting Republican Senator said while speaking as a guest on Q&A; " you always reach a point where complexity becomes fraud". Quote unquote. Tax evasion and or avoidance is only made possible by our extremely complex convoluted mind-numbing, 40,000 page tax act, and absurdities like the double tax act of 1953. Or indeed, the need to stump up around 7% of the bottom line just to comply with the act, a figure that will likely top 11% when we transition to a POLICED complex carbon trading scheme. The operative word being scheme; given less revenue will be returned, but costs will rise as the carbon trading barons collect a 140 billion dollar international pie, which will like every other impost, be passed on down to those who cannot pass on their operating costs.
Ordinary folk who's productive inventive minds and hands, blood sweat and tears, create all the wealth we share?
Debt laden tax avoiding speculators wrecked the Irish, Icelandic, Spanish and other economies.
A land tax will be passed on in house and unit prices or returned to the people, as speculators seek shelter in legal instruments, bankruptcies and spousal transfers etc/etc? This is borne out by historical realities totally at odds with ivory tower dwelling perpetually pontificating academics.
However, a single stand alone unavoidable expenditure tax is very hard to actually pass on, given the fierce competition of normal business further compounded for retailers and others, by the realities of globalised web assisted marketing! Nonetheless the end of compliance costs, the central feature of a stand alone expenditure tax, returns all current compliance costs, which in many cases, will provide an after tax net benefit. This is why those currently earning the overwhelming bulk of their income as completely unproductive tax practitioners, argue so vehemently against it, and or in favour of even more complex arrangements, as would likely occur with the proposed land tax? Rhrosty.
Posted by Rhrosty, Sunday, 29 April 2012 10:50:37 AM
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The George Carlin video clip says it all. We, the people (also known as the sheeple) are being screwed without mercy by the rich.

The game is rigged and, truly, we aren't in it! Those who live along the harbour foreshores are in it bigtime. They even deny us the right to walk along the water's edge.

When are the sheeple going to wake up, rebel against the Parasites and Predators who feed upon us and laugh at us from their mansions?

Such people have never heard of equality. It's a word that makes them afraid.
Posted by David G, Sunday, 29 April 2012 11:35:36 AM
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Miacat when I came back to Oz, with very little money, I worked in the resort industry. It was not too hard to earn enough to live reasonably well in tourist areas of Queensland. The same income verses cost of living should apply in Canberra.

By moving to employment in a resort, where accommodation & food are part of the package, there was not much income, but limiting grog & tobacco, I was able to buy a block of land each year. Perhaps you have sort the wrong employment, or are you living on welfare?

Perhaps your choice of area is not very good. I know rents for 2 bedroom homes in places like Lithgow or Jandowe are often below $150 a week, & often lower. Perhaps they would suit you better.

We have quite a few towns in Oz in decline due to demographics, & they are inexpensive places to live. Often despite that decline, they are excellent places to live, with a really great spirit. Try one of them.
Posted by Hasbeen, Sunday, 29 April 2012 2:41:59 PM
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I appreciate your point Hasbeen however we all live in a differant circumstance. After cylones, fires, losing home and business, it gets a little hard to constantly start again and again and again.

As a Migrant I'd lived in 53 housing arrangements before I was thirteen, before I came to Australia. As you can imagine I am virtually self educated, have been dealing with part-time under-paid employemnt most of my life. Now as I reach my later years... my health is not as youthful as it was, neither is my attitude. I have spent many years trying to be the best citizen I can be. Independent and progressive. This last move however cost skin. It has been a shock. I do not feel I can take more risk without some better resources. I have no desire to live in the middle of a Tourist environment as you suggested, just to say yet again... I work part-time. I certainly have no desire to LIVE-IN a hotel/motel work place.

Afforable Safe Housing is key. Base to building on life-quality and imagining what that means when you are not economically mobile.

I don't know your circumstance Hasbeen, and I hope your comment doesn't mean that the lack of Housing availability is Good for Australia. Buying a block of land each year is not the kind of production I wish to be part of. Just one home would ethically speaking be more then enough.

http://www.miacat.com/
Posted by miacat, Sunday, 29 April 2012 4:00:39 PM
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Miacat I have lived in quite a few places that I chose because of a financial advantage, rather than a desire to live or work there. This is life. We can't expect to be provided with what we want, where ever we want, just because we would like it.

I for example, would not chose to try to work part time, & live in one of the more expensive cities in the country.

