Home > Tax and public expenditure > Rethinking tax policy for Australia

Rethinking tax policy for Australia

April 24th, 2015

The title of this post is taken from that of the recent Treasury Discussions Paper on Tax, entitled Re:Think. Sadly, as I point out in this Guardian piece, there’s very little evidence of rethinking from Treasury. Most of the paper could have been lifted straight from the Asprey Review of 1975, and the sensitivities of the current government have ensured a step backwards from the Henry Review, with carbon taxes and resource rent taxes now off limits.

Undeterred, I’m going to start on my own review. I’m going to try something a little different in blog terms. This post will be updated whenever I get a chance, both with new material and in terms of publication date so that each new version will appear at the top of the homepage, hopefully with the comments being carried with it. I’m putting in some headings, and starting off with an idea I mentioned recently, that of a tax on bank profits

Aggregates: Revenue, expenditure, budget balance, debt and net worth

Revenue options

* A tax on the super-profits of banks, reflecting their privileged position. Tax base $29 billion. Possible revenue $5-10 billion, or 0.3-0.6 per cent of national income/GDP.

* Reforming the treatment of negative gearing “Quarantine” business losses for individuals, at least with respect to housing investments, and allow them only to be used as an offset against capital gains. Revenue estimate: rising over time to $5 billion a year, or 0.3 per cent of national income/GDP.

Expenditure requirements

Categories: Tax and public expenditure Tags:
  1. rog
    April 1st, 2015 at 17:33 | #1
  2. Ivor
    April 1st, 2015 at 17:38 | #2

    The left-populist Australia Institute and right-populist Jackie Lambie are calling for a Tobin tax.

    Foreign Transactions Tax

    This has to be addressed seriously.

  3. John Quiggin
    April 1st, 2015 at 17:46 | #3

    @Ivor

    I’ve written about the Tobin tax many times before. Important, but unlikely to be a huge revenue raiser.

  4. hc
    April 1st, 2015 at 18:50 | #4

    Some rough thoughts. I think a major issue is the way you think about personal income taxes. As this report points out when Australian income taxes are joined with means tested social security benefits the outcome is very progressive. This runs contrary to a line of thinking dating from the Mirrlees (1972) paper that marginal tax rates (not average rates) should decline as income increases. What you need to justify this is evidence on high income labour supply elasticities – the evidence the report cites is that taxpayer numbers cluster around thresholds in the tax structure which isn’t strong. Isn’t it true that, at high incomes, there are likely to be strong positive effects of income on the demand for leisure. This suggests that with higher taxes people will work harder. Maybe I have it wrong? I notice that the Mirrlees claims are evidence-free – he intuits a case for a flat income tax structure but I don’t see any empirical basis for this. Even if there are inefficiency costs at high income levels of high marginal tax rates this doesn’t matter if good gains in terms of equity are being provided. Income taxes are of central importance because (a) they provide most tax and (b) if you can optimally select both direct and indirect taxes there are strong arguments (Atkinson/Stiglitz) for having uniform (or zero) indirect taxes and relying only on an income tax to achieve equity.

    On company taxes the evidence is that in so far as these tax returns to capital they fall heavily on labour and should be cut. Yes, John there is nothing new in this argument but the report does cite evidence on the implied shifting. It seems to me again a central concern that is worth revisiting.

  5. Jim Rose
    April 1st, 2015 at 19:02 | #5

    @John Quiggin how did the Tobin tax go in Sweden?

  6. Megan
    April 1st, 2015 at 19:20 | #6

    Just throwing a thought into the mix.

    What about raising the tax-threshold to, say, $40,000 or so AND massively simplifying tax-return and tax deduction rules below that. I’m thinking of a system where anyone earning less than the threshold in any tax year simply has no tax withheld and only has to file a simple declaration so they don’t claim any deductions and don’t get any return.

    It has always struck me as a massive waste of time and resources to go through the charade of doing the annual income tax returns, claiming deductions and then getting a return of some sort from the ATO for people who, at the end of all of that wasteful exercise, are not huge income earners or tax-payers.

    They still pay a large amount of tax in other ways, like GST.

  7. hc
    April 1st, 2015 at 19:21 | #7

    I think user charges in transport (on heavy vehicles, congestion) with distance-based insurance policies are a no-brainer. Retain the petrol excise (don’t eliminate it yet) even with the user charges, And of course scrap the emissions subsidy scheme and replace it with a non-revenue neutral carbon tax that would help to balance the budget rather than be a major cost.

  8. ZM
    April 1st, 2015 at 20:01 | #8

    Following the government’s preference for consumption taxing, I propose smart consumption taxing.

    The influences of this new tax policy are Kenneth Rogoff, Andrew Forest, and John Stuart Mill.

    The celebrated liberal philosopher Mill is celebrated for his discovery that not all utility is equal as poetry is better than pushpin.

    Taking this idea of the different weighting of utility, I add Forest’s ideas that some utilities might be over utilised to the detriment of individuals, their families, or communities, so perhaps it is prudent for an informed responsible government to discourage over-utilisation of these sorts of utilities.

    Taking the idea of weighted utility and the need for government market intervention to moderate consumption of some utilities susceptible to over-utilisation, I combine Forest’s proposal of an electronic card with Rogoff’s proposal to move to a cashless society to eliminate the black market.

    Due to community concern with how they can make contributions to churches without cash — I propose a small cash allowance be lawful.

    Consumption goods can then be weighted according to benefits and harms to health and community, for example, and goods of fewer benefits or cumulative harms can be taxed higher.

    So the smart consumption tax would vary according to weighting of utility and the number of items purchased for certain items.

    Since the government wants to stay with a market economy, this smart consumption tax can help it to decouple economic growth from the unsustainable growth of consumption of material resources.

  9. Donald Oats
    April 1st, 2015 at 21:59 | #9

    I’m in agreement with simplifying personal income tax by nuking deductions. No deductions makes for a pretty simple calculation of income tax, and cuts down on the potential to dodge tax.

    Taxing investment properties, perhaps increasing the taxation rate as the number of properties increases.

    Removal of GST and any other tax of that general nature. Increasing business tax to compensate.

    Extraction from the shambles of middle class welfare, to the extent it is possible. Why are we paying baby bonuses and the like? Having children is a private and personal matter, not an income generation scheme, surely.

    Abandoning taxes which have too high a compliance/enforcement cost for the revenue earned.

    Taxing environmental externalities such as pollution, especially things like cutting down old growth forrest, GHG emissions, pollution of aquifers, etc. Taxing minerals extracted.

    Seems there are plenty of ways of reducing the myriad taxes whilst holding onto or even increasing revenue.

