78 thoughts on “Monday message board”

  1. Nouriel Roubini has interesting post on the appropriate monetary policy response to asset bubbles. He is of the view that monetary policy should be used to try and control asset bubbles. I have gathered from Pr Q’s comments here and there that he tends to agree but I am not sure.

    http://www.rgemonitor.com/blog/roubini/98758/

    As someone who is currently experiencing the pain of entering the housing market after our own property boom I have a lot of sympathy with this view. However it does not seem to be the convetional econocmic wisdom. I find it strange that on such an important issue which has an enormous direct impact on the hip pocket of so many people that there is so much disagreement.

  2. An interesting article by Gittens advocating abolishing tax rorts to align the top tax rate, company tax rate and capital gains rate tax to reduce distortions in the system. This argument has merit but for different reasons than Gittens is prepared to say.

    http://www.smh.com.au/news/ross-gittins/nobulldust-case-for-cutting-top-tax-rate/2005/09/11/1126377202192.html

    His assumption that the change in the way Capital Gains Tax was calculated gave a concession is wrong. Prior to capital gains being taxed at 50% of the marginal rate it was averaged over 5 years and inflation was compensated. The effective capital gain rate would generally be lower than 50% of the marginal rate. It no longer was so there was less incentive to use CGT minimisation after the reforms.

    The reason we had a large increase in the number of people utilising tax minimisation was that people were reacting to increases in their real rates of taxation. (total taxation has increased 2% of GDP and the effective rate at which Average Weekly Earning is taxed also increased markedly after the introduction of the GST.) This increase in real rates of taxation occur because marginal tax rates are never properly adjusted for inflation and so real effective tax rates increased. This increase was amplified in the inflationary period caused by the introduction of the GST.

    Aligning at 33% the top tax rate, company tax rate and capital gains tax rate to reduce distortions in the system will go along way to alleviate the rort that is caused by marginal tax rates coupled with inflation.

  3. “Aligning at 33% the top tax rate, company tax rate and capital gains tax rate to reduce distortions in the system will go along way to alleviate the rort that is caused by marginal tax rates coupled with inflation.”

    The company rate (which is 30%, not 33%) is irrelevant to this discussion. With full imputation, company taxes are just withholding taxes. People who think they are being smart by diverting their income into company structures are not being smart, because they have to pay top up tax according to their marginal personal rate, when they pay themselves dividends out of the company.

    CGT is now much more concessionary than it used to be. Cutting the rate in half more than makes up for abolishing indexation of the asset base. Only if we had much higher inflation than we have would the reverse be true.

  4. UM,

    ” because they have to pay top up tax according to their marginal personal rate, when they pay themselves dividends out of the company. ”

    If they are smart and control their shelf company the company would pay for everything and their marginal rate would be below the company rate.

    “CGT is now much more concessionary than it used to be. Cutting the rate in half more than makes up for abolishing indexation of the asset base. Only if we had much higher inflation than we have would the reverse be true.”

    CGT was averaged over 5 years by dividing the gain by 5 and then compensating the index, whether you had it for 5 years or less. Not just indexing the cost base as you are inferring. It was previously more concessionary than it is now

  6. “If they are smart and control their shelf company the company would pay for everything and their marginal rate would be below the company rate.”

    I suppose you mean they put personal expenses through the company and so lower their taxable income.

    Anybody who owns a business can do this to reduce their taxes, and many people do. But it’s got nothing to do with whether or not the business is incorporated, and so the company tax rate has nothing to do with anything. If I own a milk bar that is not incorporated, call it Uncle Milton’s Milk Bar, I will claim my peronal milk expenses as a business expense. I will also do this if the business is owned by the shelf company, which I own all the shares in, called Uncle Milton’s Milk Bar Pty Ltd.

    Incorporation is useful for many things, like limiting my personal liability when my business goes bust, but not for reducing my taxes.

    I am not a tax accountant, but there is no way that the old CGT tax worked by dividing the gain by 5. If there’s a tax accountant reasding this, please fill in the details.

  7. Econwit, thanks for the link to the ATO. I find tax rules to be eye glazing, but I think this is relevant part.

    “Prior to the 1999-2000 income year, for an individual and in some cases trustees, the amount of tax payable on your net capital gain was generally worked out by taking the amount of tax payable on one-fifth of your gain and multiplying that amount by 5”

    Which is a lot different to just dividing by 5.

