Australian Politics Forum - The Unaffordable Tax Cuts

Bam

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Re: The Unaffordable Tax Cuts
Reply #90 - Nov 25^th, 2017 at 2:01pm

crocodile wrote on Nov 24^th, 2017 at 2:23pm:

Bobby. wrote on Nov 24^th, 2017 at 1:16pm:

crocodile wrote on Nov 24^th, 2017 at 12:13pm:

Bam wrote on Nov 24^th, 2017 at 11:56am:

Bobby. wrote on Nov 23^rd, 2017 at 9:20pm:

If it wasn't for borrowing money the Govt.
couldn't pay the pensioners or the public servants & you know it.

You need to understand how the modern monetary system works.

The government does not actually borrow money. It creates money by spending, and destroys money by taxing. Taxation is necessary as a means to control the size of the money supply and to keep inflation under control.

Modern Monetary Theory is an unconventional take on economic strategy

MMT hasn't quite got a strong foothold yet. As a means of explaining cash flows it's actually quite good. The rest is just a pipe dream at least in my lifetime. Bear in mind that there is very little functional difference in tightening the money supply by taxation or by the sale government securities.

OK professor Crocodile,
you seem to have a seep understanding of economics -

how many jobs are lost due to Payroll Tax?

Taxing companies that hire people.

With a dead weight loss of around 41c in the dollar it should become obvious. Worse is the distortionary effects as not all companies pay it. Effectively, it is a tax on labour. It is a tax on productivity growth since retained earnings are lowered and as a consequence so to is the available capital per worker. Over time it means slower wages growth as productivity slows.

I am also opposed in principle to payroll taxes. They are a tax on jobs and they increase compliance costs due to the different rates of taxation.

This is why I have proposed turnover taxes on businesses several times - as an alternative way of raising taxes from businesses so payroll taxes and certain other taxes on businesses can be eliminated, and taxes on profits can be lowered.

* Abolish payroll taxes
* Abolish dividend imputation
* Remove GST exemption from all imports to combat transfer pricing
* Turnover tax of 1% with proceeds to be given to the states on a strict per-capita basis
* Review corporate tax deductions and eliminate those that encourage waste
* Lower company taxes on profits to between 15% and 25% (exact level to be chosen so the package of measures are revenue neutral overall)

Gains to business:
* Profitable businesses gain a competitive edge in the market
* Broader corporate tax base
* Lower business compliance costs

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« Last Edit: Nov 25^th, 2017 at 2:28pm by Bam »

You are not entitled to your opinion. You are only entitled to hold opinions that you can defend through sound, reasoned argument.

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Bam

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Re: The Unaffordable Tax Cuts
Reply #91 - Nov 25^th, 2017 at 2:24pm

crocodile wrote on Nov 24^th, 2017 at 12:07pm:

Bam wrote on Nov 24^th, 2017 at 10:12am:

You're arguing semantics to avoid discussing an obvious weakness in your argument. You can deny or avoid the point all you want. What I said is true: the GST is double taxation by design because GST is paid for out of income that has already been taxed and deductions for GST are disallowed against income tax.

There are no semantics. I was specific about double taxation of income right from the outset. You're the one that brought up the GST angle. The GST was introduced with substantial cuts to income tax as well as the tax free threshold. Since then, income taxes have gone down mostly and not the other way. I'll accept that indirect taxes have increased though.

Your claim that the tax free threshold was increased when the GST was introduced is specious because it is the only time the Howard government increased this threshold, and by only $400 - or $8 a week. Big deal. That is the only time in the past 30 years that a conservative government has increased the tax free threshold. The only Coalition government that consistently increased it was the Fraser government. If it wasn't for the Fraser government's increases, the 2000 increase (of 11%) by Howard would have been the only increase to the tax free threshold by Coalition governments in the past 70 years.