  10. Collin Street
    April 1st, 2015 at 22:55 | #10

    I’m in agreement with simplifying personal income tax by nuking deductions. No deductions makes for a pretty simple calculation of income tax, and cuts down on the potential to dodge tax.

    however, your “simple” system gives absolutely stupid results if applied to owner-drivers in the transport industry, say. Or bespoke jewellers or higher-end tailors, or builders, or what-have-you.

    [I’m not interested in hearing your solution: any solution will have exactly the same potential for abuse as tax deductions. I’m interested in why you didn’t realise the problem. It’s kind of a big one to miss, since this is exactly what tax deductions are supposed to cover and I would have thought that anyone who wants to abolish something would make at least a token effort beforehand at checking what it was supposed to do]

  11. Megan
    April 1st, 2015 at 23:17 | #11

    @Collin Street

    Donald can answer for himself,

    but I’m happy to admit that I don’t quite understand what you mean about:

    this is exactly what tax deductions are supposed to cover

    when talking about personal income tax obligations of “owner-drivers, bespoke jewelers, high-end tailors or builders”.

    In my admittedly vague scenario (no tax and no deductions if you earn less than $40,000) the externalities and inputs – such as fuel, diamonds, silk, five-foot-deep marble bathtubs – wouldn’t be “deductions” if the person was an employee, and if the person was self-employed they would be a business expense and not included in the “personal income” derived from the business (?).

  12. Jordan
    April 1st, 2015 at 23:22 | #12

    Taxes are not created for the purpose of revenue for the state. Taxes serve central planing purpose.
    No matter how funny that seems but rejection of necesity for central planning is even funnier.

    All tax deductions are created for the purpose of central planning. Central planning with tax is done trough incentives not through orders as in communist part of history.

    Tobin tax is not needed to raise funds for the state but to squelch manipulation and speculation in stock market. To prevent High Frequency Trading which manipulates stock prices and skim off of every transaction.
    Once such manipulation and speculation is removed there would be very little revenue left, only from those that invest long term.

    Just like 90% marginal tax prevented owners and firm managers from taking such large share of profits as today. There was much more left to share with other employees.

    90% marginal tax will also prevent all new financial inovations that brought us the GFC. There will be no incentives for such large scale frauds if you can not get anything from it, if tax takes all away.

  13. Donald Oats
    April 2nd, 2015 at 00:03 | #13

    @Collin Street
    You say you are interested in understanding how I missed the problem: there is no problem to miss! Perhaps I could have clarified by stating I was referring to employees, as defined by the ATO on their website, but it did kind of strike me as…rather obvious. Again, according to the ATO [2014], someone who has to supply their own tools of trade, and I presume (perhaps too hastily) that a f*cking big truck would count as a tool of trade—to use one or your examples, renders that person a contractor, i.e. operating a business and therefore not an employee on a salary or wage paid for by the man.

    Since you have explicitly stated that you don’t want to hear my solutions, you won’t.

  14. Jordan
    April 2nd, 2015 at 00:06 | #14

    @Collin Street
    Those are business expenses and they are not taxable. Tax deductions are something else. Deductions are from taxable income.
    First you have total flow/sales. From total sales you deduct business expenses which you mention, then reduce it further by nontaxable part of income and then you get taxable income. Only then deductions can start to be calculated.

    @Megan
    In tax parlance what you are trying to say is that you would raise nontaxable income to $40,000.

    What is it now in Australia? $17, 000? In USA it is $13, 000.
    And you do not have to file taxes if you made only nontaxable income. You just want to raise nontaxable income to $40, 000. That is correct parlance.

    In USA you do not have to pay any taxes over the income year, so, if you did not make above $13 000 there is no tax refund if you did not pay any.

    Deductions start only on income above nontaxable income.

  15. Geoff Edwards
    April 2nd, 2015 at 00:07 | #15

    1. The seriousness of the environmental crisis and the limits to throughput of resources and materials on their way to waste have escaped most economics discourse. The global rate of production of oil and gold has already peaked; thermal coal is peaking now; peak copper is not far ahead and peak phosphorus is on the horizon. The trajectories in the modelling in The Limits to Growth 1972 are being fulfilled as we write. Taxing waste of energy and resources surely will be essential, as a form of rationing alone, and surely rests on a thoroughly respectable theoretical economics foundation.

    2. The accelerating enrichment of the executive class is unethical as well as being a barnacle on productive economic activity. There is no ethical reason why any wage earner should earn more than the Prime Minister; and there is no reason why the average lawyer should earn $1 million. The simplest method of reining in executive pay is to tweak the progressive tax system. hc above, the claim that higher rates of tax are a disincentive to wealth creation by the executive class is nonsense. I don’t remember business stagnating when the top marginal rate was 60%.

    3. Tax speculation; tax high-frequency trading out of business .

    4. Re-introduce tariffs on non-essential imports, especially food. The free trade agenda has run its course and the Australian economy is more dependent on digging up rocks than ever before. It always rested on a false theoretical foundation anyway.

    5. I agree with Megan that we should abolish tax returns for those PAYE wage earners with no business income below a certain threshold. The complexity that is now encrusted on complexity is simply self-defeating.

    6. I suggest that a necessary precondition for gaining political support is to prick the bubble of hubris that now infects both business and government – that only business creates jobs; governments do nothing to create economic activity and all the money spent on salaries, contractors and purchases disappears into a black hole. A budget framed to nourish the preconditions of sustainable economic activity and to tax the obstacles to sustainable economic activity would look very different from the present.

  16. Megan
    April 2nd, 2015 at 00:28 | #16

    @Jordan

    I haven’t been, (or had) an employee for years so I’m not certain but I’m pretty sure every employee has tax withheld from their pay regardless of what their annual income may end up being.

    Whenever I had casual employment years ago there was always some money held back for “tax” from every paypacket.

    I’m also pretty sure that retired people and unemployed people have to lodge an annual income tax return regardless of their income and whether it exceeds the threshold.

    Unless I’m completely wrong about that, it makes my point – why on earth should an unemployed or old age pensioned person receive payments from the government and then have to go through the rigmarole of lodging a tax return? Seems silly, wasteful and pointless to me.

  17. Megan
    April 2nd, 2015 at 00:35 | #17

    P.S. Let’s say we had my $40,000 threshold level, I would be quite happy to have very strict and harsh levels of penalties for rich people pretending to be low-income earners.

    Makes sense to have a ruthless financial “disincentive” for rich people who pretend to be poor in order to avoid paying tax. A sort of “Irony Tax”.

  18. plaasmatron
    April 2nd, 2015 at 03:38 | #18

    @Jordan
    The German word for tax is “die Steuer”. It is directly related to the verb “steuern” which means ” to steer”. The resoning behind a tax is therefore implicit in its name, be it an Umweltsteuer (Environment tax) or a “Grundsteuer” (Property Tax), it implies that the Government, and by extension the society, wishes to steer peoples actions in a particular way. I think this is a very good thing. Maybe we need to change the sound of the word “Tax”, as it has such negative connotations. In Australia we could introduce a “speculation deterrent” or a “compulsory compassionate donation”. Even the liberals could do that since it wouldn’t be a “big new tax”.

