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The Forum > Article Comments > Equity and simplicity > Comments

Equity and simplicity : Comments

By John Tomlinson, published 4/12/2009

A balanced positive and negative tax regime would provide a firm foundation on which to build social justice in Australia.

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An interesting article, John. As I recall, Milton Friedman had a similar proposal many years ago. He was associated with what was then called "the new right", so many judged his idea on that rather than on the substance.

This whole concept of people having to prove eligibility for a welfare benefit is demeaning and creates a bureaucratic empire to police it. A pensioner couple gets less if they are married than if they are not - as if their marital status is anyone's business. And the whole argument about whether gay couples are couples and so on.

I also think your idea of a higher consumption tax and (for most) a lower income tax is good. Consumption is a much more accurate measure of one's standard of living than income which, for the reasons you have outlined, can be so easily understated.

Your proposal, of course, threatens the livelihood of thousands of bureacrats, accountants, lawyers, financial planners and so on. Politicians won't like giving up the power they have to dispense handouts to the rent seekers - who doesnt enjoy splashing other people's money around?. And any suggestion for an increase in GST would unleash the mother of all scare campaigns. Your ideas may seem, at first glance, to be about boring stuff like numbers. But, if they were to be implemented, would be quite revolutionary.

May I suggest you prepare yourself for the possibility that the pollies, bureaucrats and acountants might not agree with you !
Posted by huonian, Friday, 4 December 2009 8:02:09 PM
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This article fails the first test of any proposal to make tax more fair and consistent with social justice, in that it fails to cross the pons asinorum by saying what could make tax fair, or consistent with social justice in the first place.

How could the stronger shooting the weaker, or handcuffing, or Tasering, or locking him in a cage, or threatening him with any of these if he doesnít submit to forced labour or forced expropriation of his property, be consistent with fairness or any kind of justice? Yet that is what tax is: itís a forced expropriation of someone elseís property, and thus a forced exploitation of the time and labour he had to expend to earn it.

By the way, the Liberal Democratic party: has a tax policy very similar to what you are suggesting. Itís called 30/30. As I understand it, it goes like this. Thereís a flat income tax of 30 percent for everyone who earns over $30,000. Then, everyone who earns under $30,000 is entitled to 30% of the difference between what they earn, and $30,000. So letís say you earn $0. You would be entitled to 30% x $30,000 = $9,000. All different forms of social security are replaced by this one form of income support. One good feature is that you are never disadvantaged for earning more. Say you go from earning $0 to earning $20,000. Then you would get a handout of 30% x ($30,000 minus $20,000 = $10,000. 30% x $10,000 = $3,000. So your income would be the $20,000 you earn, plus the $3,000 handout = $23,000.

My ideal tax regime would be to reduce tax, and consequently the size of government by 10 percent every five years. It would be done by submitting to the people every election a list of government bureaucracies and their sections, and laws they administer, together with a list of how much they all cost. The people could tick which ones they want to abolish. The abolition, and pro rata reduction of taxes, would be binding on politicians.
Posted by Peter Hume, Sunday, 6 December 2009 10:11:43 AM
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