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October 21st, 2008

10:06 pm
Finally, the most fascinating topic in the world... Taxes!

I recently wrote that, among other more interesting things, the Rudd Government wasn't interested in making the tax system "more progressive" - but i may be wrong. edited to add: no, i was not wrong. Kevin Rudd is as much of a right-wing shit as he ever was. see the first comment (below) for an explanation of the whole kefuffle. But please, read the post anyway for some thrilling political talk!

Background: The idea behind "progressive" taxation is that you take less taxes from poorer people and more taxes from richer people. It's pretty much common sense; the more you can afford, the more you contribute, the less you can afford, the less you contribute. (This is opposed to "regressive" taxes, like the GST, where everyone - no matter whether they just bought a second house or they just got kicked out of their dingy flat - gets charged the same tax. The only people you really find publicly asking for this sort of thing are think-tank employees, who get paid by certain businesses to churn out right-wing propaganda. Not even John Howard wanted anyone to believe he was going to push for a flat-tax GST... that's why he made the infamous "never ever" comment before he was elected.)

Australia currently has a mildly progressive tax system: we do take proportionally more taxes from people with higher incomes. The problem is, the tax-free threshold hasn't changed enough to follow the cost of living, and governments keep giving tax breaks weighted toward the wealthiest people in the country. So over the last 25 years, the poorer people have been paying a slightly bigger and bigger proportion of their wages in tax, and the richest people have been paying a slightly smaller and smaller proportion in tax. Seeing as the richer parts of Australian society aren't in any danger of suffering any real financial hardship, whereas the poorer parts can (and do) end up struggling to feed themselves or have somewhere to live (let alone save for the future), this is a pretty terrible direction to be heading. (Of course, that depends on whether you view taxes as a means to ensure that every single person is fed, sheltered, and safe; or as a reward for playing an abstract game involving rats and racing.)

(A related (and more problematic) issue is, we tax based on income, not total wealth. So, for example, a person who has no savings but a high income rate (that goes entirely into, for example, rent) is viewed by the tax office the same way as a person who owns their own home completely securely (with no mortgage or rent payments to make) but has the same income, even though they are likely to see their money (and their need for tax relief) in two entirely different ways. (Interestingly, Centrelink does weight their payments according to overall wealth. If you have a substantial amount (i'm not actually sure how much it has to be - anyone know?) saved away, you're expected to use most of it up before you can get welfare payments!))

But the Herald-Scum today was bleating about Rudd apparently planning to introduce higher taxes on the highest income brackets (edited to add: incidentally, they were lying - there is no such ALP policy.); naturally portraying it as a massive hardship (their paper being owned by one of the richest families in the country - though they no longer show up on statistics of the upper classes because Rupert Murdoch adopted American citizenship to take advantage of lax Australian media ownership laws).

I'm sorry, but i just can't see how somebody earning an extra million dollars instead of an extra two million dollars is actually any sort of hardship. (Right-wing bloggers refer to it as a "happiness tax"; quite frankly, i think that just exposes how utterly and completely out-of-touch they are.) I see little problem with higher taxes coming from people who can easily afford it. And i'm willing to put my money where my mouth is - seriously, if anyone out there in Internetland wants to grant me a $100,000 per year salary, i'll be quite happy to pay the higher tax rate with no complaints. Please contact me for bank account details at "dalelemu@hotmail.com".

I poked around on The House of Representatives website, but could not find any pending bills to do with income tax.

Considering Rudd's failure to follow up on some symbolic gestures in the past (i.e. the toothless Apology to injustices inflicted on aboriginal australians, and the Kyoto limits of greenhouse gas emissions, which had already been superseded in the scientific community when Rudd ratified the treaty), i am cautious to treat this as a sign of a more left-leaning government policy.

Things to watch out for:
*Will they be raising the tax-free threshold?
*Will they be using the extra taxes from high income earners to reduce the burden on low-income earners?
*Will they be redistributing the money to the community via better welfare coverage and medicare coverage?
*Will they be removing (or scaling back) flat taxes, like the GST?
*Will the increased tax rate actually be fair (considering the fact that CEOs in this country - and i'm talking about people who measure their finances in millions - can be paid up to 63 times what their average employee is paid, will their taxes be scaled to reflect that, or will it just be a nominal change, for publicity's sake?)

What i did find on the House of Reps website was a bill to refine the GST on the values of property - pushing house and rent prices up with an extension of an already regressive tax.

So, exactly what Kevin Rudd is up to is anyone's guess. Based on past performance, and based on the right-leaning Rudd-Gillard ideology, i'm guessing the talk of progressive taxes is just for show. I would love to be wrong.