    And then they go into a lot of deail.

  8. MB

    True,

    But it is still a major concession on par with the 50%, the additional benefit was indexing. In my view indexing is a big benefit that has been removed.

    If you had a $20,000 gain you were taxed at the marginal rate of $5000. i.e $0. The concession was too be taxed at the marginal rate of 1/5 the gain.

    My point re companies is, that now days people who would normally be on a salary are becoming consultants and contractors who minimise their tax through corporate and trust structures. This would be stopped if all the rates were aligned.

    33% would be increasing the corporate and CGT rates but reducing the top personal rate. It would also reduce compliance costs

    See here my views on marginal tax rates comment 42 i.e. inflation makes them regressive and that is why I think they should be abolished.

    https://johnquiggin.com/index.php/archives/2005/09/02/simplifying-taxes/

  10. Saga? Let’s not lose our heads, Antony. Anyway, the headline from GW is: ‘ALP MP advocates ban on anti-Zionist book’. There isn’t any mention in the article about any ban, only mention of Danby’s recommendation that MUP ‘dump’ it. Has Danby actually endorsed a ban, which I take to mean some kind of legal restriction on the book’s publication? Or has the meaning of the word ‘ban’ expanded while I wasn’t paying attention?

  11. Scott Parkin. Is this guy really an enemy of the state? A quick web search shows him as an anti-Halliburton organiser. Does anyone know him? I’ll defer judgement on his detention for the moment but this looks on the surface to be another “They hate our freedoms” moment.

  12. does he have a beard and is he part of Imam Quiggin’s vile plans to blow up suncorp stadium?

  13. If you had a $20,000 gain you were taxed at the marginal rate of $5000. i.e $0. The concession was too be taxed at the marginal rate of 1/5 the gain.

    $20,000 / 5 does not equal $5000. In any case, that wasn’t how it worked. The $4000 got added to the rest of your income, and that marginal rate was applied to the whole of the gain. If you were on the top rate of 47% already, adding the $4000 didn’t change your marginal rate, so the full capital gain was taxed at 47%. If your other income was, say $45,000 in 2000/01, your marginal rate was 30%. Adding $4000 kept you under the $50,000 threshold for the 42% rate, so you paid 30% on the whole capital gain. If this system hadn’t applied, the $20,000 capital gain would have pushed you all the way into the 47% bracket.

    There will be individual cases where the old system provided a greater concession. On average, though, the new system provided greater concessions.

  14. Scott Parkin is clearly one of those tricky ones, Homer.
    No beard. Probably doesn’t even understand footy! Reckon Amanda and Phil have everything organised, on previous form.

    David, do not know him and glad i missed out on the meetings that he ran.
    A place on Chrismas Island is probably being organised ,right now. Those folks should understand that when freedom of speach vs wealth creators happens ,J.H is the umpire.

  16. “Prior to the 1999-2000 income year, for an individual and in some cases trustees, the amount of tax payable on your net capital gain was generally worked out by taking the amount of tax payable on one-fifth of your gain and multiplying that amount by 5. The result was then added to the tax payable on your other income.”

    So the way it is worded in the example is ambiguous. It should read: “1/5 of the gain is added to your taxable income and it is the marginal rate of that sum that is applied to the total capital gain”.

    My interpretation was the whole capital gain was given the concession of being taxed at the marginal tax rate that applied to 1/5 of the gain. i.e. if the capital gain was $20,000/5 = $4000. margin rate on $4000 = $0 as it is below the threshold; $0 X 5 = $0 this “result was then added to the tax payable on your other income”
    Or if 1/5 the gain was in the 15% marginal rate then the total gain is taxed at 15% and 15% of the gain is your capital gain tax liability that is added to your other tax liability.

    That is how I thought it happened so I stand corrected.

  17. Antony,let it rip.
    Do not be a treated like that.
    Let these people have their say.
    No moderation.
    It informs us all!

    Art is happening on the wall and you know that there are many brave, non-zealots in Israel.

  19. Antony, your oft-repeated postings about your book are boring and annoying. You’ve made your point. Unless you have something new to add, please don’t keep re-posting your message.