  19. rog
    April 2nd, 2015 at 04:25 | #19

    In the digital world of Joe Hockey, where people are either “lifters” or “leaners”, I propose a leaners tax.

    Leaners would be defined as those on high incomes benefitting from loopholes like negative gearing, FHB grant, FBT exemptions on vehicles and the 50% CGT deduction.

    High income would be defined as a multiple of the poverty line.

  20. Collin Street
    April 2nd, 2015 at 05:42 | #20

    > Deductions are from taxable income.

    Then name me some deductions you want to eliminate, because the only thing that comes to mind as not being a “business expense” — cost incurred to earn money — is “donations to charity”, which I don’t think is a huge issue.

  21. Collin Street
    April 2nd, 2015 at 05:43 | #21

    And in any case this discussion cannot usefully be had as long as the coalition front bench is fronted by people with clinical cognitive problems. +

  22. April 2nd, 2015 at 05:47 | #22

    Thanks John. I look forward to more contributions from you to this ‘ national conversation’ over time. Has there ever been a more misnamed project?

    Nothing is off the agenda, except a carbon tax, a rent tax, addressing superannuation concessions for the uber rich, (the latter off the agenda according to Abbott anyway, but maybe not Hockey) and abolishing section 25-90. And as the days go by we will find more and more things off the agenda (ie taxing the rich will not be on the agenda.)

    I suspect your thinking and mine will overlap a lot here.

  23. Jordan
    April 2nd, 2015 at 05:49 | #23

    @plaasmatron
    Examples of some euphemisms for tax:

    Society membership fee
    Solidarity participation
    societal participation
    social familly baptism/ confirmation
    the mark of belonging to society
    cooperation signature….

  24. Jordan
    April 2nd, 2015 at 06:23 | #24

    @Collin Street
    I should have been more percise as former tax professional.
    There is standard deduction and then itemized deduction
    After total income is reduced by personal exemptions (nontaxable part) then you can choose between standard and itemized deduction.
    Most of the people find itemized deductions better but such calculations cost more so not everyone chooses it. Up to $35,000 of income and with kids, standard deduction is taken.

    On another hand if someone has too many deductions and attempt to lower the tax to $0 (can happen only with huge credit card debt in that year or with savings) They are hit with Alternative Minimum Tax. I filed about 3,000 tax reports and have hit only dozen AMT cases. That is the level of tax that can not go lower then minimum depending on the size of income, no matter how many deductable expenses there is.
    So AMT prevents wealthy from getting away with paying less then 15% of total income as tax.

    Only if next year income becomes really small then they can get back money that AMT forced them to pay.

    Only deduction that i would eliminate is house amortization deduction. That is the deduction that assumes that a house is loosing the value over time from aging and usage. This is potentiallly true but extremely rarely in the real world.
    Many who buy investment house are going profitable only thanks to that deduction. Others bought it for cheap at auctions and then claim that properties are aging and loosing value.
    This is only bad deduction. All others are good and valuable.

    But i would raise AMT or tie it with inflation. In USA they did not upgrade it with inflation in 22 years so it is really low.

  25. Geoff Edwards
    April 2nd, 2015 at 07:45 | #25

    I meant to add above

    7. A greater reliance on a land tax. Its significance as a proportion of municipal rates is declining and this should be reversed. It is non-avoidable, progressive, and can be structured to discourage land speculation. I read that it was trialled in Denmark as a replacement for regressive taxes a couple of decades ago and caused other macro-economic indicators such as inflation and unemployment to improve significantly, but haven’t been able to track down good references. It was abolished as soon as the conservatives regained power – the major weakness of this form of tax is that it is a target for those who have become wealthy through property speculation.

  26. Uncle Milton
    April 2nd, 2015 at 08:13 | #26

    Would this super tax on bank profits come with franking credits? If so, inasmuch as bank shareholders are Australian residents, it wouldn’t raise any revenue.

  27. Uncle Milton
    April 2nd, 2015 at 08:15 | #27

    @Megan

    Raising the tax-free threshold to $40,000 would cost a motza in lost revenue.

  28. Ivor
    April 2nd, 2015 at 08:24 | #28

    @John Quiggin

    Not good enough. You may be right. But I think the times are such now, and the attacks being made by the representatives of Capital against the rest of society require more serious consideration. Our concern is not volatility but economic stability and social equity.

    I found an earlier topic (2003) “easytax-redux” in which you state:

    A small tax on large-scale financial transactions, often called a Tobin tax, is a defensible idea (I’ve defended it here), but it would not produce anything like the revenue needed to replace income or sales taxes.

    But when you click on the link to:

    http://www.uq.edu.au/economics/johnquiggin/news/speculation9810.html

    You get:

    Error: Page Not Found

    The page you requested could not be found.

    We’re sorry, but there is no UQ Web page that matches your entry. It is possible you typed the address incorrectly, or the page may no longer exist. You may wish to try another entry or choose from the links below, which we hope will help you find what you’re looking for.

    If you are certain that this URL is valid, please send us feedback about the broken link.

    You may wish to try one of the following links:

    UQ Search Page
    UQ Homepage

    So maybe this paper is elsewhere.

    The issue of revenue potential was covered by David felix and Ranjit Sau in “The Tobin Tax, Coping with Financial Volatility”, ed. M. ul Haq, I. Kaul, I. Grunberg, OUP, 1996. Although their context was whether it would reduce financial volatility.

    All manner of scares can be mounted such as raising the minimum wage will increase unemployment.

    in the case of Tobin, it is scare-mongered that a 0.5% tax, with high elasticities, would wipe out the volume of foreign exchange [p237]

    Nonetheless at lower rates the revenue for Australia is found to be:

    @0.25% rate – over $5 billion (1992 dollars)

    @0.1% rate – over $2 billion (1992 dollars)

    @0.05% rate – over $1 billion (1992 dollars)

    [Tables 9.2, 9.3, 9.4]

    I see this issue as the modern form of class struggle and not something to be pursued if the captains of business would grant us their approval.

  29. Collin Street
    April 2nd, 2015 at 09:05 | #29

    > It was abolished as soon as the conservatives regained power – the major weakness of this form of tax is that it is a target for those who have become wealthy through property speculation.

    I don’t know exactly what it means, but the industry sectors that seem to produce people who support more-conservative politics — property development, mining, certain forms of retail — seem to also be the industry sectors that are particularly rent-heavy.

  30. Collin Street
    April 2nd, 2015 at 09:09 | #30

    One thing I would say is I’d like to see CGT abolished and replaced by some sort of “spreading income over multiple years” mechanism that’d work for capital gains but also farmers, people working on occasional big commissions [artists, certain architects, etc], prize-winning sportspeople, etc.

