Private Health loss of Rebate for some

[jamesD]

The major problem with this claim is that everyone doesn't get the same hourly pay. I'm sure there are many thousands of people who work longer than you and harder than you but only get paid minimum wage, or less if trapped in exploitative industries. (I reckon I see a few of those as I walk through kings cross to work)


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A person gets paid based on what other people value their time at; so if someone is paid more per hour its because others (not themselves) consider their services more valuable. So if other people consider a persons services more valuable why shouldn't they be rewarded? They were the ones that paid for an education or went the extra mile. Most of the rich (and I'm not rich) I know work insane hours in comparison to anyone else, because in our society you don't get something for nothing. Of course, you get the odd few who are rich through inheritence, but these are in the minority.

 

[Happy Trails]

It's supposed to be private insurance so why should the government be involved at all?

 

[wafliron]

I agree in general. I think we need to remember that the Liberals gave us the Health insurance rebate and they are now the ones whinging about means testing of that rebate.

Yeah, doesn't make a lot of sense does it? Philosphically they should be against any form of rebate.

It also makes zero sense that a supposedly economically-liberal government (Liberals under Howard) would introduce a private health insurance subsidy in the first place - completely counter to their supposed economic philosophy - unless their true intention was for it to be a first step towards scaling back Medicare. I suspect this was the true intention, but it certainly wasn't their stated intention.

adding means testing is a step towards removal of the rebate. So I'm not entirely clear if you agree with the means testing or not.

If I was confident that this was a first step towards getting rid of the rebate completely - as well as the Medicare Levy Surcharge - I'd be completely for it. But they're a package deal for me - if they're both not going completely, then I am against means testing the rebate (which I'm pretty confident is the case).

For the record, I have no problem paying relativly high taxes in return for getting a high level of government services, a strong social security system (even if I'm unlikely to benefit much from it personally), etc. But I do disagree with the level of some of the tax brackets / rates, and I also strongly disagree with extra individual taxation through a system like a means-tested private health subsidy + Medicare Levy Surcharge. If the government wants to raise extra individual tax income then do it the "honest" way and raise the tax rates, don't hide it under the guise of someting else.

As for the operation of private health the other thing the Liberals gave us was the graduated increase in insurance premium based on age of taking up private health insurance.

Which also shouldn't exist / makes no sense for them philisophically.

At least I have some good news , once you get a family the Medicare surcharge becomes much less than private health insurance, roughly 50% IME.

That is good news for me in a practical sense, but I'm not making my argument out of self-interest - I'm making it because it's the correct one (in my opinion, of course) for our society / maintains a good balance between capitalism and social equity & welfare / etc. So, even if I get to the point where I'm "in front" paying the Medicare Levy Surcharge (and choose not to take up private health insurance) my argument won't change, despite the system switching back to being somewhat more favourable for me personally.

But you know private health insurance is a must have for me and I would maintain it regardless of rebate. It allowed me to get a professor plastic surgeon to remove a cist from my daughter's eye brow instead of a surgical resident in a public hospital. The emotional cost of a facial scar would have been enormous.

I'm glad to hear the private health system has provided you with benefits you value As I said earlier, I'm not against the concept, just the coersion to buy it under the current system.

The rebate is a subsidy for a lifestyle / insurance choice. It's middle class welfare and the reason tax rates are what they are.

I'm hit by this but I've decided I want private health so I understand i pay the market rates. I'm unsure why people who are doing okay in a capitalist system what socialist support.

Let's have a hard look at welfare and support payments, keep the ones that help and support the community and then cut the rest, reducing taxes with the savings. Let's stop going further down the socialist path then necessary.

+1.

As I said above I have zero issue with paying relatively high taxes, both as a country and on a personal level (compared to the average Joe Citizen), as we get a lot back, it provides a strong social security / health / education / etc system for those less fortunate, etc.

But somewhere along the way the government (and people?) of Australia seem to have forgotten the purpose of having these government-provided benefits - to provide a base-level of essential services for everyone, and to provide a safety net for those who are struggling to get by for whatever reason. Part of the system still provides these benefits pretty effectively, but we also have crazy situations where families on $150k/year (almost three times the median household income in Australia) are receiving a variety of welfare benefits (and complaining loudly if anyone whispers that they may lose them). Apart from how philosphically backwards this is, it's also a waste of money that could be much better spent elsewhere.

Btw 100% agree we do not work for the government when we pay tax we support the community we live in.

Personally I'm very grateful for the community we have and redirecting a subsidy from myself to other more needy matters to maintain our community is fine with me.