  20. I hadn’t noticed that this website and its attendant community was now owned over by an anonymous person with a fondness for apostrophes.

    Speak! For! Your! Self!

  21. To “Enough! Says”, if only people who like to restrict other’s speech like you do, would actually “get it”…

    Something new: the escalation of abuse and again the calls for restricting other’s speech,etc. Anthony L. actually does go to the real trouble of writing knowledgeably about such difficult issues as Israel and Palestine. Others post unknowledgeably about everything…

    Please join the discussion meaningfully, or stop the crap.

  22. Carlos: “Enough” has a point. The postings by this antony are day after day unrelated to the thread, & are harping on the one point all the time. I had always believed it to be comment spam which had snuk in through the filters. Whoever this antony is, he needs to get his hand off it, or at least change hands.

  23. UM

    For sake of argument company tax is 30% and personal is 50%. The difference is 20%. The benefit of incorporating a company is that the company can re-invest this 20% while an individual could not.

    Effectively, by using a shell company you can use some tax money (the 20%) to invest, take the benefits, and then finally pay the 20% when you take your dividend.

  25. JH

    If you retain the earnings in the company and the investment gives you a return of x%, then the amount of tax you pay will also increase by x%. The net present value of the tax you pay is the same, whether you take the money out of the company now and pay personal tax now, or whether you take the money out of the company later and pay personal tax later.

  26. If you make $100 using taxpayers money, then you do not pay an extra $100 in tax. You get to keep $50 that you would not have otherwise got if you did not have an incorporated company.

    Further, you delay paying the tax… so you decrease the net present value of the tax.

    Some people say that the tax is inevitable so what value is delaying it. Death is also inevitable. 🙂

  27. JH,

    If you delay paying the tax by reinvesting in the company, then it is reasonable to assume that that investment will grow the profits of the company and so when you finally pay yourself a dividend out of higher profits, you will pay more tax. Provided the discount rate at which you calculate the npv of the tax you pay is the same as the growth rate of the profits, then the npv of your tax payments is the same whether you retain the earnings or not.

    Of course, you might choose to reinvest the earnings somewhere that makes no money, like a bank account for a year that pays zero interest. Then the NPV of your tax payments would decrease, as you say. But what is the point of that? You’ve deprived yourself of the money for a year, for an effective loss to yourself, as well as depriving the government of your taxes for a year.

    So, if you are rational, and reinvest the earnings with a positive return, it all washes out and there is nothing to be gained, tax-wise through a company structure. (In fact, looking at it in detail, you actually lose money by retaining the earnings, because the franking credits lose their value over time.)

  28. Uncle Milton
    If you structure your milkbar affairs effectively then you will only ever pay 30%. If any of your profits are retained by your milkbar company and then distributed to you as a franked dividend then the tax has been paid (provided your taxable income does not exceed the 30% threshold). This is a simplistic scenario but should be a guide to differrences in business structures and the way they are taxed. Also it may be viewed by some that claiming personal expenses as business expenses is tax evasion (think the ATO).

  29. UM,

    You assume that holding a deferred a tax liability in cash has no benefit. Insurance companies hold floats (premiums) which are the equivalent of interest free loans that they then reinvest at a profit. Deferring tax is utilising the same principle.

    Further, If you have profit sitting in a company you control with 30% tax paid you have additional flexibility to minimise my tax liability.

    (1) you can time when this is profit is distributed to a period when your marginal rate might be less than the company rate.

    (2) you could leave the retained monies in the corporation and sell the corporation at a capital gain to reflect its increased cash value, converting income into capital gain and taking advantage of the 50% marginal rate CGT discount.

  30. Lurch

    if my taxable income doesn’t exceed the 30% threshold, then it is true I won’t pay any more tax after payment of company tax. But so what? That’s only because my income is so low that I’m in the 30% bracket.

    Claiming personal expenses as business expenses is tax evasion, but provided it is done on a small enough scale, is impossible to police. A lot of people have offices at home, and they claim their internet costs as business expenses. Do you think the ATO is going get them to prove how much of the time they are surfing the net is for business purposes, and how much for personal purposes?

    econwit

    as a replied to JH, investing for a profit leads to you to pay more tax, not less, but in NPV terms it washes out.

