“We’ve taken the biggest surge in national income in years and squandered it. The punters are spending every cent they can and Canberra is encouraging that by handing back its share of the commodity price loot as tax cuts.”
Yes, Keynesian wannabes Access Economics released a report fretting about interest rate hikes, and it feels the answer is to remove the financial options of individuals and ensure that the government collects and hoards ever more of the people’s income. I suppose one should look at it this way; some day soon you might benefit if you find yourself in a geographic or demographic sweet spot that the government needs to court come election time.
Talking about rum plans, this proposal from Deloitte floats an admirable (though not particularly original) idea – swapping tax deductions on work expenses for across-the-board tax cuts. Liberals will start to choke when they see Deloitte’s adjustment of the progressive income tax rates:
The poorest tax payers would see their rate cut from 15 per cent to 4 per cent, with the 42 per cent tax rate paid by people earning $75,001-$125,000 falling to 33 per cent. The top 47 per cent rate paid by those earning more than $125,000 could be cut to 44 per cent.
Deloitte would surely have access to the masses of theoretical and empirical evidence showing the superior economic benefits of shrinking the gap between top marginal rates of income tax and the lower rates, not to mention the moral argument. Why this EC (and I do not mean European Community, though maybe I do…) drivel, then? Why do Deloitte believe they need to field a taxation proposal that is going to win elections?
Thankfully, the political party that prides itself on its fiscal responsibility and economic liberalism holds government in Australia. Yet we have a curmudgeonly treasurer (chancellor of the exchequer) who steadfastly refuses to budge over our absurdly high top marginal tax rate of 47%. He is more than happy to ladle out benefits to politically useful groups, however. Oddly named, the Liberal Party of Australia, when one considers it is run by big government conservatives.
Couple these few good men with the leading economics consultancies, who seem to be trying to outdo each other in the social crusading stakes.
Have these people never heard of the Chicago school? I despair.