+1 again in principle, taking into account my comments about coersion / problems with the Medicare Levy Surcharge existing / etc.

As an aside, I find the attitude some people have of not wanting to see their tax dollars supporting others very strange. Apart from any moral obligation (not going there, different argument), they completely ignore the practical benefits of a strong welfare / public edutcation / public health / etc system. By providing these you end up with a healthier, better educated, etc, society as a whole, which avoids a whole heap of social problems (which affect everyone), makes the whole country more productive (which benefits everyone), etc.

 

[drron]

No I haven't missed your point at all the increase in the Tax free threshold is not a change at all. It has always been the same, except now you you are not paying tax on the first $18k you earn as well.

I find it BS to claim lower earners are not subsidizing the insurance rebate. Everyone earning between $18k and $83k has some amount of their tax go to the 0.1% earning $1 mil+ to pay for their health insurance. Fact!


As for the unemployment measures they are determined the same now as under the Liberals. Would this even be an issue for you if Howard was still driving around in C1?

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Reread my post.The single point I am making is the government spin is BS.You are once again misrepresenting me.I fail to see how you can have a better knowledge of what I am thinking than myself.
Second-those on $1million plus incomes are paying more tax than those under 83K.Fact.They are subsidising the lower income earners not the other way around.Fact.
Third under the Howard government we still had the breakdown of full time vs part time employment.There have been other changes to the employment statistics such as reducing the number of hours needed to be worked to be counted as employed-though I dont know when those changes came in.Of course over the years we have progressively lowered the employment pool by adding to the pension pool.If we look at the proportion of males 18-59 employed as a percentage of the number of males of that age we are not far off 1930s levels.But of course all governments try to put themselves in the best light but the current spin is particularly bad.

 

[wafliron]

A person gets paid based on what other people value their time at; so if someone is paid more per hour its because others (not themselves) consider their services more valuable. So if other people consider a persons services more valuable why shouldn't they be rewarded? They were the ones that paid for an education or went the extra mile. Most of the rich (and I'm not rich) I know work insane hours in comparison to anyone else, because in our society you don't get something for nothing. Of course, you get the odd few who are rich through inheritence, but these are in the minority.

You make it sound like the GovCo has a 100% tax threshold above a certain level. Clearly they don't - the "rich" are still being rewarded for their skills / value / extra hours / whatever - they're just contributing a higher proportion back to society once they get beyond certain levels of income.

This makes sense (to me at least ). There is a big difference in the personal value of the first dollar someone earns each year and the 200,000th dollar someone earns each year - if you take away the first dollar you are depriving someone of money they need to survive, whereas if you take away the 200,000th dollar you are taking away money that is going on some form of discreciary spending. Big difference.

We can argue about the fairness of relative tax rates / brackets and amount of taxation at any given income level as it's currently implemented, in a practical sense, but this is a separate argument. Fundamentally, the idea of taxing higher income earners at higher rates makes sense.

 

[opusman]

Just on the increase in the tax free threshold. Very important point here. Increasing the threshold means that we no longer pay 15% tax on about $13000, that is about a $1950 reduction in tax. Lose a $1000 rebate and your still in front.

People talking about the increase in the tax free threshold seem to have missed the point that this was only meant to compensate low income earners for the carbon tax. The next two tax rates were increased, meaning people earning more than $80K pay the SAME amount of tax overall as they did before.

 

[jamesD]

Fundamentally, the idea of taxing higher income earners at higher rates makes sense.

Apart from the fact that the above idea is an income tax concept straight from Karl Marx's Das Kapital ("From each according to his need, to each according to his abiltiy to pay"). The other reason why people shouldn't be dis-proportionately taxed higher the more they work is that a country's general standard of living is determined by the amount of goods and services its population produces; not on anything else. So people should have an incentive (not dis-incentive) to work harder and longer.

 

[medhead]

A person gets paid based on what other people value their time at; so if someone is paid more per hour its because others (not themselves) consider their services more valuable.

which is exactly my point; you talked about working harder and for long hours making you deserve more pay. But the fact is that you get more pay because people consider your time more valuable. Or to put it another way I know a ditch digger works a damn side harder than me and probably longer, I'm sure I earn more.

Apart from the fact that the above idea is an income tax concept straight from Karl Marx's Das Kapital ("From each according to his need, to each according to his abiltiy to pay"). The other reason why people shouldn't be dis-proportionately taxed higher the more they work is that a country's general standard of living is determined by the amount of goods and services its population produces; not on anything else. So people should have an incentive (not dis-incentive) to work harder and longer.

Again you are not taxed based on how much you work, you are taxed on you're ability to earn. The incentive to earn more is the extra money you have to spend.

Reread my post.The single point I am making is the government spin is BS.You are once again misrepresenting me.I fail to see how you can have a better knowledge of what I am thinking than myself.
Second-those on $1million plus incomes are paying more tax than those under 83K.Fact.They are subsidising the lower income earners not the other way around.Fact.

Far from misrepresenting you I am simple point out that you stated reason for calling the government spin BS is not a reason at all. There is effectively NO difference due to raising the tax free threshold. If you have other reasons (no doubt valid, I'm sure I can thinking a few reasons to condemn the spin) it would have been better to list those.

It is also interesting that you think the amount of tax someone pays is even relevant. It is a simple fact that tax money paid by 85% of taxpayers in the bottom 2 marginal tax brackets is being used to fund welfare for people who do not need it.

Really that's the bottom line, it conforms to Liberal party ideals. The correctness of the spin is really meaningless in that case and in fact is mostly likely the result of the predictable, hypocritical response from Dr No.


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[simongr]

If the govt should't be involved in PHI then why have a tax that forces people into PHI?

My personal view is that I don't look at this change as a change to who subsidises what and how - for me it is a change in my overall tax burden. I am against the govt increasing the amount of tax I pay given it is so high already.

I personally object to paying a higher tax % than other people. We should all be taxed evenly as a % of income.

It is also interesting that you think the amount of tax someone pays is even relevant. It is a simple fact that tax money paid by 85% of taxpayers in the bottom 2 marginal tax brackets is being used to fund welfare for people who do not need it.

I thought the tax we paid was going to fund the community - defence, hospitals etc.? Rather than that money being specifically allocated for higher income earners. You can't have it both ways - either money goes into one pot for everyone's community or people are "working for the govt".

By that fact (that low income earners are subsidising high income earners) all medicare benefits should be means tested as even without PHI I can go go to a doctor and get treatment paid for by low income earners.

 

[wafliron]

Apart from the fact that the above idea is an income tax concept straight from Karl Marx's Das Kapital ("From each according to his need, to each according to his abiltiy to pay").

Your point being? Whilst I'm not familiar with the context of that quote, assuming it is 100% applicable to our tiered tax system that still doesn't mean it's a bad idea - in fact this concept seems to be working very well in the majority of western nations.

Just because you (and I) may not agree with most of what Karl Marx wrote doesn't mean every idea he had was a bad one - if you have proper critical thinking skills you'll evaluate every idea separately and on it's own merit. It's the same same as me strongly disliking the current Liberal's opposition's policies overall but still being able to recognise that they have some specific policies which are good and logical.

The other reason why people shouldn't be dis-proportionately taxed higher the more they work is that a country's general standard of living is determined by the amount of goods and services its population produces; not on anything else. So people should have an incentive (not dis-incentive) to work harder and longer.

People opposed to a tiered tax system often trot out this argument, but it's a flawed one in the context of how tiered tax systems are actually implemented and work in reality.

Your scenario certainly makes sense if the tax rate [/actually reaches a point where it provides a disincentive to work harder and earn more money/] - that is, in actual reality it causes people's productivity to drop. But that's not how it actually works in a country like Australia - you pay more tax as you earn more, but it's not so much that it's not worth working harder / earning more. The proof is in the pudding, so to speak - I can't think of a single person I've ever met or spoken to who has stopped trying to work harder / earn more money simply because it's going to be taxed at the highest (or any, for that matter) marginal rate.

 

[haydensydney]

Im not terribly concerned about this - I will be affected but I think the intention of means testing the subsidy is sound.

Those of us who are affected lead privileged lives in comparison to many others in our community. $1300 amongst a family of four is peanuts for a family who pulls in quarter of a mil each year.

What I will do is not claim the rebate at all, that way at tax time I will get more of a refund coming back to me if I actually do get a % subsidised by the government. Forced savings I guess.

 

[drron]

Oh Medhead.It appears i gave you too much credit.You have swallowed the ALPs spin hook,line and sinker.
The true fact is that most people earning up tp 83K get more from the government than they pay in tax.It is not just direct subsidies but the value of things such as roads,hospitals,schools,bank deposit guarantees,down payment on future pensions.Of course now it is at least 40% of people depend directly on the government for their income anyway so are definitely not subsidising anyone else anyway.By the way although not under 83K i am in this 40% as are most medicos-even in full private practice medicare is responsible for a good proportion of their income.
It is a pity the ATO doesn't make easily available on the break down of taxation revenue as the IRS does-there the top 10% income earners pay 46% of the income tax revenue.It is almost certainly much the same here.So the fact is the top earners subsidise the lower income earners not the other way around despite those that are using the politics of envy to desperately cling on to power.