  31. Ivor
    April 2nd, 2015 at 09:21 | #31

    Well worth reading:

    http://TinyURL.com/tai-tobin

    The most recent work, and quite readable.

  32. Troy Prideaux
    April 2nd, 2015 at 10:07 | #32

    Have to agree with a super profit tax for the banks John. It always interested me that the ALP targeted mining ahead of banking for super profits – no doubt there was politics in play. I know many here would disagree with me, but I personally believe mining does deserve to keep a super profit from time to time – it’s a huge capital investment that’s very risky and gathering funding for such projects generally will require the possibility of large returns in what has always been a spasmodic boom time (no I’m in no way related to that industry).
    The big 4 banks on the other hand were delivered silver spoon treatment by the ALP that helped more than double their market capitalisation and smash their competition. I suppose it’s fair enough to make a decent profit with an economy so reliant on debt, but it has always frustrated me hearing the common justifications used for such consistent super profits or not super profits as they will tell us: ‘the profit to funds under management ratio is small compared to other industries’ – like it’s a fair comparison keeping a number on a computer and assessing the risk of such compared to actually producing something.

  33. Janette
    April 2nd, 2015 at 11:16 | #33

    The current system for negative gearing is not increasing much needed supply of housing. I suggest that negative gearing for housing is restricted to dwellings 0-10 years old. To prevent any clunky corrections in house prices and rent, the policy change should be implemented over a number of years, with rates of negative gearing gradually reducing for older dwellings. A dwelling could be defined as any form of new housing, to encourage subdividing and better use of space near public transport, schools and where people work.

  34. Richard Hunter
    April 2nd, 2015 at 11:17 | #34

    I’d be interested to hear what commentators think about a flat rate tax on all financial transactions. Given modern technologies this is surely feasible now. A small flat rate on every financial transaction of any kind should surely raise substantial revenue, increases fairness and equity (the larger the transaction the high the $ amount taxed) and should be levied on all those tranfer transactions that multi-nationals use to hide their revenue.

  35. John Quiggin
    April 2nd, 2015 at 11:31 | #35

    Here’s a link to the piece on financial transactions taxes mentioned by Ivor

    http://www.uq.edu.au/economics/johnquiggin/news98/speculation9810.html

    I have more in the files, which I will dig out when I get a free moment

  36. Jim
    April 2nd, 2015 at 13:08 | #36

    +1. A few sensible no-brainers there.@hc

  37. John Quiggin
    April 2nd, 2015 at 14:25 | #37

    @hc

    When you take the welfare and tax systems into account jointly, the lowest effective marginal tax rates are at the top, at least for families with children. Most of the way up the scale, there are benefits with clwaback/withdrawal rates of 25 per cent and often 50 per cent. Add that to the marginal income tax rate and you get something well above the 47 per cent top rate for income tax alone.

    At least, that was the situation last time i looked. Part of my project will be to take a more detailed look at all this.

  38. Uncle Milton
    April 2nd, 2015 at 15:19 | #38

    @John Quiggin

    It’s true that the withdrawal rate is high for welfare benefits. This means that the net increment to income is low. On the other hand, the net increment to utility is likely to be high, because the ex-welfare recipient no longer has to deal with the Centrelink bureaucracy. It has to be liberating not to have to continually prove that you’re not cheating the system, with the constant threat of benefit withdrawal, or worse, always looming.

  39. faust
    April 2nd, 2015 at 15:52 | #39

    Your idea confuses an insurance policy (taxing profit as a way of bailing out banks in the event of default) with a revenue-raising measure for current expenditure. The former acts as it should: it means that as the market presumes the banks are too big to fail then there is a pool of funds that it should not happen and taxpayers are not on the hock to do so. The latter is essentially taking a systematic issue and using it as a political tool to buy votes (which revenue-raising for public spending too often is) and is bad public policy for the long run.

    Also you mentioned resource rent tax. This was a bad idea whose time should never have come. On the revenue side the government takes the upside and helps protect the producers on the downside – an inherently cyclical tax that would dampen investment in the sector. On the expenditure side it created a source of money that would be spent on permanent non-cyclical government spending. In short, cyclical cash inflows with structural cash outflows. Another bad piece of public policy.

  40. faust
    April 2nd, 2015 at 15:57 | #40

    @Richard Hunter

    Richard a financial transaction tax is a very bad idea. It is often used by those who have a political motive and don’t really understand financial markets.

    Let me demonstrate. A pension fund who allocates a certain amount to a new debt or equity issue will be forced to pay a certain % of that in tax. This is a pension holders money which is being taxed on being invested in order for them to enjoy a standard of living post-retirement. It doesn’t impact the asset manager who places the order, the investment banker who originated the deal, or the salesmen (usually men) who make the market. It hurts the little guy.

    Let’s take another example. A company wants to hedge the interest rate risk in $100m loan from fixed to floating using a standard interest rate swap. Do you pay a transaction tax on the nominal amount of $100m which might mean that the company won’t bother hedging their interest rate risk? Or would you tax it on the stream of cash flows that are hedged?

    I can go on and on. This is a deeply political tax proposed by those who really don’t get the financial services system.

  41. faust
    April 2nd, 2015 at 16:00 | #41

    I realised my original post about John’s post was slightly incoherent in the second sentence. Apologies.

    What I meant was that as investors believe that the banks are too big to fail, and they are, instead of putting taxpayers in hock for this assumption an insurance fund makes perfect sense by saying to investors this pool of cash is devoted to bailing out the banks and nothing more.

  42. faust
    April 2nd, 2015 at 16:00 | #42

    @Troy Prideaux
    Could you do me a favour and define a “super profit”?

  43. J-D
    April 2nd, 2015 at 16:55 | #43

    @Megan

    Is it true that retired people and unemployed people have to lodge income tax returns even if their income is below the threshold? I had a look at the ATO website and there’s an online tool which you are supposed to be able to tell you whether you have to lodge a tax return. I couldn’t find any clear statement about which people don’t have to lodge tax returns, but obviously there are some people who don’t. Doesn’t it make sense that in general (even if there are some exceptions) people with incomes above the threshold have to lodge returns and people with incomes below the threshold don’t have to? If anybody else can get a clearer answer from the ATO website I’d be interested to hear about it.

  44. Ikonoclast
    April 2nd, 2015 at 17:01 | #44

    @John Quiggin

    A logical system would integrate welfare and tax. That is to say, a single tax/welfare calculation would be made for each person. The result of this calculation would determine whether the person should pay positive tax (pay tax) or pay negative tax (get welfare).

    To enable this to work in practice, every adult person would simply get a Social Income. This would be set at about the current single age pension. Thus there would never be any need to apply for unemployment benefits, age pensions, student benefits and so on. When a person turns 18 they apply for the Social Income. Everyone over 18 would would get the Social Income.

