Corin,
What absolute rot. The best tax policy is one that puts more "real" money into the ordinary families budget. Is one that taxes mining companies more for exploiting "our" assetts. Is one that repeals the high level of poverty/homelessness in this "wealthy" nation, that is the best tax policy, one where everyone gets a "fair" share. In other words the exact opposite of the current one.

Shonga,

Neville Wran was reputed to have advised Bob Hawke circa 1983, if the greedy bastards wanted spiritualism they'd join the Hari Chrishna - and I think that premise is always worth keeping in mind.

That said, work incentives are better in my view than money in the pocket - though clearly they are similar concepts.

Australia has by world standards as well minimum wage levels that are the highest in the OECD at least measured as regard to domestic median incomes (I believe).

There is little doubt that effective marginal tax rates pushing 60% when welfare is phased out and high minimum wages are keeping the workforce participation rate down. And all Australians are worse off because of this - whether due to higher welfare costs or even just slower economic growth rates, but both in truth.

So - what to do? Well - we could keep minimum wage levels at or below CPI increases but return money into award workers pockets via tax relief (credits).

It has the spin-off of improving employment rates and work incentives at the same time.

Whether it is politically sellable is a bigger question - I think it could be - but would take a very gifted reformer - the best. A proper leader - certainly better than any of the parties have.

Thanks for the response,

Corin

Corin, I know much of the work (and most of the economists) you refer to, and I think you pull it together into a good case. I suspect that many senior advisers such as Don Henry grasp this, whether their "masters" can shift perspective sufficiently is the issue. I can't see it from Beazley, Howard may be too locked in to anti-unionism to accept a greater role for (freely employee-chosen) collective arrangements but he and Costello should recognise the merit in most of what you propose. Howard's "legacy" would be greatly boosted if he shifted the incentives structure for work and education/training so as to bring un/under-employed into employment.

Corin

I believe you presented a convincing argument, particularly in relation to education incentives. I find my biggest gripe with the current government is the barrier they created for mature aged students in studying everything but nursing and teaching. My intention was to do what Amanda Vanstone did and study law part time over 10 years.

What I would add to your argument is to not only provide educational incentives (beyond teaching and nursing) but to add a further incentive in the way of housing concessions to those welfare recipients undertaking tertiary studies. Accommodation costs around university campuses are astronomical.

Possibly, having been granted these incentives, upon completion of studies, the graduates could be available for government service of some sort, such as the doctors who were expected to complete country service for three years upon graduation a number of years ago.

Faustino - cheers for the comments.

Liz - I agree, I suggest you review the work of Fred Argy, he will point you in the direction of well tailored investment schemes for people who need a "chance in life" to excel.

It can be a very lonely road making arguments that are unpopular, such as very high minimum wage levels potentialy hurting the poor (through negative employment effects on the most vulnerable), but being honest is the most vital ingredient, and good societies prosper from proper analysis. At present the current IR debate is a farce on all sides: we should expect more. I would ignore what Howard and Beazley say and read economic opinion. Read the reports I attach in this piece.

Cheers,
Corin

Corin
Sadly Australian dollars will buy a kings ransom in South East Asia, however ordinary families live and budget in this country, with wages and conditions being slashed at the moment, ordinary families who are already struggling to survive, will go under if their wages drop further. Small business will go under with them, as if families have no money to spare small business is the first to feel the pinch.

This is a negative domino effect, one cannot say wages are too high without condemming today's anouncement of another C.E.O. getting a 66% wage increase while the majority of his fellow Australians are chugging along in reverse. Home ownership is becoming more distant for first home buyers, as a result they are slipping into the high rent market, trying to feed clothe and educate 2/3 children on $350.00 net per week, ends are not meeting, as shown by Australians foriegn debt, the only sensible answer is to put more $ in the ordinary families budget, so they can circulate it through our economy.

As everyone addresses the problems of the unemployed in the third person I feel somewhat voyeurish reading this article and post - which is relevant to my point.

Instead of writing the unemployed off as a problem, it would appear to me that the most economically viable way of assessing us would be as currently wasted assets. While economists and Ministers continue to speak in the abstract about the effects of downsizing and work agreements it appears that they are slow to recognise the effects these have had on the demographics of the unemployed. While main stream Australians continue to regard the unemployed as shiftless, unskilled and inhabiting some wasteland of socio-economic slumland, things have in fact changed drasticlly down here in the vast underbelly of Oz.

