GarryP

If you look back I wasn't pointing at income tax as a particularly wonderful thing either. Rather I was pointing at rentseeking and the dead accumulations of wealth as the things that need to be hit hard.

Let's take a for instance. In the good time the bankers were paying themselves large bonuses - mainly because they were raking off a %age from each financial transaction. Then when the wheels came off, as a result of those bankers lying through their teeth, they CONTINUED to pay themselves big bonuses - otherwise these geniuses would 'leave'.

I'd contend that none of those bonuses were earnt, and that all of it was rentseeking - and thus it's those ..... individuals ..... that should suffer the majority of the tax on this unearned income.

Here's an idea for you, an income tax rate that reflects how valuable and what size of contribution you make to society. If you are a Gina Rinehart you get hit with a large tax bill, because basically you are nothing but a rentseeker. However, if you are a chemist and develop a cure for cancer, you pay hardly any tax, because of what you have contributed to society.

Make the parasites pay.

Beoz

I get your point Nige. I always get your points. Just because I don't subscribe to your thought process, does mean I don't get it. You are not always right you know

You seem to want to bucket everything. The rich and the poor, what should have GST applied, what shouldn't. It's not that simple as someone outlined earlier. It is discriminatory to tax an item that you perceive as luxury. What you perceive as luxury others may not.

Once upon a time the TV was seen as a luxury item now the bogans bend over backwards to get the 12 month interest free deals from Harvey Norman. Should we give that a GST break?

Bogans like to ski too, and if you have ever skiied in Oz, you will see for yourself, many sleeping out of their cars and eating lunch from the sandwiches they made in the morning. There are also many jobs and businesses hanging off this industry. Many of the workers are lowly paid hospitality staff. Make it more difficult for people to ski, eat, and do all the things that should come priced to entice the masses, you only hurt the businesses and the lowly paid workers, when the business can no longer survive.

As for the rich and the poor, I asked for it defined and there was one single wishy washy response and I'm not surprised. How do you define rich and poor?

Beoz

Exactly ...... too hard to bucket and unfair to do so which to me sounds like a GST is probably a fairer system.

knockoff nige

But I didn't create a divide between rich and poor. That's there by greed and deception.

Let me tell you how you missed the point. People need to spend their money in order for the economy to survive. The price of skiing holidays going up isn't the problem. The problem is the price of everything going up as everything has a knock on effect to everything. The price of a Ferrari going up because of a luxury tax increase does not have a knock on affect to the price of bread. The price of bread going up has a knock on affect to the price of Ferraris and everything in between. So, if you want the poor spending their money, things will need to be affordable for them. They don't care much for the price of Ferraris, they care more about the basic stuff but also need to be able to buy some of the luxury stuff such as 50 inch TVs and new iPhones. They will buy more of them than the combined purchases of the rich. If we all buy 1 sofa, that's far more sofa purchases by the poor than it is by the rich. You can disagree with me but you'd be wrong.

The poor are those people who are struggling on what they earn when considering essentials. The rich are those who have a lot of disposable income when considering essentials. That of course is open to interpretation but if you're asking for a monetary figure, I can't make that call. Some people have more essential commitments such as medical costs, dependencies etc that mean they can afford less than someone on the same salary.

GarryP

Depends on your definition of fair.

Your far right winger will say "everyone paying the same amount of tax for the same thing is obviously fair - cut income tax, etc. and put it on GST"

Someone of a more centralist viewpoint will say "it's disposable income and the relative pain, flat taxes aren't and GST is regressive"

Fair changes on how you frame the debate.

However, from a societal viewpoint the answer is clear - keeping the money with the poor and making sure the rich pay and can't accumulate vast wealth is better for the national economy (counter to what the far right wingers like to push with 'trickle down'). That economy works better, from a number of dimensions.

Beoz

No but you keep trying to put it into a bucket and its not working, and nor should it. See below


I get your point here Nige, I got it from your first post, but this is where you are trying to bucket the rich and the poor again. Even by your own admission you can't define it. Going back to your original post, lets 20% some electrical items, lets 20% cars over $50,000. That idea fell apart because it was too hard define the lines and ultimately too discriminatory.

OK that's not a bad definition. Now if we were to take the rich out of this problem because according to the poor they have no problems, and we focus solely on the poor, is giving to the poor, those who struggle to purchase "essentials" the best social outcome here? What if we tried to help the poor in other means. For example, lets take Mr Rich Boy who has a luxury yacht that sits in Sydney Harbour. If we hit Rich with a hefty 20% on the purchase of hit yacht he may not buy it. But if it was a standard rate he may purchase it. Lets say Rich uses the yacht as a charter business and needs to maintain it - there's the mechanics covered. He needs food for the charters - there's the catering business covered. He also needs 10 staff to operate his yacht. Rich gets to employ a few of the poorer in society, they earn a good income, they feel better about themselves, they learn to aspire towards something, they pay tax which enters the economy, they have more money which means they can purchase more things.