    When a person commences work as a PAYE taxpayer (the most common case), the tax/welfare calculation on earned income takes into account the known steady Social Income, the number of dependents and so on and sets tax accordingly. When a person loses a job, their income and any tax also end accordingly and the Social Income continues as always. Thus there is no need to re-apply for social income.

    Adminstratively, there would still be separate Tax and Social Security Departments. The administrative requirements and mind-sets are necessarily different. The Social Security Department would have relatively simple administrative requirements. It verifies age, identity and citizenship for applicants and sets up the Social Income payment. It follows deaths and only cancels the Social Income on death, renunciation of Social Income or renunciation of Australian citizenship.

    Those who do not rely predominantly on wages or salaries for income would have options to not claim / renounce the Social Income or to accept it and repay it pro rata if required at the end of the tax year. The amount repaid would attract a simple annual interest payment equivalent to one half of that charged by the tax department on unpaid tax (unpaid tax interest). Note: The UTI rate is 10.69% for the 2014–15 financial year. Half the UTI rounded (5.35%) would be reasonable. So Gina Reinhart could take the Social Income if she liked and pay it back at tax time with 5.35% simple annual interest.

    Naturally, other logical changes would have to made with this. All the usual suspects including negative gearing, fuel subsidies, accelarated depreciation and corporate welfare would have to be ended.

  45. Jordan
    April 2nd, 2015 at 19:19 | #45

    @J-D
    The only punishment for not lodging tax return is by penalties on the tax OWED. If there is no tax to be paid after late filing the return then there is no penalties.
    The penalty for not lodging taxes is calculated based on tax owed, and then additional penalty interest on the ammount owed.
    If it turns out that you would have a refund comming, then not receiving money untill claimed is the incentive.
    That is the USA system.

    @Janette
    I could agree with fasing out negative gearing by age of dwelling instead of eliminating it as i suggested. Any dwelling deduction is reducing the burden of interest rates and as such it is important to support agregate demand. But negative gearing is kinda funky.

    @Ikonoclast

    Such system we have allready for those that had a job once, not imediately after turning 18 but only after a person held a job for over 11 months.
    Social income is split up in many social programs; tax credits, unemployment, disability, education and other benefits.
    Your proposition would be much less costly to very complicated and cheating prevention expense as present system of welfare. There is also a cost for claiming it to claimants..

  46. April 2nd, 2015 at 21:07 | #46

    I don’t think that high income tax rates are a disincentive to high income earners working. There are many reasons that high income earners work, and mostly, it seems to me its because they like work.

    I’m pretty sure that the highest marginal tax rates are paid by people working their way out of welfare.

    Anyway, my income tax scheme is to pay everyone in Australia a living allowance that you can live on – a little higher than the dole. And then tax every dollar earned. Even if the lowest rate of income tax was 40%, that is not as high as the rate you currently pay as you leave welfare.

  47. Ivor
    April 2nd, 2015 at 21:31 | #47

    faust:
    @Richard Hunter
    Richard a financial transaction tax is a very bad idea. It is often used by those who have a political motive and don’t really understand financial markets.

    I can go on and on. This is a deeply political tax proposed by those who really don’t get the financial services system.

    yes, you can be very, very sure that proposals for any tax are political. That is the only way society can protect itself against the machinations of greedy, incompetant, self-centred cavaliers of credit and banksters.

    proposals for different taxes arise precisely because we have a very clear idea of the worth of the so-called financial system and the risks this poses to future generations. It is the purpose of politics to respond.

    Your so-called financial system has now created $200 trillion of debt at a time when global GDP is just over $73 trillion. And the financial system requires this debt to survive, and further – a increase in debt.

    We have always known that the current financial system leads to inequality. This has steadily become serious and threatens to get worse.

    here would be no financial system but for society. Society therefore has to decide whether it can stomach what the financial system has done and is doing.

    We need a lot more politics.

  48. Megan
    April 3rd, 2015 at 00:34 | #48

    @J-D

    Is it true that retired people and unemployed people have to lodge income tax returns even if their income is below the threshold?

    As I said above, I’m pretty sure they do. As I also said, I might be wrong about that.

    As you have demonstrated, it isn’t at all clear from the ATO website.

    I’ll go further, my reading of the ATO website is that if you have received ANY taxable payments/income etc.. you MUST lodge a tax return.

    Since pension payments must go into a bank account, and since that account will inevitably “earn” some interest, no matter how embarrassingly tiny, I think that would trigger the liability to lodge a tax return.

    @Jordan

    Again, I’m not 100% certain but I think the situation in Australia is different. If you fall foul of the ATO you will be asked to pay much more than just the assessed tax on unfiled returns. There are all sorts of penalties and fines they can and do lump on top, as well as civil fines if they prosecute you in Court, as well as charging something like 17% interest.

    PS: Since they charge 17% interest on money “we” owe “them”, why not pay 17% interest to people who overpay or pay early on tax liabilities? “Stuff The Banks!”, I bet a lot of people would happily slot a few hundred dollars into their “ATO Account” if it was earning that kind of interest. And it would be simple to administer, you only need a Tax File Number or Australian Business Number and access to a Post Office and away you go.

  49. Rob Day
    April 3rd, 2015 at 00:39 | #49

    @Ivor
    Did you follow the advice given in the 404 error page?

    Search john quiggin speculation returns
    http://www.uq.edu.au/economics/johnquiggin/news98/speculation9810.html

    Which appears to be the page in question.

  50. J-D
    April 3rd, 2015 at 08:36 | #50

    @Megan

    I don’t see where on the ATO website it says that you must lodge a return if you have received any taxable income even if it is below the threshold.

    If the rule is that everybody must file a tax return, wouldn’t they just say so? Who could the exceptions possibly be, if not people with incomes below the threshold?

    Also, I can definitely assure you from personal experience that it’s straightforward to maintain a bank account that earns no interest — or less than a dollar a year, which is the same for tax purposes, since the ATO only counts whole dollars. All you have to do is spend money about as fast as it comes in, which I imagine is exactly the experience of many pensioners, beneficiaries, and other low-income earners.

    I think what you are saying in response to Jordan does not contradict what Jordan was saying. I don’t think Jordan was saying that late-filers only have to pay the tax owing. I think what Jordan was saying is that late-filers who have no tax owing don’t have to pay any penalties. I don’t think that is contradicted by what you are saying, and which sounds right to me, that late-filers who do have tax owing must also pay penalties.

  51. bjb
    April 3rd, 2015 at 09:33 | #51

    John Brookes :
    I don’t think that high income tax rates are a disincentive to high income earners working

    If you go back to the Greed is Good decade of the 1980’s, before that the remuneration of the executive class wasn’t orders of magnitude greater than average. It was also a time when the top rate of personal income tax was higher, so maybe before the 1980’s the executive class wasn’t incentivised (love that word !) to work hard, and then when tax rates fell, they unleashed this explosion of effort and productivity to justify their salaries.