I have been unable to find the results of any survey which collates the numbers of skilled or tertiary educated unemployed persons. Neither Centrelink itself nor Government agencies have any regard for such persons and continue what seems to be a punitive policy of ignoring peoples skills and qualifications in order to set them to menial or labouring jobs; thus enforcing the feeling of culpability one feels about being jobless. The very real problems devolving from this are a causual factor in our soaring mental health problems.

Rather than various departments finding "solutions" to a problem they have no working knowledge of, inter-disciplinary consultation is vital: not only amongst departments such as Education and Health, but from amongst the ranks of the unemployed themselves. Nurses, child-care workers, skilled tradesmen...rather than allowing their much-needed skills to be lost, could be utilised to administer training and courses to other unemployed persons. If other Australians could only be made to understand that the ranks of the unemployed have swelled over the past few years with middle class, trained personnel who are, in fact, sentient beings, we could be turned into assets to the economy.

Romany,
I am a disabled pensioner, who feels your pain. Having only risen to the humble position of purchasing clerk, I appreciate what it is that you are saying. Our most precious resource should be our people, especially our intellegent, educated people. Apparently our economy is squed in such a way that your type of person is redundent in it? Why.

My disability is generalised anxiety disorder with accompanying chronic major depression, insomnia, and phobia's. A compliment of the pace, and workload of the end of the 20th century, a precursor to the 21st century. I am genuinely "good for nothing" somedays I simply do not have the emotional strength to get out of bed, a disgusting state of affairs for me I can assure you.

Back to you and this economy, I expect what it is trying to coerce you into doing is to start a small business, risk your life savings, which may end up in the pocket of a wealthy person, then go to the government for support, which will not be forthcoming. You can then be classified as a "business failure" to add to your woes. The sad part now is that if you have a nervous breakdown as I did, you will not nessescerly go onto a disability pension, but newstart instead.

Meaning that you will have to spend your pittance on petrol to apply at job interviews, petrol is cheap anyway, if you are an MP.If I sound sarcastic, it is only because I am. Unemployment 4.9% ? Yes if you count people with anything over 1 hour per week as employed.

Shonga, I think the overall aim is high real wages. But Australia's minimum wage is a very high proportion of average wages, a far higher proportion than in other OECD countries, and many people can not be profitably employed at such wages. Better to get them in the workforce with lower wages (and better welfare-to-work transition arrangements) than leave them unemployed. Once you are currently employed/have recent work experience, more opportunities open up.

I'm also a disability pensioner, no prospect of working regularly, as a result of work-related depression which exacerbated viral illnesses, so I'm also aware of that side of the equation. Like you, I can often do little or nothing, I did manage to do a little paid work from home on a when-I-was-fit-to basis, it showed that I could still produce (as an economist) but demonstrated how far I was from being able to work regularly or reliably. And I accepted a low pay rate rather than turn down the opportunity.

PS the paid work followed work which I agreed to do free as (a) I thought it was in the public interest and (b) to see if I still could.

Faustino,
I understand your reasoning, however I find it absolutely incredible that the economy is unable to afford to pay ordinary working people, starvation wages of the type I "didn't" enjoy, yet it can afford 66% pay increases to c.e.o.'s on million of dollars to begin with. Imagine how many ordinary working people could be employed on subsistance pay rates as I was, for the cost of all the grossly overpaid executives in this country adding to labour costs. I am not suggesting executives be reduced to our subsistance levels, merely that the formula return to the 70's where an executive was paid 4 times the average weekly earnings, instead of the current 60 times the average weekly earnings. If that were to occur perhaps the cost of Australian labour would drop to a level where we in the starvation wage bracket, or now starvation pension bracket could be afforded a little more money in our pockets, which we would then circulate throut the community to small business and create more jobs through increased demand a positive domino effect.

Shonga, Faustino I agree with both of you.

We need practical and positive incentives to re-enter the workplace. In the transition from welfare to paid employment we need tax breaks and adjustments of benefits at a less prohibitive level.

And some simple common sense applied to the 'value' of executive pay. Sacking low level workers with the excuse that a company is suffering from financial difficulties while management are never expected to take a pay cut or even a wage-freeze on income has to stop. Also some equity in the value of work provided by employees. After all without production line workers what is actually produced? CEO's don't make the widgets - the workers do. Equal pay for equal work needs to be redefined.