    Your further point (1) is correct in principle. I don’t know how important it is in practice. Not many people have great variations in their year to year income that they move into a lower tax bracket where what you describe could occur. Those that do, like farmers, are allowed to smooth their income for tax purposes anyway.

    It is possible to do what you describe in your further point (2), but if you did that, you’d lose the franking credits.

  32. econowit,

    Further, If you have profit sitting in a company you control with 30% tax paid you have additional flexibility to minimise my tax liability.

    That actually doesn’t help you that much. You have to compare the total tax paid. If you control the company you could presumably have paid out the profit to yourself, either as salary or in dividends, in which case you’ll be taxed at your full marginal rate – let’s assume it is the top rate of 48.5% for the sake of argument.

    Deferring dividends will help if your marginal rate is 30%, because you’ll get the franking credits for the tax already paid by the company. But the best you can hope for there is to pay out the whole of the 30% band – which is about $60,000-$120,000 I think, so $60,000 in total. So savings of 18.5% of $60,000 compared to the top rate, or about $11,000 per year. It’s a tidy sum but not exactly a huge tax dodge.

    Turning the company profits into a capital gain won’t help much because you lose the franking credits. So if you sell your company for the value of the profits it could have paid out as fully franked dividends, you’ll pay 1/2 your marginal rate on the sale (say 24.25%), in addition to the 30% already paid by the company. So you end up paying almost the same tax on that money (47% = 24.25% * 70% + 30%) than if you had paid the lot as salary or dividends.

    Needless to say, storing the money in a company is not how the pros do it. I think what they do is have a family trust that owns the shares in the company that has the profits. The proftable company pays its 30% tax and then distributes the remainder in dividends to the trust. I’m a bit vague on the details, but I believe the trust can then make interest-free loans to its members (as well as other benevolent gestures). Presto: money in your hands with only 30% sent to the idiots in Canberra for them to piss up the wall.

    Theoretically of course you have to pay those loans back at some point, but who cares if it is a family trust?

  33. For the slow ones… ASIO: Now jailing peace activists.

    Of course, nothing the mainstream media has done comes close to a decent analysis of why and what’s really going on. But do check what the SMH had to say: Orders from Washington behind deportation.

    But the best among all the media’s crap was last night’s Lateline with Pilger on Australia’s new anti-terrorism laws.

    See the full transcript, there are some very good insights there, comparing what’s going on in London and their judicial oversight v/s what our PM & Attorney General are trying to get away with here in Oz:

    JOHN PILGER: Well, I think what has happened here, the interesting difference in Britain between here and, say, September 11, was that there wasn’t that kind of panic attack. There was shock, yes. But you know, this is a country – this is a city that has been used to bombing, unfortunately. And I think there has been more examination of why, in this country, than anywhere. Certainly more than in Australia. The fact that the connection with the attack on Iraq has been made beyond all doubt, and not by the likes of me, and not even by the alleged Muslim bombers themselves, or those that came after them, but by establishment organisation. Here you have the Royal Institute for International Affairs, Chatham House, effectively saying, as indeed the intelligence agencies have said, that the reason London was bombed because Britain took part in this attack on Iraq. That’s why it happened. Now, undoubtedly there are other reasons, of course. A lot has been going on in the Middle East in my lifetime. But certainly as a principal reason, there is a general agreement, I would’ve thought, right across the board, from left to right in this country, that that’s what happened. So it’s a debate that has to – if Australia simply swallows these laws, and you have an Attorney-General – who has deserted an Australian citizen, David Hicks, in Guantanamo Bay – at the vanguard of these laws, I think that’s terribly worrying and we should be looking at what we can do about debating them properly and breaking silences and speaking about taboos.

  34. Would you lose the franking credits? Not if you got the cash equivalent for them when you sold the company.

    Contractors and consultants income varies considerably from year to year, especially when they have converted income into a capital gain utilising negative gearing and then they sell or borrow against an asset.

    Anyway what about trusts for minimising tax? They can utilise income units, capital units and income splitting.

    Why do people bother with all these entities if they don’t minimise tax? To keep their accountant employed?

    The use of entities to minimise tax is pretty wide spread going by the amount of trusts and shelf companies that exist. My view is that aligning the rated would stop help curtail their use.

    Carlos,

    I think we should do a hostage swap- Ruddock for Hicks.

  35. Carlos, channelling John Pilger, provided the following comment above: “…that the reason London was bombed because Britain took part in this attack on Iraq.”

    Lets accept this piece of pop-wisdom. So is murdering civilians in London therefore acceptable?

    There are plenty of people who opposed the Iraq war, but don’t murder innocents.

    In addition, what then of the insurgents in Iraq (who I guess we could say also opposed the war though have managed to get pretty good political mileage out of it), who are murdering their own countrymen.

  36. You may be right about being able to sell franking credits, but since the value of franking credits decreases over time, they won’t be as much as if you’d used them in the first place.

    Trusts can certainly be used for income splitting, provided you can find someone to split with who is on a lower tax rate. Traditionally that has been the non-working wife, but these days, there are less of them around. The barrister whose wife is a surgeon isn’t going to save any tax by splitting his income with her. And children under 18 who get trust income are taxed at the 47% rate, apart from the first few hundred dollars, so that avenue has been closed.

    Still, income splitting through trusts does happen. But the point is, there is no additional tax advantage to having a shelf company involved. Company structures are very useful if you want to put some distance between yourself and your creditors. They are much less useful for avoiding tax. Trusts are particularly useful for keeping family assets in the control of the head of the family, and out of divorce settlements. They are also useful for minimising tax, but less useful than is commonly assumed.

  37. Tony Jones was grimacing and stammering all over the place as we were pleasantly reminded what an arrogant, hardline, unforgiving, nutter John Pilger STILL is. Like the wonderful sophist Michael Moore he makes you think that a country really doesn’t need to cultivate enemies when they can grow their own personal attack dogs just like him. Unfortunately, being rude to your interviewer or failing to pull your head in when you’re being a bit of an idiot is not enough of a reason have your views dismissed and nor should it be. Nor is having a seemingly endless string of almost unreadable books, sigh.

    Do many people in the USA/UK and Auststill believe in their heart of hearts that Iraq is NOT one of the causes of the most recent terrorist acts? Surely no. In this JP is stating the now obvious … it is.

    That some muslims in the world pursue not peaceful marches (like the so-called “west” does in spades) in defiance of this or any other war of their choosing but instead terrorise their own people and other civilians in foreign countries by blowing them to bits on the street is a mystery. That is the reason for new laws, not Iraq. That the laws are well-designed or not is another question.

    The world would have more sympathy for the apparent plight of the so-called “muslim world” if it actually put a bit more effort into its argument and stopped preying upon the Sudan, Thailand, Holland, Indonesia, even this morning in the Philippines and practically every country where they have the shits because their elites are religiously superior, economically backward, losing power and hostile to successful co-habition with other cultures.

    Just to take the philippines or Mindanao as an example, this war on citizens has been going on for decades well before iraq and the “insurgents”‘ only language is a home-made bomb. Not a brain cell nor a reasonable argument between them. Being in or pulling out of Iraq is not some amazing idea we can use to stop terrorists, it may stop them multiplying but if YOUR personal desire is to get out there and kill strangers on another country’s streets then laws are enacted to stop you or poepl like you no matter how good your reason might be for doing so. Of course, in China they probably don’t bother radical muslim separatists with new legislation so much as the very business-like implementation of brutal force.. but that’s another story of human rights.

  39. GDP & UM

    I might be mixed up on the logistics but if this is possible:

    “Presto: money in your hands with only 30% sent to the idiots in Canberra for them to piss up the wall.”

    Then all the rates (cgt,pt,ct) should be aligned at 30% with a $30k tax free theshold to make it fair on everybody.

  41. …all the rates (cgt,pt,ct) should be aligned at 30% with a $30k tax free theshold to make it fair on everybody…

    Indeed. But make it something like a $10K tax-free threshold + $10K for each dependent, and get rid of family tax benefits.

  42. I finally had an opportunity to look at Carlos’ 30A Network website, and on it, apart from condoning vandalising the Sydney Opera House and the usual undergraduate political rehtoric, the ‘network’ has as its banker…….the Commonwealth Bank!

