LDP Press Release - 10 August 2010

Keep taking our policies, Tony

The Liberal Democrats welcome Tony Abbott’s announcement that the Coalition will move toward implementing a flat tax with a high tax-free threshold.

“A flat tax and high tax-free threshold have been part of the Liberal Democrats policy for a long time now, and was part of our submission to the Henry Tax Review,”  said Terje Petersen, Liberal Democrats candidate for Bennelong.

“We’re pleased to see the Liberals finally pick up some economic reform ideas. Of course, Tony is only talking about a watered down version of the Liberal Democrats policy, which calls for a 30% flat tax on income over $30,000, but it is a good start.”

Terje went on: ”The Liberal Democrats have a lot of other policies we will be happy for the major parties to steal. For starters, they have missed out the most radical part of our tax policy, replacing the welfare system with a negative income tax and living wage. But we think it is step in the right direction. If either Julia or Tony are stuck for more policy ideas, we’ll be pleased to help.”

LDP Reform 30/30

The Liberal Democrats tax policy does not argue for incremental tax and welfare reform. Instead it offers a new template from which to consider tax and welfare issues.

Reform 30/30 includes a tax-free threshold of $30,000 and a flat tax of 30% above that. All taxes (company, capital gains,  fringe benefits) would be equal at 30%.

Welfare would be replaced by a sliding scale of payments (called a Negative Income Tax, or NIT) starting at 30% of $30,000 for those with no other income. As income was earned, NIT payments would be reduced until income reached $30,000.

For example, if you earned $0, you would receive 30% of $30,000. If you earned $10,000, you would receive 30% of $20,000. If you earned $25,000 you would receive 30% of $5,000. No tax would be paid at any of these levels.

One advantage of the NIT is that it removes the need for a minimum wage. Wages can be determined by demand and supply, with those on low incomes receiving the NIT as a supplement. This would result in a significant increase in the number of jobs available, especially benefiting the long term unemployed and those on disability support.

Probably the biggest advantage is that the effective marginal tax rate is always 30%. Under the current system the EMTR is variable and can be higher than 80%, creating a major disincentive to earn additional income.

30/30 solves the poverty trap which locks low income families into welfare. Under the policy, low income earners can climb the 'ladder of prosperity' to higher incomes and a better standard of living.

Only the Liberal Democrats offer a solution to the poverty trap whilst encouraging saving and investment in our future. The era of buying votes with welfare payments to those who have paid tax must come to an end.

The Liberal Democrat policies can be found here: www.ldp.org.au

Equitist wrote on Aug 10^th, 2010 at 1:09pm:

A flat tax isn't regressive. It's flat! That's point of it. It's neither regressive or progressive. It's a level playing field.

Our tax code is ridiculous. It's over-complicated and full of exemptions, rebates, penalties. It's a mess. People have to hire accountants to do their taxes. You need a big bureaucracy to run the tax system. You need to print out millions tax forms, mail them around, file them. It's a godzilla of a thing. It's the cause of so much corruption in government because you have unions, businesses, organisations lobbying to get their tax exemption, or to get a tax put on their competitors, etc. It pollutes our entire system.

Think all the time, effort, money and resources we would save with a simplified tax code. And there's nothing simpler than a flat tax. A huge burden could be lifted off Australia if we simplified our tax code. It would alleviate so much stress, confusion and corruption. The economy would take off because we'd be using a brains for more useful things than worrying about taxes. I've always believed the potential of a free and unrestrained individual is virtually limitless.

Where it's been tried, who see more revenue come in because tax compliance goes up. There's also more money to collect because the low rate with no increase as you earn more incentives people to be more productive. You look at countries that have adopted the flat tax or some form of it, Hong Kong, Estonia, Russia, Slovakia (all of which used to be very poverty stricken), they've generally experienced increased economic growth, lower unemployment, and (despite your nonsense) more wealth equality.

freediver wrote on Aug 12^th, 2010 at 6:20pm:


Nah, more likely just the inherent far-right incapacity to appreciate and/or care about the real world ramifications of ostensibly fair and simple 'flat' taxes...

Equitist wrote on Aug 12^th, 2010 at 6:50pm:

I never said a flat tax would eliminate corruption, just that it would alleviate it. Which it would, obviously. If you have 150 representatives, each representing a different part of Australia, and each representing the special interests of their constituents, then you are going to have at least 150 different tax exemptions put in the tax code. It's easy to slot a tax exemption in amongst the mass amounts of exemptions, exceptions, rebates, rates, fees, penalties, in the Australian tax code.

How do you propose doing this without flattening the income tax? You need to simplify the tax code somehow. How are you going to do that while still maintaining "fairness" and "progressivism"? You can't. Progressive taxation leads to complication, leads to tax avoidance, leads to tax corruptions, leads to wealth disparity. To suggest applying it to corporate tax is ridiculous. You want to punish corporations for growing? How is that economically smart?

Finally, this has a lot to do with individualism, but very little to do with corporatism. Corporatism is when the government actively assists or somehow controls and manages (but doesn't own) corporations. That's the opposite of free market economics. To be truly corporatist, you have to actively be turning taxpayer money over to corporations, like how the leftists around the world encouraged government to give billions to failed banks and companies after the GFC. That's corporatism. It is not individualism.

Individualism is something I embrace and I reject that it is socio-economically counterproductive. Society benefits most when individual cooperate together voluntarily through pursuing their own economic self interest. Societies falls when they become a forced collective, forced to work together and share the wealth as it dwindles away like all wealth does in collectivist societies.

freediver wrote on Aug 13^th, 2010 at 12:58pm:


Well, if we are expected to believe the Liberal party savings list, then the Libs are set to remove deductions for work related expenses?

http://www.liberal.org.au/~/media/Files/Policies%20and%20Media/Coalition%20Savin...

freediver wrote on Aug 13^th, 2010 at 12:58pm:

How am I confusing tax rates with exemptions? I'm making the point that progressive tax rates incentivise people to seek exemptions. I don't know that it's necessary to eliminate tax exemptions. There are some exemptions in our tax plan, for example no tax on your first $30,000. That's an exemption. It exempts income under $30,000 from the 30% tax rate. The 30% tax rate would only apply to income over $30,000. Now we could look at exemptions for families, write offs for capital investments, but we have to KISS.

BobH wrote on Aug 13^th, 2010 at 12:39pm:


Sorry, Bob but that is a dogmatic croc - either you don't understand human nature and/or you have a hidden agenda!

Firstly, exemptions and progressive tax scales can be mutually exclusive - and self-serving people such as yourself, will still go to great lengths to minimise/evade tax where and when possible, regardless of what the applicable marginal tax rate is. What they may do a little less of, is invest in tax-deduction/concession driven schemes - but proper regulation and apropriately punitive fines are still necessary to deter determined rorters anyway!

Secondly, you seem to be very out of touch with human nature - as if mutual competition means mutual prosperity!? On this planet, it is untenable that: "Society benefits most when individual cooperate together voluntarily through pursuing their own economic self interest"!?

LDP policy is a recipe for total anarchy - and in times of crisis and hardship, I guarantee you that mountains of money are the last thing on a normal/sane individual's mind - because Maslov's hierarchy kicks in instantly!

Meantime, I've been wondering how the LDP think their 30/03 policy could possibly be implemented...

Would they set up a 'level playing field' - by equally dividing the ownership of the nation's total private and public assets (including money, shares, stock, real estate, land, infrastructure, mineral resources) amongst existing citizens, then allowing open slather from that point on - or would the day 1 starting point be the current level of gross inequity!?

Seriously, even if the first theoretical option was chosen, how long before total anarchy would transpire in the real world!?