So, Corin “An “empowering” economic model must consider some or all of the following:” (here follows the usual baloney which enshrines government into the minutia of private arrangements and attempts (certain to fail) to make "all things lovely for everyone")

I note Corin expresses no opinion to “reward for commercial risk”.
I note Corin makes no mention of personal choice.
I ask should a fair pay commission consider the capacity of an organization to pay what the commission would deem "fair pay" and then would that same commission underwrite to likelihood not only of business closures but also businesses which would have started and did not because of an onerous environment.

As for Tax systems -

No tax system is perfect but what is certain is a complex one will be less perfect that a simple one.

“Income tax” is a very "blunt instrument" to pretend to shape "equality" with.

I would, personally, prefer to see the differential tax bands removed completely and everything reduced to a single tax rate, a bit like GST presents a single tax rate, replacing a plethora of differential sales tax rates.

Recognising such a "radical" strategy might appear to significantly benefit the high earners versus the low earners, the tax-free threshold could be raised to ameliorate such an outcome and spread the average tax burden closer to how it is levied at present.

Adam Smith had the right answers 200 years ago, I see no merit in this socialist pap and drivel, which is designed to ensure mediocrity will prevail and we will all be forced down and into a state of equal impoverishment.

Oh Corin, good of you to have the courage to actually admit you advise Red Ken. Most would not show such courage, or maybe it is just foolhardy.

Shonga and Faustino - it appears that you both seem to suffer from the syndrome which was called M.E. in the country I was living in when I also had it. However, I would not use my own personal experience in overcoming this syndrome to pontificate on how you should handle it. You are both intelligent and discrete beings doing the best you can under debilitating conditions and my heart is with you both. I am sure nobody else would presume to come up with catch-all solutions for either of you either.

Yet when it comes to that vast amorphous mass called "the unemployed" personal stories such as yours are never considered as the unthinking cry of "any job is better than no job", is repeated ad nauseum by those who have no more experience or knowledge in this matter than the personal.

From my ongoing (unpaid)work in this sector I cite "Mary" who for twenty five years successfully ran her husbands business. When the marriage broke up she was classed "unskilled" and sent out cleaning. "David" was school chess champion, and a science and mathematics whizz: after his parents divorce he left school and was sent out to dig holes. "Anne" spent her entire married life doing extremely important charity work - she was made to give all that up and currently washes dishes. "Mark" a University educated film maker with no transport was consistently offered jobs fruit-picking in remote areas. Not one of these jobs even covered these peoples rents and they all had nervous breakdowns.

Hell's teeth, what does it take to convince others that a "one size fits all" policy is what condemns a vast number of the unemployed to failing mental health, on-going unemployment, and the derision of the rest of society? Any job is better than no job? No, it demonstrably isn't.

Thanks for those kind words, Romany. My sister on Tyneside diagnosed ME five years ago. I’ve improved a lot in the last 12-18 months, but am still adjusting to the reduced capacity. As for “I am sure nobody else would presume to come up with catch-all solutions for either of you either,” I’ve had a vast array of generally unsolicited advice over the last six years, essentially, as in all things, one has to find one’s own wisdom and balance.

Romant/Faustino,
Sadly my ignorance of ME syndrome prevents me from comment, unless it means that my life concerntrates on ME. This is true, as most mentally ill people with my particular symptoms consider removing oneself from the matramonial bed a huge achievement on some days, we have very few friends. Not really employable material, I would have thought, however from the first of June this year, someone with similar symptoms will be expected to arrive for job interviews, and find themselves on "newstart" instead of the "disability pension" when they don't arrive they will be struck off the books, and will recieve no means to survive.

Col Rouge who appears above and I have had many disagreements, however I have found things in Col's character to praise, I won't go back into those now, however I would like to comment on Col's tax comment above. I see the merit in your arguement for a flat tax, with accompying tax threashold rise to exempt low income families from paying tax at all. The only provisions I would add are that the national tax take does not fall, and that tax subsidies to business should be abolished to achieve a net situation of equal incoming and outgoing expenditure. Col and I and the general community fail to realise how much we have in common, and also the old chesnut trotted out by the wealthy that "they are only envious of our success" is a total nonsense. The wealthy can have their wealth as far as I am concerned, provided they pay their "fair" share oftax to their country. We working class people in general "couldn't care less" about the wealthy, all we care about is trying to put food on the table for our families, and being able to sacrifice something else this week so we can fill the car with petrol.

