On the property taxes of John Daley and Brendan Coates

Comments on John Daley and Brendan Coates "Property taxes", 16/07/2015

I have not read the full report and as a result I don't know if the authors have discussed and included the existing effective taxes on properties or not. There are already quite heavy taxes on properties, such as rates, not to mention the increased rates in the ACT which was supposed to replace the stamp duty on property purchases.

It is easy to say you can get so much tax revenue from this and that. It can be very sensational to make dramatic claims for so many billions of revenue could be raised and to grab the media headlines.

Why do the authors are so obsessed with increasing taxes or imposing new taxes? Why don't the author study whether all the governments' spending are appropriate or not in the first place.

There are enough taxes in Australia and we don't need more of them.

I think the authors need to take a cold shower to be intellectually sane. There is enough of this and no need for them to lecture people on this tax and that tax.

Need different thinking on cutting top marginal tax rate

Comments on Robert Carling “Tax reform should include cuts to marginal rates”, 11/03/2010, http://www.theaustralian.com.au/news/opinion/tax-reform-should-include-cuts-to-marginal-rates/story-e6frg6zo-1225839327651

While Carling uses conventional economic wisdom to argue for cuts to the marginal rates of personal income tax, there are two serious issues that just make the argument too hollow.

The first one is a practical one that the GST was quarantined from the Henry review, so there is little room for tradeoffs between income taxes and consumption taxes. Given that most State taxes are more inefficient than the federal income taxes, one has to wonder how any government can design a reduction in the marginal rates of personal income tax, unless it is tradeoffs between higher and low rates that are politically not feasible.

The second one is theoretical. Conventional economic wisdom states the harmful or disincentive of higher top marginal rates on work that is logical thinking. But that logic thinking may also have some practical holes. For example, the top marginal rate may only apply to a small number of people; the so called harmful effects are minimal. More importantly, high income earners are more likely to be intellectual and entrepreneurial, so the conventional labor and disincentive to work of using labor may not necessarily hold.

Taking into account of issues of social equity, the case for arguing a reduction in top marginal personal income tax rate is neither sound nor convincing.

So it seems Carling is too theoretical and surreal.

Australian tax picture more complex than just company and personal tax rates

Comments on Michael Stutchbury “A capital idea to cut company tax”, 16/06/2009, http://www.theaustralian.news.com.au/story/0,25197,25641251-5017771,00.html

Company tax, like income tax, can be a complex concept. I don't think 30% of company tax rate is a true reflection of company tax burden in Australia. Nor do I think the nominal company tax rates in most other countries are either.

For example, besides the 30% income company tax rate, we have also payroll tax of varying rates at least for large firms in every State, and superannuation guarantee contribution of 9%. They may not all tax on company earnings per se, but some of that belongs to company tax burden and some of that a tax on labour.

So it is overly simplistic to just quote and compare the nominal company tax rates across countries. Any conclusions drawn from that are misleading and will not inform the public on the true burden of tax on capital versus labour.

Further, there is dividend imputation in Australia. It is discriminative against foreign capitals, but has the advantages to encourage domestic investment.

On tax issues of structural versus permanent - again

Comments on Alan Kohler “Swan's high and dry”, 10/05/2009, http://www.businessspectator.com.au/bs.nsf/Article/Swans-high-and-dry-pd20090511-RWST4?OpenDocument&src=sph

Alan, this is an excellent piece. I have not read the Edwards note, but read a similar article in the Australian website. I do, however, think people went too far in blaming Howard/Costello for the current budgetary problems. They paid down government debts, and did not need that much revenue so returned to taxpayers via tax cuts. That was then, and now is now. Don't forget that Rudd/Swan already had a full budget year and now it is their second one. If Howard/Costello had been wrong, why Rudd/Swan did not correct them in their first budget last year? That is the very point!

Wrong premise and wrong conclusions Mr George Megalogenis

Comments on George Megalogenis’ “Swan set for two-step shuffle”, The Australian, 9/05/2009, http://blogs.theaustralian.news.com.au/meganomics/index.php/theaustralian/comments/swan_set_for_two_step_shuffle/

Since there are already so many comments, I will only make a few very short points. First, the claim that the resources-led surge in revenue between 2003-04 and 2007-08 - crucially - won’t come back in the next recovery, is likely to be incoorect or false. Why, because:

We know that was caused by the mining boom associated with the development of Chinese and some other East Asian economies;
The current world wide financial and economic crisis should be regarded as abnormally low growth for the world and Chinese and East Asian economies;
The world, China and East Asian countries will return to more normal courses of their relevant growth paths;
That means the mining boom, will return for some years to come, albeit amybe a little less boomerous.

So the contributions of company tax and capital gains for a considerable period following the recovery will be higher than the current trough, although whether they will reach the highs during the heydays of 2007-08 is a question.

Secondly, the implications or conclusions following this false premise are likely to be wrong. They include for example:

The Coalition government left him with an unsustainable income tax mix that assumed too much from capital and took too little from labour;
This is why the budget was deemed to be in structural deficit: recovery alone wasn’t going to restore the surplus;
John Howard and Peter Costello must take most of the responsibility because they delivered what have now proved to be unfunded tax cuts and handouts between 2004 and 2007;
What is clear with hindsight is that the Coalition wrote cheques to the electorate that would bounce once the mining boom turned to bust;
It wasn’t the election tax cuts that broke the budget, but the combination of tax cuts and handouts in the final term of the Coalition.

I only argue why the last point is false and wrong. That election tax cuts showed Laobor was opportunistic and lack of its own leadership in managing the economy and the budget at least back then. In order to win the election, it matched the “reckless” tax cuts promise of the coalition, without asking seriously whether it would be sustainable. If the author argues that the coalition was wrong, surely labor was equally wrong. Further by not chanllenging the coalition on this, it falsely showed the public that those tax cuts were correct and sustainable.

Worsely still, if labor’s matching tax cuts promise was “excusible” due to election political dynamics, its two cash handouts since November 2008 were no excuse at all. They were completely under its control – not past election promises. Further, the coalition opposed them, though in very ineffectual ways – that was the coalition’s problem.

My point is that implications and conclutions drawn from false premises are most likely to be wrong. There might be some structural tax mix problems as a legacy of the coalition, they are by no means as serious as the author assumed. What is important at this point of time is not to provide false excuses for the government of the day to continue to make the same mistakes and/or new mistakes. Both the government and the media need to focus on the real game: what is the best ourse of action now, for all the available information and our best prjection of the future?