    Now I am sure that while the ‘network’ was and remains critical of the Forbes love-in, it’s interesting that Commbank’s CEO was probably at that same event which the networkers (couldn’t find by the way).

    Irony anyone!

  43. Don’t know exactly what JQ is thinking of, probably a consideration of economic effects and changes, thought about the question as I see it impacting on me.

    Conscious of the obvious like the level of security and the shifting of the balance in civil rights. Something that was actually argued about in this household at about three in the morning of the Twin Towers nightmare.

    The older arguing it had become necessary, the younger that it wasn’t necessary and wouldn’t achieve any thing. Have no idea whether an age difference like that carries over into the general population. Also the Iraq war is such a potent force for anger and dissension amongst us that it is hard sometimes to tell which attitudes are the result of 9/11 and which are from Iraq. It seems to me that there has been a greater polarisation of positions held and much less civility, which though identified as Iraq has to be in some ways from 9/11. We are a little more frightened than we were. But maybe I just didn’t move in such vigorous circles and am now more aware of the debate via this medium.

    While considering saw this report from Amnesty International

    “Amnesty International is deeply concerned that the Hamburg Supreme Court (Hanseatisches Oberlandesgericht) decided on 14 June 2005 to accept evidence which may have been obtained through torture or other cruel, inhuman or degrading treatment (ill-treatment)�

    This I would have thought was a major change for Germany. The changes in rights however, if this sort of thing is a trend rather than an aberration, which I don’t think it is, would say that for the foreseeable future there has been a shift in the west’s and its populations views on what the human rights balance should be.

    For better or worse more knowledge of Islam and the countries in the world that are Islamic or have large Islamic populations. Perhaps more than other issues 9/11 has made Australians see a global world and learn some more about it.

    A different feeling about multiculturalism, it has become I think for all Australians something more now than food and particular suburbs. In my case, though I don’t really understand what it (the policy) is I am less bothered by it and see advantages in such a policy that I may not have considered otherwise. While it always seemed to me that a multicultural society was a vibrant and learning one because of the influx of new ideas, I now see it as a being a part of a happier society in that the learning of tolerance brought by such a policy feeds into other beliefs one holds.
    (despite the fact that I am a RWDB)

    It seems to me also that post 9/11 the gap between the UN and the USA has been steadily increasing even apart from the Iraq war. And for Australia also. And that this feeds into issues other than terrorism. While it was the case that the US Congress and Senate wouldn’t go for Kyoto under Clinton, the US has now moved along with us to its own international agreement. Has this sort of approach been accelerated by 9/11? Is the idea of international law and international institutions led by the UN becoming less attractive, certainly for such as the Australian populous.

    Which events lead to which changes are hard to pinpoint.
    The sort of changes that I would assume alter my life post 9/11 but about which I have the least knowledge are economic and financial. If in Australia as in USA there has been as Hamilton says “a significant expansion in the size and power of government,…government is more intrusive� that is not something that I am conscious of particularly either. I am being heated up slowly?

    http://www.indystar.com/apps/pbcs.dll/article?AID=/20050911/OPINION/509110301/1002/OPINION

    Lee H. Hamilton, co-chair of the 9/11 commission, served in Congress from 1965-99. some of his views expressed in this article. Indy Star 11/9/05

    Nearly every private industry has been presented with new and difficult challenges. Security has become a top priority. If you own a chemical plant, you had better take precautions to guard against an attack. If you work in a large office building, you need a disaster-response and evacuation plan. If you ship cargo, you face changing regulations. If you work for a major financial institution, new rules guard against terrorist financing. No matter what the industry, you face an economic climate vulnerable to shocks from a terrorist attack, jittery markets, or energy shortages tied to global instability.�

    .

  44. “As someone who is currently experiencing the pain of entering the housing market after our own property boom I have a lot of sympathy with this view. However it does not seem to be the conventional economic wisdom. I find it strange that on such an important issue which has an enormous direct impact on the hip pocket of so many people that there is so much disagreement.