Tax free threshold
1950–51: £100 ($200)
1974–75: $1,000
1975–76: $2,000
1976–77: $2,260
1977–78: $2,506
1978–89: $3,893
1980–81: $4,041
1981–82: $4,195
1983–84: $4,595
1986–87: $4,890
1987–88: $5,100
1990–91: $5,250
1991–92: $5,400
2000–01: $6,000
2012–13: $18,200 - this increase restored the purchasing power of the TFT to roughly what it was in 1983.

We need to index all income tax brackets to inflation to end the insidious evil of bracket creep.

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You are not entitled to your opinion. You are only entitled to hold opinions that you can defend through sound, reasoned argument.

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Bam Gold Member Offline Australian Politics Posts: 21905 Gender:	Re: The Unaffordable Tax Cuts Reply #92 - Nov 25^th, 2017 at 2:24pm page flip
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Dnarever Gold Member Offline Australian Politics Posts: 57175 Here Gender:	Re: The Unaffordable Tax Cuts Reply #93 - Nov 25^th, 2017 at 2:34pm Quote: Sydney Morning Herald November 20 2017 Scott Morrison urges company CEOs to support government's tax cuts Say's it all really, not even company CEO's believe that it is sensible or affordable.
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crocodile

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Re: The Unaffordable Tax Cuts
Reply #94 - Nov 25^th, 2017 at 10:35pm

Bobby. wrote on Nov 24^th, 2017 at 3:19pm:

crocodile wrote on Nov 24^th, 2017 at 2:23pm:

With a dead weight loss of around 41c in the dollar it should become obvious. Worse is the distortionary effects as not all companies pay it. Effectively, it is a tax on labour. It is a tax on productivity growth since retained earnings are lowered and as a consequence so to is the available capital per worker. Over time it means slower wages growth as productivity slows.

And no Govt. wants to stop that tax -

No they don't do they. They are state based taxes. It's really a victim of the system. The states don't have many efficient means of raising revenue and must go cap in hand like Oliver Twist to Canberra with their begging bowls. Yet it is the states that are charged with delivering the bulk of the services. This is why we have these silly taxes.

it's an extra unseen tax on every worker -

So is corporate tax. Payroll tax is particularly galling since it is levied even when a loss is made.

it's money that they can't be paid.

Not only money that can't be paid ( more on that later ) but the impact of the high deadweight losses needs to be considered.

Jobs n growth - or so they say.

The point regarding money that can't be paid requires some scrutiny. Firstly, wages growth, in general does not track profit. Corporations make healthy profits at times but the growth in wages is not due to benevolent bosses.

Wages growth, over time tracks productivity growth. Productivity growth is attained via investment in capital stock and technology. Naturally, as technological progress is achieved so too is the required skills of the workforce. Higher skills translate to higher wages. This is the mechanism as to why productivity drives wages.

Less retained earnings means less available capital and therefore lower productivity. As an illustration, observe the historical trend between labour productivity and wages per hour worked.

The distortion around the mid '70s is primarily due to the very high inflation at the time. The dip post 2000 is a bit more sinister. The above chart tracks only labour productivity. Productivity, or more correctly, Total Factor Productivity also has a capital component. Unfortunately, capital productivity has been falling steadily since the start of the century and has now hit negative territory.

Bear in mind that labour productivity is still growing so firms are still willing to invest. It simply means that each increment of labour productivity is chewing up larger and larger chunks of capital. The result of this is slow wages growth and a loss of industries that cannot match the productivity gains of competitor nations.

Corporate taxes are a tax on productivity gains and therefore a tax on real wages growth. The notion that it is only a tax on wealthy business owners and shareholders is a myth.

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Very funny Scotty, now beam down my clothes.

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crocodile

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Re: The Unaffordable Tax Cuts
Reply #95 - Nov 25^th, 2017 at 10:41pm

Dnarever wrote on Nov 25^th, 2017 at 2:34pm:

Quote:

Sydney Morning Herald
November 20 2017

Scott Morrison urges company CEOs to support government's tax cuts

Say's it all really, not even company CEO's believe that it is sensible or affordable.

