7 thoughts on “We can talk about a higher rate of GST in Australia, but it will never happen”

1. JQ, you are referenced in “Social tension order: A new approach to inequality reduction” Bich, Chateauneuf & Ventura (2023) 

   Ref..  QuigginJ. A theory of anticipated utility J. Econ. Behav. Organ.(1982)

   Is; Bich, Chateauneuf & Ventura (2023) of use to replace / augment Gini coefficient, as they boldly state:
   “We prove that reducing social tension corresponds to fair taxation”…  “we construct a new index from the “social tension” order, which may better capture the various sources of inequality compared to the Gini index.”

   Would  “Social tension order” assist in highlighting high effective marginal tax rates, as JQ said in the The Conversation link … “The bigger problem in our tax-welfare system is the high effective marginal tax rate paid by many families (often well above 60%) caused by the combined effect of income tax and the clawback of means-tested benefits.”

   Or assist in hightening undesirability of excess wealth; “To get to limitarianism, we only require that the extra wealth of the rich is, on balance, undesirable for the rest of us.” From “The limitarian implications of utilitarianism”
   July 29, 2023

   Is “Social tension order” as outlined below, a proxy for cost benefit weightings? I assume I am off base with that glancing observation.

   What is fair taxation?

   I’d appreciate an enlightening comment on;

   “Social tension order: A new approach to inequality reduction”

   Journal of Mathematical Economics
   Volume 108, October 2023, 102886
   Philippe Bich, Alain Chateauneuf, Caroline Ventura
   …
   “We prove that reducing social tension corresponds to fair taxation and provide an explicit algorithm that allows for transitioning from a dominated distribution to a dominating one through a sequence of elementary transfers that respect our order. Additionally, we construct a new index from the “social tension” order, which may better capture the various sources of inequality compared to the Gini index. Lastly, we characterize those expected utility functions that respect our order.
   …
   “In this work, we define a new order (the “social tension order”, also called ST order throughout this paper) for income distributions with same size and equal mean, aiming to explicitly incorporate the idea of social tension between different groups. We build on the concepts of “absolute satisfaction” and “absolute deprivation” introduced in Chateauneuf and Moyes (2006). Specifically, we classify individuals as “poor” if they belong to the qth percentile of the poorest individuals and as “rich” if they belong to the (1−q)th percentile of the richest individuals, where q∈(0,1). Our order assumes that each poor individual compares herself with richer individuals, while each rich individual compares herself with poorer ones.

   “From the ST order, we construct a social tension index that addresses some of the limitations of the traditional Gini coefficient, the most commonly used measurement index in economics. Unlike the Gini index, our social tension index explicitly takes into account the sense of deprivation felt by the poor and the sense of satisfaction felt by the rich in society. Moreover, our new index allows us to demonstrate that reducing social tension is equivalent to implementing fair taxation.
   …
    https://www.sciencedirect.com/science/article/abs/pii/S0304406823000794
   *

   Hardly anything on social tension directly related to economics. I’m all for peace though.

   Will Social Tension Order make a response necessary to  … “administrative and political institutions do not respond to social tensions. On the contrary, they look through them, neither denying their existence nor accepting their prevalence.”

   From:

   “4 – Responses of Communities to Social Tension
   By Vinay Kumar Srivastava
   …
   ‘The point I wish to put forth is that sometimes administrative and political institutions do not respond to social tensions. On the contrary, they look through them, neither denying their existence nor accepting their prevalence. Against such a backdrop, the communities are left with no other alternative except to devise their own solutions to social tensions, whether they are between different sections of the same community or between different communities. Perhaps the administrative and political institutions tacitly believe that the tensions would subside on their own – on the contrary, they think, any external intervention would further exacerbate the tensions; thus, the administrative and political institutions adopt an instance of what is famously called the ‘conspiracy of silence’, or to put this idea in other words, ‘give nature a chance to heal’, or ‘do nothing, nothing will be done, and the problems will be solved (or pushed to a state of insignificance) on their own’.

   Peace and Conflict
   The South Asian Experience
   , pp. 63 – 81
   2014
   https://www.cambridge.org/core/books/abs/peace-and-conflict/responses-of-communities-to-social-tension/62DCCAE1DC5ACDA8317907D612168B72

   And self evident :
   “Measuring Social Tension”
   January 2016

   In book: Social Welfare Functions and Development (pp.45-76)

   Nanak Kakwani
   UNSW Sydney

   Hyun Son
   Asian Development Bank

   Abstract
   “Different types of social tension can lead to social unrest. Inequality and poverty, for instance, could cause social tension, given temporal fluctuations in living standards including both systemic and idiosyncratic sources of risk. Social tensions may also arise from immobility among social groups, polarization, and issues relating to middle class. This chapter provides a common methodology to model different sources of social tension.”

2. I like the idea of modifying the GST to make it more progressive. So goods and services which are consumed more by the rich should have a higher rate eg overseas travel, jewelry etc. We have a higher luxury car tax. Why not extend the idea to other luxury goods and services.
   Making the system more progressive is also the reason for bringing health and education into the system, as because government provided services are exempt from the GST, only private provided services would pay the GST.
   On food it would be best to have an unhealthy food tax. The GST rate could vary from 0 to 20 per cent in 5 steps with the 20 per cent tax being on the 0 health star rated foods and the 0 per cent tax being on the 5 star rated foods. Health and revenue would increase and (I think) it would be more progressive than the existing exemption. It would be a food tax one could avoid entirely if one ate only 5 star rated foods.

3. […] Source link […]

4. There will be no changes from the power nexus of big business, big government, big media. They are not listening. They don’t care.

   The “reformers” in parliament clearly do not understand the problem. They are incapable of thinking outside neoliberal capitalist parameters. Imagine thinking a higher GST is required! Dear oh dear.

   The ordinary people at this stage remain gormless and supine. The initial “radical” changes will come from the natural world. Natural forces will bust up the log jam of this structurally immobile and unsustainable political economy.

5. My option would be to raise land tax on all land valued over one million dollars. If the land is owned by an absentee landlord then that gets taxed at an even higher rate. Then if land is unoccupied that gets the top rate. There is excessive demand for land on this country. It is not sustainable. By increasing land tax rates this distortion of the economic role of land can be overcome. I live in an area just outside Canberra where hobby farmers have large acreages of land that is underemployed. This should attract a high land tax rate. Underemployment of land assets should be discouraged by punitive land tax rates.

6. Yes, levy higher land taxes and abolish negative gearing. There’s more that’s needed in many areas but that would be a start.

7. I notice that Allegra Spender and David Pocock are cited as saying they want to reduce dependence on income tax ‘as the population ages’.

   In which sector of the population is it the case that almost nobody has any income? Children! Nearly all children have no income. As the population ages, children make up a smaller fraction of the population.

   So what they’re saying is ‘As the fraction of the population with no income decreases, we want to reduce reliance on income tax’.

   What kind of sense is that supposed to make?