The "trickle downs" has got to be a more progressive step than giving them handouts.

Beoz

The idea seems to focus on pushing the rich down rather than the poor up. Is that really healthy?

GarryP

Actually no, that's a far right wingers viewpoint on it

There are two points to the centralist view; first that you are better to have the pain of paying for things equally shared, not the number of the small green pieces of paper. And second that getting money moving, rather than accumulating, is better for the whole economy.

Most centralists wouldn't have a problem with the richest decile earning 10 times the average, nor to having them have 100x the savings. However, when we get to 1000x the earnings and 20,000x the savings, you have a major problem with the economy unbalancing, and the wheels coming off.

knockoff nige

I honestly have no idea what you mean by bucket. The rich and poor divide exists and is relevant to this discussion.

Mr Rich will by a yacht even if you apply a 20% GST on it because he wants the yacht. He certainly isn't buying one out of good business sense. He will also continue to be careful with his money as that's what's helping him maintain his rich status. His lack of spending means he has more money. But, it also means he is heavily dependant on the rest spending their money. If they don't, the economy suffers. So, things need to be affordable to them. The yacht doesn't need to be reasonably priced for the economy to be healthy.

my argument is that if the GST needs to be increased, it should not be applied to fresh food etc as that makes everything more expensive and not in a small way. If we apply a higher rate to yachts, Ferraris and vintage wine etc, we are increasing GST if that is the requirement but also limiting the damage to the people that you need to spend their money the most. It works for everyone then.

Beoz

But do you know if Rich is buying the yacht for his own pleasure, a business, or whatever. If he is employing 10 staff to run it then that would suggest its a business. Have a read of this. There are a lot of mis conceptions about the rich as Ed Milliband tried to tell the voters.

Soaking the rich won’t cut poverty or inequality - Telegraph

Labour typically wants to soak the rich, but the evidence shows that this is a foolish design. Last week Ed Miliband appeared to claim that the super-wealthy pay no tax, but new data shows that the top 0.01 per cent pay an astonishing 4.2 per cent of all income tax. That means that the top 3,000 contribute more than the lowest-paid nine million taxpayers put together. Given how much they help to subsidise the NHS and other social benefits, the rich ought to be encouraged rather than attacked.

knockoff nige

Im pretty sure that this business would also need to buy non luxury items too such as stationary, food, telephones etc. How is it better for them or their customers for all purchases to get hit with a GST hike? They might have to be a bit more practical and purchase a kayak instead of a yacht but that's a cost cutting exercise that good businesses do anyway.

But, why you changed the argument from Mr. rich and Mr Poor to Business versus consumer is a bit strange. They all have to spend money but as much as the business needs to limit spending, they also need consumers to spend more. The yacht doesn't need to be bought buy the business if there is an affordable alternative. Plus, tax exemptions are far more common in business than they are for the individual.

the troubadour

Well not really. Frugal living in the sense I mean is as a lifestyle choice. Not brought about by necessity.

The GST being regressive in nature can hardly be suggested as being a fairer tax. The poorer still have less to forfeit on item x than those on three times plus income.

Already rather shocking stats with regards how many live week to week on each pay check. Way more than half couldn't raise $3000 in an emergency.

I'm all for quashing the consumption culture that has become the main stay of national culture but not necessary at the cost of a segment of society.

the troubadour

Well The Telegraph would write that wouldn't they? Don't get me wrong I enjoy that journal and it is part of my regular reading.
Doesn't mean I agree with their political take on all things in the world though, just as The Guardian and Independent from UK. All sound journals but none are my gospel.

Allowing increasing income disparity between the bottom to top , with the massive increasing of wealth of the top 1% is a very big problem indeed. It would appear we have learnt nothing from history and it will in time repeat itself.

I still look towards Denmark and associated countries where such great disparities do not exist. Although personal debt is high like Australia, a decent health state funded system remains in place.

I wonder if such less inequality is a pointer to why the Danes usually rate the top or close to the top of happiest people in the world?

Beoz

It isn't better for the business, and no one other than government coffers benefit from tax hikes. But if tax hikes are needed, which is inevitable, then this discussion is on which is the best way to do it.

You seem convinced that the wealthy have yachts parked on Sydney Harbour doing nothing, have money squirreled away in the banks doing nothing, and that the wealthy don't pay tax and only the poor do.

The question is - is all this mumbo jumbo really the case? Or just more scare mongering like our friend Ed Milliband tried on.

I think you'll find most super yachts are working day and night most days of the year and are treated as a business rather than a toy. The rich hate money sitting idle doing nothing.

the troubadour

Quite right. Besides no one is likely to push the rich down. Just a little more fairness and the eradication of entitlement that the very top feel they have the God given right to massively more than their fair share in fact far more than they will ever be able to dispense with.