    SWIO, try thinking about the debate over terrorism and Iraq from a short and medium term perspective. Lots of disagreement about whether or not intervention there was/is necessary and what will be the short/long term consequences. Roubini is taking the reactionary monetary interventionist path cf those who argue we shouldn’t. However, there are those who believe all this is merely arguing about the best way of treating the symptoms of a prolific disease. The organism that caused the disease was excessive money creation and hence it is the carrier of that virus that needs to be constantly controlled if you don’t want regular disease outbreaks. ‘It’s in the skeeters stoopid!’ they cry, although we may be at the stage where we haven’t invented the microscope yet. It’s an intuitive kinda thing, although obviously some empiricism can be brought to bear. You’ll get the constant drip of that ‘money matters’ argument here http://www.brookesnews.com/index.html

    So SWIO, rhetorically, do you think Oz intervention in Iraq has made us more/same/less safe from terrorism now? What about in 5 or 10 yrs time? What about our intervention in Afghanistan? What if we pulled out now? These are not simple questions and difficult to answer in isolation. National economies don’t stand still in isolation either, while you contemplate the ultimate, econometric macroscope. Indeed, some would find such a tool, conceptually laughable. Stay tuned I guess.

  45. I thank Carlos for the link to the Pilger interview.
    He ,Pilger,is hardly a “nutter”. Indeed, makes good points about the state of civil liberties in the U.K. ,as compared to our own rapidly diminishing rights.
    Can hardly see how an organisations banking arrangements are “ironical”.
    Surely, any group, needs to run the books properly and it would be necessary to deal with a financial group of some kind.
    My regret is that many attempt to attack individuals ,rather than the argument they propose. Hope i haven’t just fallen into that trap.

  46. GDP says:

    Turning the company profits into a capital gain won’t help much because you lose the franking credits.

    The franking credits are a distraction.

    Let’s say you’ve got $100,000 cash to invest, either in your own name or through a company. For simplicity, you’re just going to stick the money in a term deposit paying 10% annually.

    At the end of each year, you have to pay tax, either at your marginal rate of 48.5%, or at the company rate of 30%. Then you reinvest what’s left in another term deposit.

    At the end of ten years, you’d have $165,000 if you invested in your own name, or $197,000 in the company. There’s no further tax payable. You end up with an extra $32,000 via the company, and the money is accessible by simply winding the company up.

  47. I should point out, though, that if you did the same exercise via a super fund, you could end up with as much as $337,000 after tax. That’s an extra $172,000.

  48. Free Scott Parkin.
    Just for the sake of democracy and freedom of speech.
    Even decency, for Texan visitors of all kinds.
    George 11,included.

  49. While there is much said about the corruption and incompetence of New Orleans and Louisiana (even Al-Jazeera ran an article on the New Orleans Levee Board and the Good Ol’Boys of Louisiana, which was either stolen from the BayouBuzz or the other way around), their civic society is clearly something different. As a result of the simulation which was run by the city and state authorities and FEMA in 2004, at which the local communities were told that there was no way that the city could be evacuated by the authorities the local and state government appears to have done bugger all. FEMA seems to have just let it fade away. However the local civic society, having been told that it was up to them to set up arrangements to get people out went away and did that. If I recall right it was expected that only 60% could be got out, 80% was. Churches and other civic groups developed evacuation plans and it would appear they worked reasonably well. And a big part of that was the buddy evacuation arrangements developed within communities (that is looking after individuals within the 100,000 who didn’t have private vehicles). One parish got out over 90% through their planned buddy system. If not for the strength of their civic society how bad would it have been.

    Some individuals may have behaved appallingly, but the citizenry of New Orleans I believe has no reason to be ashamed of itself. Considering the poverty and exclusion and their abandonment they have every reason to be proud of themselves.

  50. GDP
    I’m unsure how a trust makes “interest free loans to it’s members [beneficiaries]”. Any income unaccounted for by the trust wiil be taxed to the trustee at 47% (for example – income to which no beneficiary is presently entitled, ITAA36 s 99A). On the other hand if a persons discretionary trust owns and maintains the assets to which they have full use of and the trust is able to make a distribution to a corporate beneficiary owned by the individual, then a substantial saving of tax (and expenses) can be envisaged. If his distribution can be kept to the present company tax rate of 30% (under $58,000), then I would suggest a comfortable lifestyle can be maintained.
    As for who cares if the loans are paid back, then if you are talking about directors loans then I think you might be subject to ITAA36 Pt IVA

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