So enlighten us all. Where is the reference to the CEOs' dismissal of the proposed tax cuts.

P.S. In your case CEOs ( without the apostrophe )

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Very funny Scotty, now beam down my clothes.

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crocodile

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Re: The Unaffordable Tax Cuts
Reply #96 - Nov 25^th, 2017 at 10:44pm

Bam wrote on Nov 25^th, 2017 at 2:24pm:

crocodile wrote on Nov 24^th, 2017 at 12:07pm:

Bam wrote on Nov 24^th, 2017 at 10:12am:

You're arguing semantics to avoid discussing an obvious weakness in your argument. You can deny or avoid the point all you want. What I said is true: the GST is double taxation by design because GST is paid for out of income that has already been taxed and deductions for GST are disallowed against income tax.

There are no semantics. I was specific about double taxation of income right from the outset. You're the one that brought up the GST angle. The GST was introduced with substantial cuts to income tax as well as the tax free threshold. Since then, income taxes have gone down mostly and not the other way. I'll accept that indirect taxes have increased though.

Your claim that the tax free threshold was increased when the GST was introduced is specious because it is the only time the Howard government increased this threshold, and by only $400 - or $8 a week. Big deal. That is the only time in the past 30 years that a conservative government has increased the tax free threshold. The only Coalition government that consistently increased it was the Fraser government. If it wasn't for the Fraser government's increases, the 2000 increase (of 11%) by Howard would have been the only increase to the tax free threshold by Coalition governments in the past 70 years.

Tax free threshold
1950–51: £100 ($200)
1974–75: $1,000
1975–76: $2,000
1976–77: $2,260
1977–78: $2,506
1978–89: $3,893
1980–81: $4,041
1981–82: $4,195
1983–84: $4,595
1986–87: $4,890
1987–88: $5,100
1990–91: $5,250
1991–92: $5,400
2000–01: $6,000
2012–13: $18,200 - this increase restored the purchasing power of the TFT to roughly what it was in 1983.

We need to index all income tax brackets to inflation to end the insidious evil of bracket creep.

No argument there. Fraser introduced indexation when inflation was mad. It should have stayed. Unfortunately, Treasurers and Finance ministers are too enraptured by them.

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Very funny Scotty, now beam down my clothes.

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crocodile

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Re: The Unaffordable Tax Cuts
Reply #97 - Nov 25^th, 2017 at 11:14pm

Bam wrote on Nov 25^th, 2017 at 2:01pm:

crocodile wrote on Nov 24^th, 2017 at 2:23pm:

Bobby. wrote on Nov 24^th, 2017 at 1:16pm:

crocodile wrote on Nov 24^th, 2017 at 12:13pm:

Bam wrote on Nov 24^th, 2017 at 11:56am:

Bobby. wrote on Nov 23^rd, 2017 at 9:20pm:

If it wasn't for borrowing money the Govt.
couldn't pay the pensioners or the public servants & you know it.

You need to understand how the modern monetary system works.

The government does not actually borrow money. It creates money by spending, and destroys money by taxing. Taxation is necessary as a means to control the size of the money supply and to keep inflation under control.

Modern Monetary Theory is an unconventional take on economic strategy

MMT hasn't quite got a strong foothold yet. As a means of explaining cash flows it's actually quite good. The rest is just a pipe dream at least in my lifetime. Bear in mind that there is very little functional difference in tightening the money supply by taxation or by the sale government securities.

OK professor Crocodile,
you seem to have a seep understanding of economics -

how many jobs are lost due to Payroll Tax?

Taxing companies that hire people.

With a dead weight loss of around 41c in the dollar it should become obvious. Worse is the distortionary effects as not all companies pay it. Effectively, it is a tax on labour. It is a tax on productivity growth since retained earnings are lowered and as a consequence so to is the available capital per worker. Over time it means slower wages growth as productivity slows.

I am also opposed in principle to payroll taxes. They are a tax on jobs and they increase compliance costs due to the different rates of taxation.

