Is the idea of giving a tax deduction for the purchase of goods or services used to create income (eg negative gearing) a good idea and for whom?

phooey,
Let's stop this tax nonsense by introducing flat tax. Straight forward, simple & most of all fairest. No more dodging, everyone pays the same rate. Imagine all the straight-forwared planning, no more guessing, just straight to the point up front.
Yes, the bludgers et al wouldn't like it but it would be good for the whole country.
Only the dishonest would jump up & down about it.

Fair point, but my thread was really about whether tax deductions like negative gearing or car lease etc are a good idea, not how income tax is calculated. What is your opinion on this?

Phooey,
You have the incorrect term. They are not tax deductions, they are costs involved in running a business and are deducted to arrive at a net taxable income. Big difference.

Or are you advocating that busness's pay tax on gross income?

Or are you advocating that busness's pay tax on gross income?
Banjo,
Consumers have been doing that forever. If businesses were to pay tax on gross income then would that not create a more stable economy ?
Income or gross income, it's still income. If businesses think they're paying too much tax then pass it on to the consumer. Most businesses claim way more than business expenses & that's no secret.
A businessmen can claim nice dinners, boat, car, apartment, travel etc etc. with friends whereas the ordinary crap kicker has to pay his way through all of these..At the end the businessman can then rid himself of equipment which has been written off & still get something for it. Or, if convenient he can just declare bankruptcy whilst all his money is accumulating interest in some bank account in his spouse's name. Many just continue the good life whilst their creditors go broke.
Yes businesses need our support by way of patronage but definitely not by way of deceit at the expense of the crap kicker.

Yes, and the if you've studied economics prices are set in balance of supply and demand. Placing extra demand increases the cost to people who are purchasing the product for personal use.

House prices are inflated because a proportion of all homes are purchased in this way. Same goes for cars, clothes and even food.