 

[11sjw]

It's supposed to be private insurance so why should the government be involved at all?

Because the government was trying to reduce waiting lists in Public hospitals. Rightly or wrongly they decided that encouraging people to enter the private system would help.

To do this they used a carrot (rebate) and a stick Medicare Surcharge.

 

[Simo]

If you are on a high income your accountant/financial advisor would be looking at tax minimisation strategies.

My accountant is always looking to minimise the tax my company and myself pay via legal ways to make it happen.

We still pay a 6 figure sum of tax but greatly reduced from what it should be.

I am not sure what amount is for what entity.

I just have to pay the bill.

So what I am saying if a high income earner is paying tax on there full income go and by some investment properties and the like.

 

[drron]

If you are on a high income your accountant/financial advisor would be looking at tax minimisation strategies.

My accountant is always looking to minimise the tax my company and myself pay via legal ways to make it happen.

We still pay a 6 figure sum of tax but greatly reduced from what it should be.

I am not sure what amount is for what entity.

I just have to pay the bill.

So what I am saying if a high income earner is paying tax on there full income go and by some investment properties and the like.

Like me you obviously believe in that famous Kerry Packer quote which is more relevant today than when it was uttered in 1991-

I am not evading tax in any way, shape or form. Now of course I am minimizing my tax and if anybody in this country doesn't minimize their tax they want their heads read because as a government I can tell you you're not spending it that well that we should be donating extra.

 

[simongr]

We still pay a 6 figure sum of tax but greatly reduced from what it could be.

Fixed that for you

My point still stands though that some of us are now paying more tax than we did. This fully reflects the labour party policy that the "rich" should pay a much larger % of their income than the "poor".

I don't classify myself as rich - live in a $500K house (mortgaged), haven't had a new/replacement car in 12 years, don't have holidays every year and most holidays funded by points. I have shelled out thousands in medical bills despite having great PHI coverage.

On top of the flood levy (because for some reason I have to fund QLD's lack of state insurance) I am $3,000+ out of pocket due to this govt's increased taxes. That is $3000 that won't be spent in the retail sector.

 

[Alanslegal]

Oh well it can be a few more FF points next year!

And earn more FF points for many further years to come. Tony Abbott will not repeal these changes.

 

[Pleb Status]

Your scenario certainly makes sense if the tax rate [/actually reaches a point where it provides a disincentive to work harder and earn more money/] - that is, in actual reality it causes people's productivity to drop. But that's not how it actually works in a country like Australia - you pay more tax as you earn more, but it's not so much that it's not worth working harder / earning more. The proof is in the pudding, so to speak - I can't think of a single person I've ever met or spoken to who has stopped trying to work harder / earn more money simply because it's going to be taxed at the highest (or any, for that matter) marginal rate.

I do not work any overtime solely due to the fact that I only take home 43.5 cents in every dollar I earn (45% marginal tax + 1.5% Medicare + 1% flood levy + 9% super = 56.5% gone). So you have now met someone who stops working due to the tax rates in Australia. I would rather have the time off than work at such a reduced rate.

 

[leemin]

A bit of perspective is always useful I think.

There is a great blog here: http://mattcowgill.wordpress.com/2011/05/11/what-is-the-typical-australians-income/

Essentially, in the last period measured by the ABS (FY 2007-08), half of all Australian households earned less than a quarter of that at which the rebate cuts out for households.

Personally, I look forward to the billions of dollars in savings in the years to come hopefully going towards the establishment of a dental scheme under Medicare to address Australia's worsening dental health situation.

I have shelled out thousands in medical bills despite having great PHI coverage.

The precise reason I believe PHI is a bit of a crock IMO. I cancelled mine and put the money in a savings account ready for the next trip to the dentist..

 

[medhead]

I thought the tax we paid was going to fund the community - defence, hospitals etc.? Rather than that money being specifically allocated for higher income earners. You can't have it both ways - either money goes into one pot for everyone's community or people are "working for the govt".

Of course, it funds the community I was just sticking to drron's premise that someone is being subsidised. That doesn't mean I agree with it.

Oh Medhead.It appears i gave you too much credit.You have swallowed the ALPs spin hook,line and sinker.

Really. I thought I'd been clear that the spin is irrelevant, did I not say that at least once. You're the one getting hung up on spinning and ignoring the most important aspect of the government reducing its role in private choices that people make. As I started off with: take off the blue undies, get over your Anti-ALP views and realise this change is a good thing.