This is why I have proposed turnover taxes on businesses several times - as an alternative way of raising taxes from businesses so payroll taxes and certain other taxes on businesses can be eliminated, and taxes on profits can be lowered.

* Abolish payroll taxes
* Abolish dividend imputation
* Remove GST exemption from all imports to combat transfer pricing
* Turnover tax of 1% with proceeds to be given to the states on a strict per-capita basis
* Review corporate tax deductions and eliminate those that encourage waste
* Lower company taxes on profits to between 15% and 25% (exact level to be chosen so the package of measures are revenue neutral overall)

Gains to business:
* Profitable businesses gain a competitive edge in the market
* Broader corporate tax base
* Lower business compliance costs

Yes, you have too. History is not very favourable to this method.

These taxes are known as cascade taxes and were popular in Europe over a century ago. For large corporations like Woolies the answer is simple. Vertically integrate back along the supply chain buying up all the suppliers or creating their own units so that the tax is paid only once.

Meanwhile, smaller businesses without the resources to do likewise are forced out of business and government revenue collapses.

It was for this reason that the European nations replaced it with VAT.

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Very funny Scotty, now beam down my clothes.

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Dnarever Gold Member Offline Australian Politics Posts: 57175 Here Gender:	Re: The Unaffordable Tax Cuts Reply #98 - Nov 26^th, 2017 at 6:09am Bobby. wrote on Nov 23^rd, 2017 at 8:53pm: Quote: Now apologise. Quote: Are you serious ? Yes - apologise. I'm Sorry ?? What for ??
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Dnarever

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Re: The Unaffordable Tax Cuts
Reply #99 - Nov 26^th, 2017 at 6:23am

crocodile wrote on Nov 25^th, 2017 at 10:41pm:

Dnarever wrote on Nov 25^th, 2017 at 2:34pm:

Quote:

Sydney Morning Herald
November 20 2017

Scott Morrison urges company CEOs to support government's tax cuts

Say's it all really, not even company CEO's believe that it is sensible or affordable.

So enlighten us all. Where is the reference to the CEOs' dismissal of the proposed tax cuts.

P.S. In your case CEOs ( without the apostrophe )

Why else would Scotty have to come out asking for support from CEO's ?

There is no real argument to support it and the words that the government are using are particularly poor.

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crocodile

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Re: The Unaffordable Tax Cuts
Reply #100 - Nov 26^th, 2017 at 9:08pm

Dnarever wrote on Nov 26^th, 2017 at 6:23am:

crocodile wrote on Nov 25^th, 2017 at 10:41pm:

Dnarever wrote on Nov 25^th, 2017 at 2:34pm:

Quote:

Sydney Morning Herald
November 20 2017

Scott Morrison urges company CEOs to support government's tax cuts

Say's it all really, not even company CEO's believe that it is sensible or affordable.

So enlighten us all. Where is the reference to the CEOs' dismissal of the proposed tax cuts.

P.S. In your case CEOs ( without the apostrophe )

Why else would Scotty have to come out asking for support from CEO's ?

There is no real argument to support it and the words that the government are using are particularly poor.

A fairly routine Dna response. Cynical and without substantiation. Merely an offer of personal opinion.

Are you really suggesting that tax rates have no impact on investment decisions, especially in the face of falling yields.

Even our own treasury do not agree with you.

https://treasury.gov.au/publication/business-tax-working-group-final-report/busi...

The effects of corporate taxes and the impacts on productivity have been studied for decades with the same conclusions. In no less than 42 countries to boot.

http://www.academicjournals.org/journal/JAT/article-full-text-pdf/1F941571048

Stay in denial mode for as long as you wish. just don't whinge while wages remain stagnant and the ongoing attrition of our industries continues.

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Very funny Scotty, now beam down my clothes.

