Rethinking tax policy for Australia

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

96 thoughts on “Rethinking tax policy for Australia

  1. 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.

  2. 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.

  3. 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?

  4. @J-D

    Your comprehension skills are inadequate.

    The question was:

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

  5. @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?’

  6. @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.

  7. @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.

  8. @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?

  9. @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.

  10. 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!

  11. @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?

  12. 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.

  13. 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.

  14. 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

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