    Maybe we can be like the USA and reduce taxes on the rich even more, and this will unleash an even greater bout of productivity and we’ll see salaries demanded in the $100’s instead of $10’s of millions. Just think how productive our economy will become – oh, wait hasn’t quite worked that way in the USA.

  52. TerjeP
    April 3rd, 2015 at 09:34 | #52

    This suggests that with higher taxes people will work harder.

    I’ve heard it is the same when you whip people.

  53. Ikonoclast
    April 3rd, 2015 at 11:35 | #53
  54. Ikonoclast
    April 3rd, 2015 at 11:51 | #54

    @TerjeP

    I found being treated like sh** by bosses to be a much higher disincentive to work than taxes. If my taxes had been been a bit higher and had been used to keep capitalist bosses (and mangerialist bosses) in line I would have been much happier and more productive at work. I can say that because I was much happier and more productive at work in my first 20 years in the workforce than in my last 20 years.

    In the last 20 years, neoliberalism and manegerialism took over and ruined most workplaces private and public, tilting the playing field heavily in favour of capital and heavily against workers. Now almost all workers are treated like sh**. This is what happens in unfettered capitalism. All the wealth goes to a few and the majority, the workers, lose ground. Current trends in this regard are not sustainable. If current trends continued in the long run we would reach the point where workers get zero pay and capitalists get everything. Clearly that system won’t work so where does the process of continually cutting workers’ pay end and what ends it? That is the key question now. Greece is on the front line of this question.

    Footnote: Even slaves can’t be worked for zero pay. They must get “pay” in kind; namely basic food and cheap lodgings or else they die. Also they won’t breed abd replace. Slavery is apposite in this context. Capitalists want to reduce workers back to slavery. Just look at the Apple factory in China (one example).

  55. J-D
    April 3rd, 2015 at 15:36 | #55

    @Ikonoclast

    I looked there. The trouble is that the information is presented to identify people who do have to lodge tax returns, and is not conveniently structured to identify people who do not have to.

    But then I searched the ATO website for information about the tax-free threshold and found this:

    If you have earned less than the tax-free threshold during the financial year, what do you need to do?
    You need to work out if you must lodge a tax return.
    You must lodge a tax return if:
    your payment summary shows you have had tax withheld
    you have paid tax under the PAYG instalment system.

    People whose only source of income for the year was the Newstart Allowance will have incomes well below the tax-free threshold (they’d still be under even if they did manage to earn a few dollars in interest on a bank account), they won’t have payment summaries showing tax withheld, and they won’t have paid PAYG instalments, so they, or at any rate most of them, won’t have to lodge tax returns.

  56. TerjeP
    April 3rd, 2015 at 21:14 | #56

    I found being treated like sh** by bosses to be a much higher disincentive to work than taxes.

    Bad bosses are a problem. No argument. But I don’t think they are related to the tax system or economics reforms. Except that bad bosses don’t deal well with stress or change so any period of stress or change will probably make the bad bosses more visible.

  57. Jordan
    April 3rd, 2015 at 22:37 | #57

    @TerjeP
    But what bad boss means? Is it bad boss for boss’s boss or bad boss for workers?

    Most often bad boss for workers means good management for top bosses, very rarely this descriptions works both for workers and top management.
    Why?, Because incentives to be bad to workers are working for top management benefits.

    If you want to find a proff of it is the fraud in banking that destroyed banks and shareholders but public money saved them.

  58. April 4th, 2015 at 09:24 | #58

    Just on the tax question, this is my understanding, which hopefully may clarify some of it.

    1. If you paid income tax in the financial year you have to lodge a tax return.

    2. You may have paid tax even if your annual income was below the tax free threshold, if you worked at a higher rate of pay for a short term, because PAYE tax is deducted on the rate during the pay period, not the year.

  59. J-D
    April 4th, 2015 at 15:00 | #59

    @Val

    But if you were unemployed all year and your only income was the Newstart Allowance, then you won’t have paid any income tax instalments, right? and so you won’t have to lodge a tax return, right?

  60. zoot
    April 4th, 2015 at 15:42 | #60

    But if you were unemployed all year and your only income was the Newstart Allowance, then you won’t have paid any income tax instalments, right?

    Not necessarily.
    You can request Centrelink withhold some of your income for tax (usually in the optimistic belief that you won’t be on Newstart for the whole financial year).
    Now, let’s get on to the pressing question of how many angels can dance on the head of a pin.

  61. Megan
    April 5th, 2015 at 00:47 | #61

    @zoot

    It’s not that simple.

    How do you define “dance”? For example, standing very still might just be a very slow waltz. Or it might be a modern interpretive dance.

    How big are the angels? If they are very big and the pin is very little, that would make a difference to the calculations.

    If it is a barn-dance you would need a barn the size of, or smaller than, a pin head. Could you get DA for such a small structure?

    If the angel dancers only did one paid dancing gig for the tax-year and earned only one dollar would they have to file angel tax returns? Does H & R Block even do angel tax returns?

    So many questions and so few answers.

  62. April 5th, 2015 at 04:06 | #62

    What about a higher tax on high incomes? The Equality Trust have done a report on this (in UK) and they reckon it’s a good idea http://www.equalitytrust.org.uk/resources/our-publications/course-correction-pre-distributive-case-50p-top-income-tax-rate

  63. April 5th, 2015 at 05:07 | #63

    However their top income bracket, which apparently starts at £150,000, is much higher than ours, which starts at $180,000. £150,000 at current exchange rates is closer to $290,000.

    We could introduce a higher bracket, say starting at $250,000. That would include most of the top 1% of high income earners. In fact if you wanted to be politically smart, you could raise most income brackets slightly (compensating for bracket creep) while introducing a new 50% income tax bracket starting at $250,000 for the “super-rich” (http://www.smh.com.au/federal-politics/political-news/if-you-want-to-be-uberrich-you-will-need-to-earn-668700-20130505-2j1eq.html – this is a bit old but I couldn’t find anything more recent on a quick google search).

    However the UK report authors caution that it might not be a great revenue raiser (I think because high income earners might shift their income round, I presume through family trusts and similar) – they mainly recommend it because it would reduce income inequality.

  64. Ivor
    April 5th, 2015 at 13:11 | #64

    Would applying a Tobin Tax (or similar charge) contradict the Articles of the proposed TPP Agreement which uses the words “all transfers relating to a covered investment to be made freely”?

    See latest version (march 2015):

    Article II.8: Transfers [19]
    1.
    Each Party shall permit all transfers relating to a covered investment to be made freely
    and without delay into and out of its territory. Such transfers include:

    (a) contributions to capital;

    (b) profits, dividends, interest, capital gains, royalty payments, management fees,
    and technical assistance and other fees;

    (c) proceeds from the sale of all or any part of the covered investment or from the
    partial or complete liquidation of the covered investment;

    (d) payments made under a contract, including a loan agreement;

    Source: https://wikileaks.org/tpp-investment/

  65. TerjeP
    April 6th, 2015 at 04:39 | #65

    introducing a new 50% income tax bracket starting at $250,000 for the “super-rich”

    $250k is a high income but is that really the definition of “super rich”?

  66. Ikonoclast
    April 8th, 2015 at 19:16 | #66

    All profits taken offshore should be taxed at the full Australian company tax rate irrespective of whether taxes are also paid on these profits in another country.

  67. April 10th, 2015 at 21:36 | #67

    a linking issue. I’ve tried it in two different internet browsers and

  68. zoot
    April 10th, 2015 at 23:29 | #68

    @Megan
    🙂

  69. Nicholas
    April 24th, 2015 at 13:43 | #69

    The effectiveness of a tax system depends on the answers to these questions:

    How well does it function as a macroeconomic tool for influencing aggregate demand?

    How well does it promote allocative efficiency in the economy?

    How well does it achieve redistributive goals?

    To what degree does it prevent rent-seeking?

    Revenue is not a relevant consideration at the national level. State and local governments are revenue-constrained but the national government is not. If there is room in the economy for non-inflationary government spending then the government can spend without destabilising prices. It doesn’t get its money from taxpayers and bondholders. Taxpayers only get their hands on the dollars they need to pay their taxes and bondholders only get the money they need to buy bonds because the national government created created those dollars and spent them in the private sector through a process of crediting bank accounts.

  70. Ikonoclast
    April 24th, 2015 at 14:15 | #70

    @Geoff Edwards

    Be careful mate, you are introducing empirical reality into an economics discussion. 😉

    There is nothing so far from empirical reality as standard magic pudding economics where they believe;

    (1) The economy is freestanding with no relation to material and energy limits.
    (2) Infinite growth is possible.

    Oh, I know they SAY they don’t believe these things. Then they go right back to advocating policies based on those precise premises. It is hopeless trying to get them to understand that the economy is a sub-system of the biosphere system. I don’t know why they can’t understand that. Probably because standard economics is eseentially a dogmatic system like a religion.

  71. John Quiggin
    April 24th, 2015 at 15:07 | #71

    @Ikonoclast

    This is completely wrong, but I’ve pointed the fact out too many times to be bothered doing it again.

    Readers tempted to pay attention to Ikonoclast might want to consider, why most standard definitions of economics represent some variant on “the study of the allocation of scarce resources”.

  72. Mike Waller
    April 24th, 2015 at 17:07 | #72

    John
    Go for it. The current thinking is tired or timorous (or both). One area that, on the evidence, warrants serious attention are Pigouvian taxes, notably to address excessive alcohol assumption. This approach, coupled with a strong educational/regulatory approach, has been successful with tobacco. Latest estimates I have seen suggest social costs in Australia of excessive alcohol consumption (health, family breakdown/violence, lost productivity) in the range $15-20bn, compared with the current tax yield of <$10bn. See AIC paper here
    http://www.aic.gov.au/media_library/publications/tandi_pdf/tandi454.pdf)
    Of course, action in this area would be wildy popular with the AHA and brewers and hence presumably very attractive to a government that has so wedded to the highly selective use of market signals and driven by moral panic rather than evidence (cf the Ice Taskforce).

  73. Ivor
    April 24th, 2015 at 17:32 | #73

    @John Quiggin

    The “allocation of scarce resources” is a common definition of economics.

    Reality is constructed by political economy.

    Monopolists use politics to create, maintain and profit from an artificial scarcity that would not exist if there was only a simple “allocation of scarce resources”.

    However the issue seems to me to be more the belief of capitalist Keynesians that future growth is endless and therefore, it is implied that there is no scarcity in the long run.

    You have pointed to a claim and an opinion, you have not pointed to a “fact”.

  74. totaram
    April 24th, 2015 at 20:01 | #74

    But..but… Joe Hockey says he is “philosophically opposed” to raising taxes, which I read as code for “can’t tax the well-off, because who else can afford to pay?”. So, in JH’s book the only option is to cut expenditure – which is the main idea all along, as long as the cuts are on health, education and welfare. Obviously, you people here aren’t getting with the program, because you insist on discussing tax-reform without realising that “tax reform” means “tax cuts”. Please continue your useful exercise. I just hope the ideas here may be of use to someone else someday.

  75. J-D
    April 25th, 2015 at 07:53 | #75

    @Ivor

    There is no ‘belief of capitalist Keynesians that future growth is endless and therefore, it is implied that there is no scarcity in the long run’.

  76. Ikonoclast
    April 25th, 2015 at 09:42 | #76

    @John Quiggin

    Why then is the current system predicated on endless growth?

  77. Ikonoclast
    April 25th, 2015 at 10:12 | #77

    http://www.scientificamerican.com/article/does-economics-violate-th/

    “”Real economics is the study of how people transform nature to meet their needs,” said Charles Hall, professor of systems ecology at SUNY-ESF and organizer of both gatherings in Syracuse. “Neoclassical economics is inconsistent with the laws of thermodynamics.”

    Like Hall, many biophysical economic thinkers are trained in ecology and evolutionary biology, fields that do well at breaking down the natural world into a few fundamental laws and rules, just like physicists do. Though not all proponents of the new energy-centric academic study have been formally trained in economics, scholars coming in from other fields, especially ecology, say their skills allow them to see the global economy in a way that mainstream economists ignore.”

    Basically, the scientists (physicists, ecologists etc.) understand the empirical reality of our world (as well as humans have managed to do so to date and far better than any religious or idological system like standard economics). Standard economists don’t understand empirical reality at all. Standard economics is a formal system divorced from the empirical realities of real systems.

  78. John Quiggin
    April 25th, 2015 at 10:32 | #78

    Energy debates should be taken to the sandpits.

  79. Ikonoclast
    April 25th, 2015 at 11:34 | #79

    @John Quiggin

    It’s more than an energy debate. It’s a formal systems / real systems debate. But if I post again on this topic it will be at the sandpit.

  80. Ikonoclast
    April 25th, 2015 at 11:44 | #80

    On taxes, why not tax the things easiest to tax? Tax consumption, real property, capital and wealth. I know a consumption tax is regressive but everything thing produced must be consumed (or else wasted). Therefore tax consumption and do it progressively as in;

    (a) whole, unprocessed foods and staples 0%.
    (b) processed foods 10%
    (c) standard goods and services 10%
    (d) junk foods and luxuries (sliding scale of 20% to 50% depending on category)

    With property, wealth and capital put high taxes on non-productive and speculative activity / wealth. Rapidly scale up the taxes on welath. For example, the property tax on a second house should be more than the tax on the first house, the tax on the third house more again and so on. Same with the second million, third million and so on.

  81. Ivor
    April 25th, 2015 at 12:14 | #81

    J-D :
    @Ivor
    There is no ‘belief of capitalist Keynesians that future growth is endless and therefore, it is implied that there is no scarcity in the long run’.

    Weird ????

    If this is so, what is the end of future growth that Keynesians supposedly believe in?

  82. J-D
    April 25th, 2015 at 15:50 | #82

    @Ivor

    What is the end of future growth that you believe in?

  83. Ivor
    April 25th, 2015 at 16:03 | #83

    @J-D

    Your comprehension skills are inadequate.

    The question was:

    what is the end of future growth that Keynesians supposedly believe in?

  84. J-D
    April 25th, 2015 at 17:46 | #84

    @Ivor

    Your question was ‘What is the end of future growth that Keynesians supposedly believe in?’

    My question is ‘What is the end of future growth that you believe in?’

  85. Ivor
    April 25th, 2015 at 18:25 | #85

    @J-D

    So you cannot answer the question?

    Therefore your original “weird” statement must be wrong.

    So why did you say:

    There is no ‘belief of capitalist Keynesians that future growth is endless and therefore, it is implied that there is no scarcity in the long run’.

    And why are you asking what I believe in – when this is not relevant.

    My statement was about capitalist Keynesians, and I am not a capitalist Keynesian. But you seem to want to tell us what capitalist Keynesian beliefs are.

    Do you have the necessary skill for this?

    Maybe you do not know whether Keyenisan capitalists do or do not believe that future growth is endless.

  86. J-D
    April 25th, 2015 at 19:04 | #86

    @Ivor

    I am asking you the question ‘What is the end of future growth that you believe in?’ because it is relevant, as I will demonstrate once you answer it.

    I _can_ answer your question, but it will be much easier if you answer mine first.

  87. Ivor
    April 25th, 2015 at 21:00 | #87

    @J-D

    This makes no sense.

    If it was relevant to ask someone a question – you would have done it before initiating a dispute.

    What others believe is different to what Keynesians believe.

    My view was that capitalist Keynesians believe that future growth is endless. You chose to deny this. This denialism is such a weird claim that it is surely wrong.

    You are not making any sense.

    Maybe you now realise what you said was either vexatious or just false?

  88. J-D
    April 26th, 2015 at 08:16 | #88

    @Ivor

    In answer to your most recent question: no, I stand by what I wrote.

    I observe that you’re not answering my question.

    Also, the second and sixth statements in your most recent comment are false.

  89. TS
    April 26th, 2015 at 08:17 | #89

    The charity-based Tax Justice Network estimates at least $32 trillion sits in tax havens/secrecy jurisdictions.

    http://www.taxjustice.net/cms/upload/pdf/Price_of_Offshore_Revisited_120722.pdf

    Any idea of how much of that is owed to Australia?

    Could we say that the Gross World Product is $75,592 billion:

    https://en.wikipedia.org/wiki/Gross_world_product

    And Australia’s GDP (nominal) is $1,400 billion (IMF figure):

    https://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29

    Therefore Australia’s cut of the $32 trillion in tax havens is 1.4/75.592 = 0.019% of $32,000 billion, or …

    $608 billion?

    Of course, actually getting that money is harder than calculating it!

  90. Ivor
    April 26th, 2015 at 10:09 | #90

    @J-D

    So you assert that there is no belief by Keynesians that future growth is endless.

    So what is the Keynesian Limit to Growth?

    Is not deficit spending based on the expectation of future growth?

    Is this a Keynesian principle?

    Why do we have global debt of 200 trillion? Does this suggest that the Keynesians who took over western economic management after the Depression, expected future growth to cover it?

    Will this debt increase?

  91. Ivor
    April 26th, 2015 at 15:07 | #91

    From last weeks Sunday Ockham’s Razor radio ABC program.

    ‘Sustainable growth’ is a con that has been used to justify continuing unsustainable business-as-usual.

    Of course, some will deny everything said so far. Humanity could arguably be called Homo denialensis not Homo sapiens, for we are very good at denial. Denial is common and has a long history (DDT, smoking, acid rain, CFCs, climate change etc.). As Naomi Oreskes of Harvard uni illustrates in Merchants of Doubt, denial often comes from an ideological basis. For example, the denying of climate science as it may lead to further regulation of ‘the market’ deemed sacred by neoliberals. Denial is also not just due to the denial industry, for ‘implicatory denial’ is rife in ‘we the people’. We are sadly very good at fooling ourselves and ignoring the implications of what we (en masse) do. However, the denial dam can be broken, and this is a requirement for sustainability.

    ABC Radio

    Soon, I hope, Keynesians will admit that there are limits to growth and the economy must be restructured accordingly.

    Soon, I hope, capitalists will admit that there are limits to growth and the economy must be restructured accordingly.

    Soon, I hope, academic economists will admit that there are limits to growth and the economy must be restructured accordingly.

    Soon, I hope, politicians will admit that there are limits to growth and the economy must be restructured accordingly.

  92. jt
    April 26th, 2015 at 18:35 | #92

    Keynesianism is nothing more and nothing less than a school of macroeconomic thought.

    Keynesianism will not put the kettle on for you.

    Keynesianism has no opinion on whether in this day and age it is OK to wear white shoes after Labor Day.

    And Keynesianism sensibly walks in the opposite direction when it sees a scared weird little dude with an LtG idee fix holding a “The End Is Nigh” sign.

    I hope that clarifies matters.

  93. Ivor
    April 26th, 2015 at 20:22 | #93

    @jt

    Thanks for your scribble, it made for a good laugh.

  94. J-D
    April 27th, 2015 at 08:35 | #94

    @Ivor

    I reply in the sandpit.

  95. May 3rd, 2015 at 18:11 | #95

    I use Drobbox (a very useful product), and was amused to get the following email from them. It seems to me that the government might want to act on income going to tax havens rather urgently.

    Hi there,

    If you’re a user living outside of North America (U.S., Canada, Mexico), we’re updating our Terms of Service to better serve you and the growing number of Dropbox users around the world. These changes include the fact that we’ll be providing our services (including Dropbox, Dropbox for Business, Carousel, and Mailbox) to you via Dropbox Ireland starting on June 1, 2015. Please note that none of our services or features are changing as a result of this. You can read the updated terms at https://www.dropbox.com/terms.

    Have questions about these changes? Visit our Help Center.

    Thanks for using Dropbox!
    The Dropbox Team

  96. required
    May 4th, 2015 at 20:32 | #96

    @John Brookes

    John Brookes – you might consider Spideroak instead:

    https://en.wikipedia.org/wiki/SpiderOak

    It has greater anonymity, in addition to stepping away from the clutches of rapacious billionaires.

Comments are closed.