When living on resorts I bought land because I did not want the worry of renting a house. However I wanted to be on the inflation elevator, with home owners, rather than leave my money in the bank. I was buying land that I might build on later. When I decided not to build, it meant I could buy a home, if only a cheep one, without too much debt.

So I'm sorry to say, those who missed the boat, often have only their own life choices to blame. I spent many years doing exactly what I wanted to do, & enjoyed every minute of it. This is exactly why I found myself into my 30s, with not very much to show for all the years. I had to bite the bullet, & start to catch up with the race, for a while. It was 20 years before I could go back to playing games of choice.

I hope you find your goal, but think you may have to pursue it in some place where the costs are a little lower.
Posted by Hasbeen, Sunday, 29 April 2012 4:43:07 PM
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Saltpetre, what a joker you are! I thought you were talking tongue-in-cheek. Then I kept reading, and I think you might be serious. Seriously!
Land is valued now, not by what a pimp might use it for, but what society wants it used for - commercial, industrial, residential or rural. The best land sells for more, because it offers greater opportunity, amenity or productivity to the buyer.
The whole idea of a land rent scheme is for businesses to retain more of their profits. Land rent would replace initiative-killing company taxes, sales taxes (GST), and income taxes. That's how to make an economy productive!
As for the residential sector, the value of land is well known already. Those occupying expensive land would pay more than people occupying less desirable (cheaper) land. Now that's fair!
Posted by foleo, Sunday, 29 April 2012 5:19:48 PM
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Good for you Hasbeen. You didn't answer the question. Are you happy with the way land and housing prices have esculated?

Are you happy that Australia is coping with a housing shortage and that for many, owning their own home is out of reach. That the rental market is unstable unless you are prepared to pay 3/4 or more of your wage on rent?

http://www.theaustralian.com.au/national-affairs/housing-shortage-threatens-living-standards-economic-prosperity-report/story-fn59niix-1226227537771

You appear to look after yourself very well. I bet you have a stable family background, a proper opportunity for education and what some people call a more "normal" cultural sort of life-style when it comes to being able to make the "choices" you say you have made.

http://www.acoss.org.au/policy/housing_homelessness/

The point is that many people from diverse backgrounds are and have been locked out of mainstream even though they too have worked all their lives.

Wir können keine Beratung für Menschen, die wir nicht wissen, bis wir sie besser zu verstehen sein. Dann haben wir jeweils eine Auswahl treffen zu Fuß oder zu nicht mehr gehen ... an der Seite von ihnen. Das ist unsere Entscheidung.

Are you proud of the fact that there are so many homeless, so many living in undesirable conditions or are you just such an optimist that none of the "fair-go" values in life really count when push comes to shove?

Diejenigen von uns, mit fragmentierten Migrationshintergrund oft verbringen die meiste Zeit mit dem Nachholbedarf. Zuerst haben wir, um die Sprache zu lernen Englisch haben, dann müssen wir herausfinden, eine Ausbildung oder den Handel, nach, dass wir vielleicht eine Chance für Haus und Familie zu planen - wenn alles klappt.

http://www.tai.org.au/documents/downloads/DP85.pdf

Klingt einfach, nicht wahr ... We all have different stories, Klingt einfach, nicht wahr, Hasbeen.

http://www.miacat.com/
Posted by miacat, Sunday, 29 April 2012 11:43:02 PM
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I have had many arguments on this topic Miacat, when I say I believe that kids today have it much tougher than I did.

My father would mention that he had a depression, followed by war, which made their lives hard, & getting assets difficult. I agree with him, but reckon it's tougher for my kids.

Dad & I were paying something like 7.5% income tax in the 60s, on the average wage, & only 4.75& interest on a home loan. Finance companies charged 8% which was considered usury. The rapidly increasing number of "underprivileged" who need help has greatly increased the tax rate for todays kids, & using high interest rates to manage the economy is about as stupid an id as is possible to imagine.

However home ownership was still not too difficult to achieve into the 80s, so I don't have much sympathy for people who were earning reasonable incomes then, & did not use the opportunity, if they whinge today. Most of us make our own choices, & can expect to live with those choices. I do agree that the rip off money grab by many state governments has made land too dear. Add the greenie resistance to green site development, & the younger ones have a problem.