Any form of "simplified" taxation system, provided it is socially "fair" would I'm sure be welcomed by the overwhelming majority of ordinary working class families, provided it did not further discriminate against them more than the current system does.

Thanks for all your comments - as far as health is concerned - clearly a benefits system must provide for the needy. The Howard reforms to disability payments are perhaps the wrong method of resolving this, incentives are often more effective than sticks. Indeed the carrot is mightier!

Indeed Andrew Leigh makes the case that well constructed EITC's (tax credits) create incentives that reduce the number of sick days taken per year in Britain.

As far as wage inequality is concerned - the best way of closing gaps - especially between suburbs and schools, is quality of education opportunity and private and public investment that results.

I would caution against using blunt instruments - like minimum wages - to do what is better done through education investment and tax credits - to create incentives and to reduce wage and non-wage inequality.

In Australia there is still a large number of people whose parents don't work ... many have been priced out of jobs.

Shonga, ME is the UK term – myalgic encephalitis – equivalent to chronic fatigue syndrome (CFS). Both generally refer to conditions for which the cause is unclear, but is thought to be viral. In my case the more specific term post-viral syndrome (PVS) is appropriate as my condition arose from shingles and Ross River virus, subsequently exacerbated by work-related severe/extreme depression which prevented recovery from the PVS.

As for business subsidies, I calculated when Corporations Tax was 39% that business welfare was equivalent to 22% of the CT revenue. Abolishing all industry support and using the revenue for tax cuts (whether in CT or elsewhere) would be much more efficient. Entrepreneurs have the ability to identify and exploit profitable opportunities. They serve the community as major drivers of innovation, better ways of meeting consumer needs and growing incomes - so long as their efforts are directed to productive ends. When the most profitable opportunities lie in avoiding tax or in lobbying government for preferential treatment - which is far too often the case in Australia - then the entrepreneurs damage Australia rather than enhance it.

The onus is on governments to reform their tax systems and practices so as to encourage productive entrepreneurialism rather than rent-seeking.

Col Rouge, I think you've completely missed the point - read the Gruen piece: effective marginal tax rates are highest on those moving off welfare - higher than the 46.5% top rate. So you think that reducing the top rate will help into a single band? By your method - EMTR's will be even higher on those moving off welfare. You have peddled a false prospectus in my view.

Also Gruen makes an even more powerful point that economic growth would be higher if tax-transfers were directed to the low end of the income spectrum. Also your point that income tax is blunt - is the reason that tax credits are superior to your method of a single tax band.

I too would prefer more wage equality - but the actions I outline in the piece - will be far more effective than legislative measures that force companies to reduce top executive pay.

However this was not my premise anyway - I was simply outlining measures to improve employment prospects and equality at the same time using innovative means.

Corin,

The problem of EMTRs could be eliminated in Col Rouge's proposal by taxing on a family rather than an individual basis and setting the tax threshold at what the family would be entitled to from the welfare system. No one receiving a welfare payment would pay any income tax. Since presumably money earned above the threshold is more than is needed for subsistence there is nothing unjust about taxing it at the same rate for everyone. Of course the politicians would never go for it, because they would no longer be able to impose confiscatory effective marginal rates on the working poor to make up for their "preferential option for the rich". They would also be unable to give favourable treatment to families with children, who are producing the next generation of peons, at the expense of, say, couples where one partner is disabled or of pensionable age.

Shonga, the current corporate rate of income tax is 30% flat (on each and every dollar), compared to a “marginal” tax rate of 30% for anyone with an assessable income of between $21,601 and $63,000 (given that every individual benefits from free and reduced rate of tax for incomes below $21,601 (2005/06). Since Keating introduced franked income offsets in the 1980’s, Australia has become one of the few places in the world which does not effectively double tax company dividends.

Eliminating the marginal higher rates will effect only a minority of the population and only a minority of the totality of tax assessable income.

A flat 30% sounds like a good round number in my book.

Corin, I see nothing “false” in what I am “peddling”. Some folk might find their “marginal income” disadvantaged when they move from “handouts” of welfare dollars to the dignity of dollars they actually earn.

The most important point I would make of your “claim” is the amount of “Welfare” is means-tested and strictly limited, whereas the amount of earned income is “unlimited” and a function of an individual’s personal will and sense of determination to do better than just replace the marginal welfare income which they lose.

To recognise the opportunity to benefit from a significantly greater amount of earned income, is of course, up to the individual.

Being one of those whose taxes from my 3 job roles have had to support welfare claimants, whilst foregoing personal benefit through tax, I recognise that, those who seek to enmesh themselves in poverty traps have only themselves to blame.

Faustino, how governments spend our taxes is a whole different debate and I am working on the assumption that this debate is how they get their hands on our taxes.

From a personal view, I do not believe governments can pick “winners” any better than private investors and thus, would suggest all forms of subsidy for commerce verge on the fraudulent and at best mange to institutionalise the interests of vested and special groups at the expense of the wider community.

Col,
Thanks for your explanation, this must be a first for you and I two consecutive relatively agreeable posts. I am medically unfit to work, but have in the past worked 3 jobs myself for a period of 7 years, so I can empthise with your feelings on that plane. When I refered to Government subsidies for business I meant along the lines of business supposedly private, free enterprise being able to claim the cost of petrol, depreciation etc, which to me more or less appears to be a subsidy, as ordinary individuals are anable to have the same benefits, I am sure that there are arguements for and against, however in the tax theme it represents an inequality to me, what do you think about this?

In my mind tax should be simple, transparent and fair, if that is idealistic, I am an idealist.

Divergence - I agree that well constructed negative income tax schemes could work well: see paper by Bartlett, Davies and Hoy: http://www.economics.unimelb.edu.au/workshops/Hoypaper.pdf

However I think it being family based is simply a form of income splitting. For poorer families in particular - 2 tax free thresholds - is superior. We should promote workforce participation in my view as far as it is still family friendly and parents can be parents - tough balance.

When you factor in the betterment of a family financially for not having to spend on childcare if a parent stays home - I think the 2 tax free thresholds off-sets this somewhat in the balance.

Col, what part of employment did you miss in my article (up to 7% growth and 2% reduction in the u/e rate) - to then follow up with this - people move from "“handouts” of welfare dollars to the dignity of dollars they actually earn." Am I not addressing this with a set of policies that could see 2 or 3% u/e in the medium term based on far higher participation rates than would occur if this rate was achieved under the current economic model. It seems to me that we are seeking the same outcome. Also what part of the article drew you to the conclusion that it was not in the national interest to have lower EMTR's at the low end - as far as the economic opinion is concerned economic growth would accelerate rather than decelerate under a wage-tax trade off, thereby improving all our opportunities in the medium term. As far as general opinion in concerned the economic benefits of reducing and pushing out the two top rates has largely been maximised, the real task is to get more partricipation in the labour-market - where is your policy for this. I could ask the same question or Howard and Beazley too - they are both missing the mark at the moment!

Shonga, this may come as a surprise but the rules for companies versus individuals for the right to charge “allowable” expenses against generated revenue are pretty much the same.

("wholly and necessarily" applies to the individual, where as "wholly" only applies to businesses).

Depreciation is allowable for a private person provided the asset is revenue earning and not for own consumption (eg. Investment housing, tools of trade, articles for resale etc.). Businesses are not allowed to claim for “non-cash costs” such as employee leave, doubtful debts or stock deficiency provisions. You suggestion to allowable depreciation being a “subsidy” is clearly, wrong.

Businesses pay taxes which individuals do not, most notably, fringe benefits tax and payroll tax. I am, however, not suggesting that individuals not paying these taxes are “subsidised”.

Corin “the real task is to get more participation in the labour-market”
Then the real issue is to free up the employment market. No sensible employer is going to underpay employees, who help generate wealth. I would suggest the issue of “employment” is for individuals to recognise, the contract of employment is a matter of negotiation and possibly a matter of putting oneself to some discomfort to make oneself “competitively employable”.

Attention to gaining qualification, a sense of appropriate dress, acknowledging that someone else who has had longer with an organisation might know more (humility) helps.

Obviously, someone who turns up on a Monday and wants to be top-dog by Friday is not going to “participate” for very long, particularly if they take Wednesday out as a “sickie”.

