The author mentions (on page 1) that "effective marginal tax rates (EMTRs) for many income support recipients can be more than 50 per cent"

On pages 2 and 3 she argues that the value of concessions for superannuation savings should be shifted towards the lower income sectors. (I agree, up to a point, but ...) She doesn't address an important issue which is often overlooked in this sort of discussion, which is that

(a) Increasing concessions/benefits for lower income people (or reducing them for higher-income people)

necessarily and unavoidably has the effect of

(b) Increasing EMTRs (ie reducing the incentive to work/earn more).

You can't talk about
(1) shifting benefits or concessions more towards lower-income people,
and
(2) keeping EMTRs to a modest level
as though these two issues are detached from each other - they cannot be.

1.
The author’s article is about making tax more fair and equitable, but she fails to establish what makes, or could make tax fair and equitable in the first place.

Taxation is a compulsory impost. By definition it involves forcible confiscation of property without the owner’s consent. If you don’t submit, ultimately a group of armed men with physically seize you and lock you in a cage where you are at risk of being further violated, and if you defend yourself with weapons as they bring, they will shoot you dead.

The effect is to expropriate from you the proportion of the time of your life and work that was spent earning that income or property.

Now if one takes under coercion one hundred percent of the labour of someone, there is no question that person is a slave. So where is the difference, pro rata, with taxation?

There is no distinction ethically between involuntary servitude and taxation. Slavery was legal in many places and times. Legalising it doesn’t make it ethically okay.

If twelve men and one woman vote whether to have sex, and the men vote for, and the woman votes against, does that make it okay? If they force her, can they say ‘It’s not rape, because the majority voted for it?’ Or can they say “It is rape, but there’s nothing wrong with it - it’s morally okay –because she was part of the group who voted for it?’

If majority opinion cannot justify what would otherwise be rape, for the same reason it cannot justify what would otherwise be the crimes of robbery or demanding money with menaces – taxation.

Similarly, the mere fact that you covet other people’s property, or would like to dispose of it for purposes you deem good, doesn’t make it fair or equitable to use force – the law - to get it.

Besides, the desire, and the social duty, to do good to the less fortunate is no justification of taxation as a method of funding it. If the people agree to such charitable provisions, there is no...

need for taxation to fund them, and if they don’t, then the government is not being representative of the people in making them.

What about utility? Suppose a state holds a third of its population in slavery, and uses the forced labour or the proceeds to provide a sewerage system, a water supply, and other public works. May the state argue: “This forced labour is necessary and desirable as the basis of a decent society. And the people who benefit need these amenities and therefore have a right to them at the expense of the freedom of these slaves.”?

Every dollar that the government takes through taxation is a dollar that society cannot spend for the same purpose, and there is no reason to think that funding such charity through taxation, nor administering it through government bureaucracy, is likely to result in any better outcome or process than would otherwise be available.

Thus the author has failed to establish that tax can be fair and equitable at all.

Though this critique is radical, so was the notion that slavery should be abolished, and so is the idea the good society should be based on freedom not authoritarian coercion.

2.
However there is a more profound reason why taxation is contra-indicated to achieve the goals that the author mentions. This is that there can be no justification in calling for government action to fix social problems, while ever it is governmental action that is itself the main cause of the problems to be fixed. And that describes all three of the author’s concerns.

There is no need to ‘make work pay’. It already pays. The problem is, if you subsidise poverty, then you will get more of it – but that is what the author is in favour of!

Similarly, it is laughable to suggest that taxation is needed to encourage people to save. Taxation is the opposite of saving: it is capital consumption. People will save all by themselves, if government stops stealing 70 percent of their income through taxation and deliberately diluting the value of their money through inflation.

“the adequacy of income support”

The last time I looked, private enterprise employed people to work and governments extorted taxes (Oh and regarding government workers… that’s just an oxymoron).

I see no merit in the notion that those who choose not to work, not to train to obtain work or not accept work which is available, should be subsidised by taxing those who do work.

Therefore the notion of “income support” is merely socialist metaphor for an abuse of the (any) tax system.

“making work pay”

if what you do for work don’t pay, go get some better skills to sell.

“taking a progressive lifelong savings approach to asset building.”

We can all do that. It is called personal budgeting. Some people do it automatically, others could nto do it even if they earned ten times what they earn now.

It is up to individuals to “get smart” and budget to live a lifestyle afforded by their income. No amount of government intervention or subsidy is ever going to make the profligate prudent or the inept smart.

I guess, having destroyed the three priorities for tax reform addressed in this article my job is done

I will not bother to read the rest of this third rate socialist drivel.

I will get about making more money for myself and the tax office

And maybe pay a tax accountant to work out some smarter way of minimising the amount of tax extorted from my efforts.

To the title “Making tax fair and equitable”

“Tax” is never fair.
“Tax” is never equitable,

nor will “tax “ ever be “fair” or “equitable”, whilst people continue to be diversified through the attributes of their genetic composition.

As Margaret Thatcher said

“…. once we concede that public spending and taxation are than a necessary evil we have lost sight of the core values of freedom."

........ NEXT.......

Good work Col.

Always a pleasure to read your posts.
I look forward with great anticipation in topics like this to hear your views.
hahhh Margaret.

Some here seem to believe that paying taxes/public spending/infrastructure are evidence of some kind of regressive evolution.

What is the alternative?

Mankind, in his wisdom will surge forward not through social cohesion, rather via ‘law of jungle’?
Can see that happening in a country like Afganistan, but here?

Also agree EMTR seem to have been designed to benefit the wealthier end of the spectrum.
I suppose that is how it goes when one has the power to write the tax rules. Advantage server.

From the Taxreview (EMTRs calculated for the real (inflation-adjusted) return):
Chart 8.4: Real EMTRs by asset type and financing arrangement

Banks/Bonds +75%
Rental +55% (not geared)
Rental +20% (geared)
Shares same as Rental property
Super -175%

http://www.taxreview.treasury.gov.au/content/Paper.aspx?doc=html/publications/papers/report/section_8-02.htm

Government will tax savings at 75%, and ‘tax’, or is that ‘untax’ wealthy contributors to super -175% (minus 175%).

Talk about regressive.