I don't have much sympathy for most homeless people, as so many have no one to blame but themselves. My wife is a counselor with a welfare/employment agency. She deals with the long term unemployed. She has awards for getting the highest percentage of her "clients" back into work, & life. Quite a few of these have been "homeless". She also gets a great deal of abuse from yobbos who not only don't want help, but object to anyone who interferes with their useless bludging lives.

I'll give you the details if you like.
Posted by Hasbeen, Monday, 30 April 2012 2:49:52 AM
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Hasbeen, would you have been able to afford to own land, if a punitive annual rent/land tax had been in operation. I also worked in tourist facilities and earned a nice income during summer holidays, none of which had to be out-laid for food or accommodation.
Instead of land, I put a down payment on a fixer upper; then another. Well,it gave me somewhere to live. I was a fair if self taught carpenter and the profit earned helped defray my tuition fees.
Had a land tax been imposed; that option would have been closed off to me, along with any self funded tertiary education options. Moreover, I likely would have been obliged to join the ranks of permanent renters?
For those on work start, renting is almost impossible! Of some 2,000 Sydney.Melbourne accommodation options available, even with rent assistance etc, a study found only 40 or 2%, were found to be affordable. [Housing affordability measured by it not consuming more than 30% of rent assisted income.]
I'm all for people getting off their butts and moving to where the work is; and applaud govt initiated payments, that help achieve that for the more industrious; but object to rents as high as $2,000.00 a week; as rent outlays in many of the mining towns or Darwin?
Or indeed, a single bed-sitter in Sydney costing more than the fortnightly income of a single pensioner!
The proposed land tax would simply exacerbate the affordability factor, particularly in our already overcrowded, gridlocked capital cities! I would instead, repeal welfare for the rich negative gearing and let the chips and cries of outrage from the seriously better off, and the seriously over populated real estate industry, fall where they may.
Just this one reform would raise/claw back in excess of 5 billion annually? Possibly more than would be the net return of the proposed land tax? I can't see repealed negative gearing impacting very much on the most vulnerable; given only around 2% of currently available housing, [church and charity owned property,] being affordable for the less well off or disadvantaged. Rhrosty.
Posted by Rhrosty, Monday, 30 April 2012 1:56:18 PM
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Micat; we can not provide advice to people we do not know until we have to understand them better. Then we each make a choice to walk or not to walk--- on the side of them. This is our decision.
Those of us who often fragmented migrant spend the most time with the backlog. First we have to learn the English language, then we must find out an apprenticeship or trade, after that we might have a chance to plan for home and family-if everything works. Make love not war. I hope the translation is inherently correct? Cheers, Rhrosty.
Posted by Rhrosty, Monday, 30 April 2012 2:33:26 PM
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So, is 'foleo' a pseudonym/nom-de-plume for one Bryan Kavanagh?

Seriously serious? You betcha.

Work, save, and pay off a piece of land and a house - and then, in addition to rates and taxes for services, keep paying to 'rent' what you've already paid for? And, in your scenario, IF the land is deemed (by whom?) to have become more valuable, then, even if you're on a fixed income (superannuation/pension) you will be required to pay a higher 'rent'? Where would it end? Have a heart.

Income tax is based on earnings, and hence, in normal circumstance, capacity to pay. Conversely, in your scenario one would pay 'rent' based on land value irrespective of use - retired on pension, or making a motza manufacturing whizbang widgets? Fair and equitable? I don't think so.

Rhrosty,

I take it your expenditure tax is like a GST, except that no-one can claim anything back for the tax paid on supplies, services, or equipment - so, in value-adding the full cost has to be passed-on, so everything gets dearer, and people end up paying this tax all the way up (or down) the line. Certainly smacks of double-dipping to me? And, a significant disincentive to small and medium enterprise. However, Big Co might then be able to expand to include all segments of operations, from primary materials (eg mining, smelting, agricultural production and machinery manufacture, etc), and then, having value-added all along their in-house production stream, end up paying the tax only on the initial inputs and labour. A very non-level playing field?

Rescind negative gearing? Might make housing more affordable for owner-occupiers, but would make buying or building an investment property more expensive. As some with spare capital make more housing available by investing in property, removing this affordability incentive (negative gearing) could end up with higher rents and even less residential accommodation available?

Want to make more housing available and affordable? Get government to build heaps of cheap housing on government land. Prioritise.
Posted by Saltpetre, Monday, 30 April 2012 3:25:04 PM
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Yes Rhrosty. A special gift for your innovation through a song.

http://youtu.be/poaXgXQmdIo

Thank You Rhrosty.

We a thought back to the point underlying the heart in the question by articles author... "What’s happening to us?".

I have always worked within community and until recently was able to contribute original and creative in thinking, as a project manager. Today however, I feel we are at the edge of a new era. Unless we consider our changing environment at ground level I fear that Australians and, the issues faced by many in demographics [young and old] will have nowhere to live... struggle to survive - struggle to find justice as governments struggle to provide the right kind of policies for what is realistically ahead. Affordable Housing is a base to most other issues that go with a persons essential needs. Don't you think?

Todays Health report said it clearly on the ABC.
http://www.abc.net.au/radionational/programs/healthreport/adolescent-health/3980102

Hasbeen. TA for your input, I find it interesting but a bit narrow. Having worked in disadvantaged sectors most of my life in Australia and overseas I find your portrayal combative, favoring confrontational methods that appear to rest on blame and shame.

My own world view is based on planing inclusive communities that build on social cohesion. Equity is key when looking at what is ahead and planning for it. Australia has a deep Housing issue, at local Council levels, through to its national criteria. Which people like you duck the issues.... The inequality we face will move into even more serious dimensions.
Posted by miacat, Monday, 30 April 2012 7:24:54 PM
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Saltpetre; no I'm not BK. But I like what i read from him.
Lets look at your comment:
You say: Work, save, and pay off a piece of land and a house - and then, in addition to rates and taxes for services, keep paying to 'rent' what you've already paid for?
I say: We should pay off the house, but always pay rent for the land. No other taxes - just land rent. By what right do you claim ownership of a natural resource? Next, you'll want to own the sky, the ocean, and the wildlife. All of this is "Res Communes", as the Romans called it.
You say: IF the land is deemed to have become more valuable, even if you're on a fixed income you will be required to pay a higher 'rent'? Where would it end?
I say: The end is the same for all of us. Land is valued by valuers, a professional occupation. I'm happy with that. If the rent is beyond the means of pensioners, then defer the debt until death or sale of peoperty. Many councils do that now for rates. Not a problem.

You say: Income tax is based on earnings, and hence, in normal circumstance, capacity to pay.
I say: Income tax is paid only by a few PAYE people, caught in a trap they can't escape. Rich people can and do avoid it.
You say: Conversely, in your scenario one would pay 'rent' based on land value irrespective of use - retired on pension, or making a motza manufacturing whizbang widgets? Fair and equitable? I don't think so.
I say: We would all have the choice of living where we want/can afford. Rich people will choose to live in expensive suburbs, and pay much more. That's fair. With deferral for hardship cases, poor people can see out their days in their own house, while eventually repaying the market rate for the land they occupy. Why should anyone get a free ride, especially while holding other worthy users out of that space? So, that's equitable.
Posted by foleo, Monday, 30 April 2012 9:13:57 PM
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foleo, if somebody wants my space, they can buy it - from ME. Have you noticed what's been happening with capital city real estate (particularly in Sydney)? It's been skyrocketing. Soon, only those on a high paying city job will be able to live anywhere near the CBD, and the also-rans and pensioners (even those who put together a nice retirement nest-egg) will have to be moving to the outback. (But that's ok with you I suppose?)

I can see your idea of taxing land and nothing else, as a clean sweep, a way of simplifying taxation and user-pays, but I don't see how this ties in to productivity, or how it can ever hope to meet the cost of all government programs - unless the land 'rent' became so expensive that most people would have to live in those cubby-holes they rent in Tokyo.

As for owning waterfronts, beaches and ocean and fishing rights, some people do - the 'chosen ones'. Or do you exempt our Indigenous Land Rights holders from the 'rent' net?

I still think this 'land rent' scheme is half-baked, and offers nothing towards increasing affordable housing, nor in making taxation more equitable.

The future lies in productivity, and only taxation based on production is capable of being fair and equitable - IMHO.
Posted by Saltpetre, Monday, 30 April 2012 10:49:45 PM
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Yours is the half-baked argument, Saltpetre. Tell me, would you pay the same amount for a parcel of land with an annual $2000 land tax on it as you would if it didn't have such a charge? No, of course not, you'd pay less. Land taxes, or rates, on properties act to REDUCE their price: taxes on goods or services INCREASE their prices. Land tax has nothing to do with assisting affordability? Get real, Salty!
Posted by freddington, Wednesday, 2 May 2012 5:00:54 PM
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