Opportunity to “participate” is not an issue, in the current economic environment, “WILLINGNESS” to participate is!

If an individual is not “willing” to participate, nothing you or I can do or say will make their lot any different.
At the risk of repeating myself, Work choices, like all other choices, are best left up to the individual and are, thus, also a responsibility of the individual.
Fluffing around with notions of “wage-tax trade off” is a emotional diversion and a smokescreen used by those with an liking to meddle in paternalistic social engineering

Col, By OECD standards Australia has low employment participation - so it is not just willingness (so be a bit frank and own up) - especially comparing Australia to a comparable society like Britain. I grant that both less labour-market regulation and EITC's have helped generate that higher level in the UK. What I am proposing would reduce minimum wages relative to the median income and compensate by tax credits - and more people would move off awards - and hence it would promote enterprise bargaining (both at a firm wide or individual basis) than WorkChoices as well.

A wage-tax-trade-off is also far better than you propose because it ensures that after-tax wage outcomes are not increasing pressure on a "working-poor" as you would want by the sound.

“Col, By OECD standards Australia has low employment participation” so what?

I would observe, when there is a need to import labour because there are insufficient locals available, “willingness to work” must be considered as an influence upon “participation in work”.

Whilst governments exercise largesse with the revenues they expropriate (being those above what they need to supply specific services) from their electorates to fritter away on pretending to subsidise the lower paid, the “disadvantages” of working will always be “exaggerated” by those who prefer a free ride at everyone else’s expense.

My scant knowledge of tax (I use a tax agent in Australia, despite being an accountant, qualified here as well as UK) still tells me: fluffing around with tax credits will lead us into an ambiguous morass of poverty traps (ie where someone is, in the immediate short term, better off on tax credits instead of working for a living), as do-gooders enmesh what should be a “revenue earning process” into some sort of quasi wealth redistribution program.

Ameliorating the effects of tax at the lower income levels is still best delivered by tax free thresholds (which the flat rate income tax suggestion did not discard).

However, one of the realities of humanity is this

A free society works on the assumption that people are responsible for themselves and thus responsible for generating the necessary income needed for their own well being. We are not, despite what Ken Livingston was preaching when I lived in London, a commune of organised drones to be directed and micro managed at the whim of his central committee. If you think that ever worked, just ask why those of (the previous) East Germany used every means at their disposal to “jump the wall” and why West Germans did not.

Col, I only work for Ken - I don't always agree - so your line of argument is absurd on that front. May be I should change the by-line to lawyer and independent thinker then. I work on the Events and Olympics advisory not political advisory and I've never worked for a politician full time in a political or press role.

Back to the real issue - High employment participation reduces welfare costs and increases Australia's ability to fund good cheap services and reduce tax across the economy, which is one reason why it is considered that $3B in tax credits if done well would be self financing. I don't know why you think I'm a socialist - if you read the article I would be well to the right of Beazley and the ALP on IR, perhaps not tax though.

Wage-tax-trade-off are by far the best welfare to work scheme. Do you want to reduce the welfare burden or not?

Only an ALP leader heavily tied to union power would miss that wage-tax-trade-offs produce far better economic results than Howard's economic model of LITO off-set at the low end. Beazley is afraid that a 'pause' in minimum wages is not sellable to the ACTU and others. Howard has obviously thought it too big a sell in middle Oz. We're likely to all be worse off for this assessment by both Howard and Beazley

Col, on your other point, I think higher business-migration would assist Australia in producing higher workforce participation - given that we have an ageing population - so on that front you also miss the mark. Also most estimates of the effect of business-migration as well as wider immigration is that it is a job creator pro-growth strategy. Lastly the problem of blockages in the economy is due to three main factors I highlight in the article - 1. high minum wages and their disemployment effects - 2. lack of incentive in the tax system at the low end - 3. most importantly skills miss-matches (see point 7 wider education for the unskilled funded by low-interest loans or HECS). So on this front - resolving the skills miss-match is the key. To suggest it is 'only' a lack of willingness is same rehetoric used such as dole-bludger - sometimes it's true - and sometimes it's not - it is also often that pople don't have a skill that is sought after. Are you pro-investment in skills and large uplifts in business-immigration? If you're not - and Australia follows - you will see Australia go backward economically and our growth trajectory upward will begin to trend down over time.