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Bam

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Re: The Unaffordable Tax Cuts
Reply #101 - Nov 27^th, 2017 at 9:17am

crocodile wrote on Nov 25^th, 2017 at 11:14pm:

Bam wrote on Nov 25^th, 2017 at 2:01pm:

crocodile wrote on Nov 24^th, 2017 at 2:23pm:

Bobby. wrote on Nov 24^th, 2017 at 1:16pm:

crocodile wrote on Nov 24^th, 2017 at 12:13pm:

Bam wrote on Nov 24^th, 2017 at 11:56am:

Bobby. wrote on Nov 23^rd, 2017 at 9:20pm:

If it wasn't for borrowing money the Govt.
couldn't pay the pensioners or the public servants & you know it.

You need to understand how the modern monetary system works.

The government does not actually borrow money. It creates money by spending, and destroys money by taxing. Taxation is necessary as a means to control the size of the money supply and to keep inflation under control.

Modern Monetary Theory is an unconventional take on economic strategy

MMT hasn't quite got a strong foothold yet. As a means of explaining cash flows it's actually quite good. The rest is just a pipe dream at least in my lifetime. Bear in mind that there is very little functional difference in tightening the money supply by taxation or by the sale government securities.

OK professor Crocodile,
you seem to have a seep understanding of economics -

how many jobs are lost due to Payroll Tax?

Taxing companies that hire people.

With a dead weight loss of around 41c in the dollar it should become obvious. Worse is the distortionary effects as not all companies pay it. Effectively, it is a tax on labour. It is a tax on productivity growth since retained earnings are lowered and as a consequence so to is the available capital per worker. Over time it means slower wages growth as productivity slows.

I am also opposed in principle to payroll taxes. They are a tax on jobs and they increase compliance costs due to the different rates of taxation.

This is why I have proposed turnover taxes on businesses several times - as an alternative way of raising taxes from businesses so payroll taxes and certain other taxes on businesses can be eliminated, and taxes on profits can be lowered.

* Abolish payroll taxes
* Abolish dividend imputation
* Remove GST exemption from all imports to combat transfer pricing
* Turnover tax of 1% with proceeds to be given to the states on a strict per-capita basis
* Review corporate tax deductions and eliminate those that encourage waste
* Lower company taxes on profits to between 15% and 25% (exact level to be chosen so the package of measures are revenue neutral overall)

Gains to business:
* Profitable businesses gain a competitive edge in the market
* Broader corporate tax base
* Lower business compliance costs

Yes, you have too. History is not very favourable to this method.

These taxes are known as cascade taxes and were popular in Europe over a century ago. For large corporations like Woolies the answer is simple. Vertically integrate back along the supply chain buying up all the suppliers or creating their own units so that the tax is paid only once.

Meanwhile, smaller businesses without the resources to do likewise are forced out of business and government revenue collapses.

It was for this reason that the European nations replaced it with VAT.

No. Taxes like the GST or VAT were introduced because it's more attractive to businesses to shift the burden of taxation onto workers, and businesses can afford to pay lobbyists a lot more than workers can. The actual benefits are specious. They are highly regressive taxes that accelerate the wealth divide because they take a higher percentage of the income of workers than it does the incomes of wealthy people.

Notice how loudly the business owners wailed about "double taxation" when these consumption taxes are always paid for out of the income of workers after income taxes were taken out. Better to tax the workers twice than tax the businesses even once, eh!

As for the possible problems you point out regarding paying the taxes more than once, the solution is simple and obvious - allow turnover taxes on business inputs to be counted as turnover tax paid down the supply chain. If it works for the GST, why can't it work for a turnover tax?

Remember that the point of introducing these taxes would be to replace or reduce other taxes that businesses pay, not to add to them. A 1% to 2% turnover tax replacing payroll taxes and certain other taxes would produce savings through lower compliance costs. Even a 2% turnover tax would be a much, much better deal for businesses than the massive 30% slug on gross income that workers on average incomes typically pay on their incomes, and with fewer allowable deductions.

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crocodile

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Re: The Unaffordable Tax Cuts
Reply #102 - Nov 27^th, 2017 at 9:33am

Bam wrote on Nov 27^th, 2017 at 9:17am: