Private Health loss of Rebate for some

[rechoboam]

I think you missed my point. Some high income earners are arguing they can't find $15 a week. So my point is, how could we expect a family on a low income to find $320?

Come on, high income earners aren't arguing they literally can't find $15 a week! personally the insurance rebate was literally the last Government hand out I received. Personally I think it was ridiculous for the Govt to pay it to me. However I also think it is ridiculous for the Govt to expect me to effectively work until March or April before I earn any money for my family each year! Almost 50% total marginal tax is absurd. I don't think middle class welfare should exist but tax rates like this dissuade enterprise - the Laffer curve. The whole system is obviously parties bribing their special interest groups to the detriment of our society, both the wealthy and average workers who would be employed in greater numbers with a favourable tax system.

Then there's that other group of 'high earners' who legally manage to have only a couple of tens of thousands of dollars assessed as taxable income each year even though they control revenue of 100's of thousands of dollars.

Please PM me with some names. Perhaps I will contact them and find out who their accountants are. You see like most high earners I pay say 35% or more of gross income in tax. Controlling revenue is not the same as having a high income. For example some companies get great tax breaks at the beginning because they pour money in without any prospect of profits until several years of groundwork have passed. And as I have pointed out before, I have a high income because I spent 17 years in training in a highly specialised area. If I didn't have a high income for my 25 years of effective earning (rather than the average 40 or even more) I would not be able to retire. Yet I am punished with 50% marginal rates rather than the 30-35% I would have been exposed to had I steadily earned with a job that didn't fill this important niche. That's why (although I pay a LOT of tax) I find it hard to shed tears over the fact that some people may have lots of deductions and not be handing money to the tax office hand over fist. I don't want to sound like I am complaining - I believe in a social safety net having lived in poorer countries in the Asia-Pacific, but the current tax regime is almost comically removed from the efficient, simple, wealth-generating system that it should be.

Has any considered the reasonable possibility that many of these 'high income' earners self insure in any case

2 points: firstly even for billionaires, if you self-insure and have a serious illness the paperwork alone in dealing with hospital departments paying your bills would probably negate the cost of insurance
Secondly for the average high earner, an unexpected long ICU stay, weeks or a month would cost hundreds of thousands of dollars. You would have to be bloody rich not to worry about that, and don't forget many wealthy people are leveraged up to the eyeballs for their Maseratis and mansions. I personally have NEVER encountered a wealthy person without some form of insurance, the only people who self-insure are people of modest means who get sick of waiting years for public treatment so go private instead when it gets too much.

 

[medhead]

It's the principle...like in Greece (I quote someone loosely) once 51% of the population have worked out how to live off the other 49% democracy is effectively dead.

That's has almost nothing to do with government borrowing. That can happen with no government borrowing what so ever.

Greek government debt-174% GDP.
Australian govt debt-10.6%
Australian private debt-160% GDP.
So we are in great shape if you dont think private debt has to be repaid.

The discussion is focused on government borrowing but private borrowing is still interesting. but then my comment was only about government borrowing. Anyway, what is the level of Greek private debt, for completeness.


Sent from the Throne

 

[rechoboam]

That's has almost nothing to do with government borrowing. That can happen with no government borrowing what so ever.

I see you do say "almost".
However if 51% decide they want a "baby bonus" for procreating for Mr Costello or Mr Swan, and there isn't enough money to pay it, the government on behalf of its client majority can decide to borrow the money. The large numbers of the population paying little or no tax have little trouble with this. The taxpaying segment of the community and their children and grandchildren are responsible for paying it back.

 

[drron]

The last account of Greek private debt I could find was 29% of GDP in 2008.So total for greece-203%,Australia-170%.And Greece is stuffed.
Now private debt may have increased in Greece as GDP has gone down but may have decreased as many almost certainly have been bankrupted.
On top of that Greek Government debt has decreased recently as a % of GDP due to their bailout so unlikely now to be as high as 174%.

 

[Moody]

And you think Oakeshott is brighter than Katter?

I will treat your question as serious (and not a complete puss-take) and simply reply "Yes". He is also a true independent who takes his responsibility to his electorate and the nation seriously. Katter on the other hand is a mixture of comical, conniving and his recent performance as a small-minded bigot. I try my best not to look down on other people's political opinion, but in the case of those who would put Katter above Oakeshott .... I fail completely.

 

[Stephen65]

Two points about these issues:

1. I would suspect that a great deal of that private debt is Australian subsidiary companies borrowing from their parents. This is very popular for tax reasons because it allows profitable Australian subsidiaries to generate a tax deduction and effectively switch profits from Australia to overseas entities.

2. Having joined the Eurozone Greece was in a much worse position than Australia would ever be with respect to sovereign debt. If the worst came to the worst here the Australian government could literally print more money to satisfy its AUD denominated obligations. Greece can't print Euros.

 

[wafliron]

When a particular recent government convinced the public that no deficits means good economic management and they public are so stupid that they took that bait hook, line and sinker.

I know, but I wasn't willing to go there :-/

Nah, lets keep borrowing. Haven't seen a country recently get into trouble doing that.:shock:

What a disingenuous statement - as I'm sure you know our debt is many, many times lower than the variety of first-world nations that are struggling with debt issues at the moment. We certainly do have to be cautious that it doesn't run out of control and we don't end up in the same situation, but we're a long, long way from that at the moment.

Then there's that other group of 'high earners' who legally manage to have only a couple of tens of thousands of dollars assessed as taxable income each year even though they control revenue of 100's of thousands of dollars.

I know quite a few people in this situation, but I don't know anyone who achieves this legally. Somewhere along the way a lot of people seem to have decided that lying on their tax return (e.g. "the car is 100% for business use because that's what the 8 week logbook shows", when in fact it's 40% over the course of the year) is legal and/or socially acceptable. Drives me f'ing bonkers, as lying on your tax return is essentially stealing from the entire population, myself included.

EDIT: I'm sure the above doesn't apply to everyone in this situation and I'm not trying to suggest as such. But I am sure it applies to a decent-to-large percentage of them.

 

[medhead]

I see you do say "almost".
However if 51% decide they want a "baby bonus" for procreating for Mr Costello or Mr Swan, and there isn't enough money to pay it, the government on behalf of its client majority can decide to borrow the money. The large numbers of the population paying little or no tax have little trouble with this. The taxpaying segment of the community and their children and grandchildren are responsible for paying it back.

Note your use of the word "can" not must. Yes they can do that but they also cam not do that. There is no need to have massive debt because of the situation you describe. It is also interesting that use another open ended welfare measure to illustrate your point. I just reinforces my view that these types of liabilities need to have a cap placed on the potential liability.


Sent from the Throne

 

[drron]

I will treat your question as serious (and not a complete puss-take) and simply reply "Yes". He is also a true independent who takes his responsibility to his electorate and the nation seriously. Katter on the other hand is a mixture of comical, conniving and his recent performance as a small-minded bigot. I try my best not to look down on other people's political opinion, but in the case of those who would put Katter above Oakeshott .... I fail completely.

You do not make allowances for the electorates the 2 represent.
Oakeshott represents Lyne traditionally held by the Country/national party.His support has fallen from 47% at the last election to 26% now.Doesn't seem that he is listening to the electorate.
Katter represents Kennedy which for the 112 years since federation has been held by the ALP for 69 years and by a Katter for 43 years.Cant find any recent polling for the seat but his son Robbie is favourite to win Mt.Isa in the upcoming election.Seems as though he listens to his electorate a little more.

Two points about these issues:

1. I would suspect that a great deal of that private debt is Australian subsidiary companies borrowing from their parents. This is very popular for tax reasons because it allows profitable Australian subsidiaries to generate a tax deduction and effectively switch profits from Australia to overseas entities.

Of the $1.6 trillion of private debt $960 Billion is household mortgages.

 

[Moody]

You do not make allowances for the electorates the 2 represent.
Oakeshott represents Lyne traditionally held by the Country/national party.His support has fallen from 47% at the last election to 26% now.Doesn't seem that he is listening to the electorate.
Katter represents Kennedy which for the 112 years since federation has been held by the ALP for 69 years and by a Katter for 43 years.Cant find any recent polling for the seat but his son Robbie is favourite to win Mt.Isa in the upcoming election.Seems as though he listens to his electorate a little more.

Hey - when did I ever accuse the public of being smart? It seems perverse to me that when the independents finally became empowered to make significant decisions in the country's future (and provide a breath of fresh air in the increasingly tedious race to the bottom by the two major parties), their electorates have abandoned them for "doing a deal". What else were they supposed to do??

The ABC program that tracked Windsor, Oakeshott and Katter over the days that followed the last federal election were an eye-opener for me. Made me wish there was a decent independent in my own electorate, and I don't look forward to normal service being resumed after the next election.

 

[rechoboam]

I know, but I wasn't willing to go there :-/



What a disingenuous statement - as I'm sure you know our debt is many, many times lower than the variety of first-world nations that are struggling with debt issues at the moment. We certainly do have to be cautious that it doesn't run out of control and we don't end up in the same situation, but we're a long, long way from that at the moment.

You have a point but it's not all about numbers. My problem with our current situation is that just as in Europe, and the US, fundamentally we have an unsustainable welfare state - superannuation balances are far lower than they need to be for someone at 65 with a 25 year life expectancy so in theory pensions will cover the rest - I can't see that is affordable. We have taxpayer support for medicine predicated on 90 year old people having endless amounts of procedures of little ultimate benefit (and which I would never want for myself at that age). Governments such as the current one here (and the last) are totally irresponsible with taxpayer-funded handouts. Government activity heading towards 30-40% of total economic activity - and I can't see that they are generating 35% of the wealth! I think we need to really step back and take a look at whether this is really the best path for our country.

I know quite a few people in this situation, but I don't know anyone who achieves this legally. Somewhere along the way a lot of people seem to have decided that lying on their tax return (e.g. "the car is 100% for business use because that's what the 8 week logbook shows", when in fact it's 40% over the course of the year) is legal and/or socially acceptable. Drives me f'ing bonkers, as lying on your tax return is essentially stealing from the entire population, myself included.

We obviously agree that few rich people can genuinely pay no tax on income.
As for your second point though, keeping your own money which you worked for yourself isn't exactly theft. Again, step back - I think the underlying problem is our stupid tax system that allows these deductions. Why do you need a tax deduction for a car at all? Why not work out what is spent on this and decrease tax rates by 4% or whatever and reduce the churn? I could also be mischievous and suggest that 91% tax rates such as existed in the US 40 years ago are much more akin to theft than the logbook business. Whether 50% is too is I guess in the eye of the beholder but at some point between 50% and 100% it must change from supporting your fellow man to being exploited. Let's not even discuss how tax rates and government benefits can sometimes interact to produce an effective marginal rate of 120% so that the more you work the less you earn.

 

[Deleted member]

You're right about Katter - he is now revealed as a complete and utter opportunist and looney. Funny how he was the one who sided with Abbott and the other independents felt that they had to go against "type" and form a coalition with Gillard. Very telling don't you think?

I would polish up your mirror and confirm that you do in fact own a proboscis!

When I last checked Katter was sitting very firmly on the cross benches. Moreover , were Kev07 still in the job, I wold suggest Katter would be propping up the labour govt as well , they are quite good mates from way back

 

[medhead]

Pretty sure the political media have described Katter as an agrarian socialist. So it is hardly surprising that doesn't fit either mainstream mold.


Sent from the Throne

 

[Deleted member]

You do not make allowances for the electorates the 2 represent.
Oakeshott represents Lyne traditionally held by the Country/national party.His support has fallen from 47% at the last election to 26% now.Doesn't seem that he is listening to the electorate.
Katter represents Kennedy which for the 112 years since federation has been held by the ALP for 69 years and by a Katter for 43 years.Cant find any recent polling for the seat but his son Robbie is favourite to win Mt.Isa in the upcoming election.Seems as though he listens to his electorate a little more.


Of the $1.6 trillion of private debt $960 Billion is household mortgages.

Katter is unashamedly pro his electorate and doesn't care for party politics when they become consensus driven. He stands for what his electorate wants. Plain and simple. Bob brown has a similar following in tassie. The place is crawling with greenies and they keep,him there. If he does a Peter garet and changes colour to suit his desire to be in parliament / government then I would think he might find himself out of a job.
So to compare Katter with the Oakshot and Windsors of this world is a long bow to draw.
But then he cold prove me completely wrong and side with labour, but I don't think so.

 

[wafliron]

My problem with our current situation is that just as in Europe, and the US, fundamentally we have an unsustainable welfare state - superannuation balances are far lower than they need to be for someone at 65 with a 25 year life expectancy so in theory pensions will cover the rest - I can't see that is affordable.

I must admit I don't know enough about the economics of this issue to have a proper, informed conversation about it, so I'll probably have to bow out if we start getting into the details.

I will say however:

1) The current welfare arrangements have worked just fine thus-far (and for quite a long time), so that is a potential argument that the current welfare arrangements are, in fact, sustainable. On the flipside I do acknowledge that we're heading towards a situation where far more people are past retirement age (as a percentage of the population) than at any stage in prior history, so that may mean they remain sustainable in the future.

2) Calling the USA an unsustainable welfare state is a very long bow to draw. They're about as far from a welfare state as western nations get, and if they hadn't spent the last 20 years mismanaging economy they wouldn't be in the mess they're in now. Not to mention that if they stopped spending upwards of a trillion dollars a year on wars and the military-industrial complex they'd have a lot more money to spend on things like a nationalised healthcare system.

3) Whilst I agree that right now the superannuation system is not enough to replace pensions, I think it will get to this point over time. Once you have people retiring who have benefited from compulsorary superannuation contributions for all (or most) of their working life, these balances should be sufficient to replace the pension for the majority of people.

We obviously agree that few rich people can genuinely pay no tax on income.

We do - unless they're engaging in tax evasion of various sorts.

As for your second point though, keeping your own money which you worked for yourself isn't exactly theft.

It is if it's by breaking the taxation laws we are all equally bound by. If someone lies on their tax return to save themselves $10,000 and I complete mine completely honestly, they're expecting me to either pick up an unfair share of the nation's government spending or depriving me of services I should otherwise be receiving (but am not due to a lack of tax revenue to fund them). Ergo, they're either stealing a portion of my tax dollars or depriving me of (stealing) something my tax dollars should have bought for me.

Again, step back - I think the underlying problem is our stupid tax system that allows these deductions. Why do you need a tax deduction for a car at all?

Because you shouldn't have to pay tax on money received that you subsequently spend generating additional income. That seems very fair to me? Assuming said car is genuinely used to help produce income, of course.

Why not work out what is spent on this and decrease tax rates by 4% or whatever and reduce the churn?

Because that would be inheritantly unfair to a chunk of taxpayers.

To do what your proposing would require taking an average of vehicle-related deductions across all tax payers, and figuring out what %age to reduce the income tax rate by (again on average across all taxpayers) to ensure the net tax-take position for the government was neutral. The problem is that you're generating this average accross all tax payers, which means under your suggested system every taxpayer benefits equally whereas under the current system each individual taxpayer benefits proportionally to their vehicle-related tax deduction.

As an example, say there were only two taxpayers in the system, and they both earn the same amount per annum: me, who claims no vehicle-related deductions, and you, who claims $10,000 per annum because you need a car to visit clients. Let's say your deductable vehicle expenses means your effective tax rate is 2% lower than mine (which is fair, as you've had to spend some of your income in order to generate said income - you couldn't generate your income without this expense). We then average the deductible vehicle expenses across both of us, for an average of $5,000 per tax payer ($10,000 in total). If the $10,000 deduction generated an effective tax rate for you of 2% less than me, you'd then have to reduce the average tax rate by 1% to ensure a net tax-take neutral position for the government, as the benefit of the tax rate reduction is now spread across two taxpayers (and twice as much taxable income). So, you'd end up paying 1% more tax than you do now (unfair to you), and I'd end paying 1% less tax than I do now (also unfair to you, and a benefit to me).

 

[rechoboam]

1) The current welfare arrangements have worked just fine thus-far (and for quite a long time), so that is a potential argument that the current welfare arrangements are, in fact, sustainable. On the flipside I do acknowledge that we're heading towards a situation where far more people are past retirement age (as a percentage of the population) than at any stage in prior history, so that may mean they remain sustainable in the future.

The aged pension was introduced in Germany by Bismarck. At the time people started working at 15 or 20 or whatever and the average life expectancy was the same, in fact I think actually it was lower than the official retirement age (i.e. people died while they were still working for a living). The pension was basically insurance against the possibility that someone might unexpectedly live til 70 after having to stop strenuous work at 50, so it prevented starvation. Now the pension age has barely moved and life expectancy is 30/40 years longer. Admittedly our society is wealthier too but there are good reasons for doubting all this can continue.
As for the superannuation issue: $75,000 wage...9% super from 25 to 65 equals $270,000 total. I'm an amateur in these matters add investment returns and based on an average 4% return that would be something like 1.2 million?, 6% return over 2 million?, the latter providing a liveable income. But of course this isn't part of the welfare state, this represents people taking responsibility for their own future which is exactly what we should be doing; I don't think there will be much of an aged pension in the future sometime though.

To do what your proposing would require taking an average of vehicle-related deductions across all tax payers, and figuring out what %age to reduce the income tax rate by (again on average across all taxpayers) to ensure the net tax-take position for the government was neutral. The problem is that you're generating this average accross all tax payers, which means under your suggested system every taxpayer benefits equally whereas under the current system each individual taxpayer benefits proportionally to their vehicle-related tax deduction.

As an example, say there were only two taxpayers in the system, and they both earn the same amount per annum: me, who claims no vehicle-related deductions, and you, who claims $10,000 per annum because you need a car to visit clients. Let's say your deductable vehicle expenses means your effective tax rate is 2% lower than mine (which is fair, as you've had to spend some of your income in order to generate said income - you couldn't generate your income without this expense). We then average the deductible vehicle expenses across both of us, for an average of $5,000 per tax payer ($10,000 in total). If the $10,000 deduction generated an effective tax rate for you of 2% less than me, you'd then have to reduce the average tax rate by 1% to ensure a net tax-take neutral position for the government, as the benefit of the tax rate reduction is now spread across two taxpayers (and twice as much taxable income). So, you'd end up paying 1% more tax than you do now (unfair to you), and I'd end paying 1% less tax than I do now (also unfair to you, and a benefit to me).

[/quote]

No no no...the essence of simplification would have to be that you and me don't have to horse trade like that!

 

[11sjw]

Of course, we've got a really long way to go with our borrowing before we get anywhere close to the borrowing of those countries.

Perhaps I'll direct you to this post medhead.

No one wants to even start thinking about paying back that 250 billion. It will take 20 good years to do that.

My ALP leaning friends seem to think that we can keep going down Juliar's path. However I tend not to agree. We have to commence repaying our existing debts as the opportunity cost associated with not doing so is quite high.

What a disingenuous statement - as I'm sure you know our debt is many, many times lower than the variety of first-world nations that are struggling with debt issues at the moment. We certainly do have to be cautious that it doesn't run out of control and we don't end up in the same situation, but we're a long, long way from that at the moment.

Yes it is but is that an excuse to go ahead and borrow more? Personally I don't think so. There was a big stink around the US when they extended their borrowing limits. We did the same. When does it stop being something that supposedly resembles strategic/sensible borrowing and when does it become kicking the can down the road like they have? If the trend is never arrested then we end up in the pooh.

 

[medhead]

Perhaps I'll direct you to this post medhead.


My ALP leaning friends seem to think that we can keep going down Juliar's path. However I tend not to agree. We have to commence repaying our existing debts as the opportunity cost associated with not doing so is quite high.

Thanks but I saw it and I really don't need you to point me to that post. The fact remains the government has borrowed 10% of GDP not 160% of GDP (or whatever the numbers are that drron quoted). Repaying it might be difficult, but as I said we are nowhere near the situation that other countries find themselves in. To suggest otherwise is little more than a pathetic scare campaign by people who use words like Juliar. In any case, I like Juliar's path of restraining spending on things like PHI rebates.

Yes it is but is that an excuse to go ahead and borrow more? Personally I don't think so. There was a big stink around the US when they extended their borrowing limits. We did the same. When does it stop being something that supposedly resembles strategic/sensible borrowing and when does it become kicking the can down the road like they have? If the trend is never arrested then we end up in the pooh.

You really should look at the situation the US is in, in terms of spending and borrowing as a percentage of GDP. The 2 countries simply are not comparable.

 

[cove]

Dont you all panic now!
I just paid part of a Billion to keep the country running for a few micro seconds( on credit cards of course).
Many of my friends have retired or are about to retire and now plan to pay no real taxes.
The post war baby boomers are leaving quietly so others have to face the $250 billion plus interest pay back.
Less taxpayers to pay a lot more unless the settings change soon!

 

[11sjw]

You really should look at the situation the US is in, in terms of spending and borrowing as a percentage of GDP. The 2 countries simply are not comparable.

Standard tripe run out by ALP apologists that don't want to limit/restrain borrowing at all. This government took its first step by increasing the amount it can borrow. These things have to start somewhere. We as a nation had enough trouble last time paying off the previous ALP efforts. This next lot is going to be much more difficult to pay back.

I agree our % of borrowing vs GDP is much lower but at some stage in the past the US was at 10% then 15%. See where it goes if restraint isn't shown??