From: yar@cs.su.oz.au (Ray Loyzaga)
Subject: Re: Fightback! the politics and the sums
Reply-To: yar@cluster.cs.su.oz (Ray Loyzaga)
Organization: Basser Dept of Computer Science, University of Sydney, Australia
Date: Thu, 17 Dec 1992 02:06:50 GMT

In article <1gk8k7INNfv1@werple.apana.org.au> speednut@werple.apana.org.au (Mark Jose) writes:
>Original Message From: chris@suite.sw.oz.au (Chris Maltby)
>I agree. The fact that the upper tax brackets will get two adjustments
>to their tax thresholds is a slap in the face for all those middle
>income workers on the average wage or below who have suffered for
>years under a totalitarian wages regime.

One of the reasons for this is to bring the highest bracket down to
the corporate rate, which should eliminate most of the dodgy things
people do with personal companies etc.

>If anything I would like to see the tax free threshold raised and
>bigger tax breaks for the average wage earner. This could easily be at
>the expense of the "rich" due to the fact that as you say, the "rich"
>will consume less of their disposable income. In fact the "rich" will
>benefit nicely from less tax on savings. Meanwhile, as you imply, the
>poor will continue to get poorer as food prices are hit by GST.

I would probably prefer a higher tax free threshold and income splitting.

>>To offset the inflationary effect of the GST there is a corresponding
>>income tax reduction, and special assistance aimed at asset rich,
>>income poor people (retirees). But this new income tax system is
>>also less progressive than at present.  That is, the more income
>>you get the greater the proportional income tax saving.
> 
>As the inflation is sure to rise, the next impact on the average wage

The inflation effect is a one off.

>earner is the industrial relations policy. If you are locked into a
>contract you may end up being squeezed even more. It is surely a goal
>of the coalition to let the average man pay more and more.

I would say their goal is more in the line of raising the "average"
which as a consequence means that they pay more.

>Consequently, the belief must be that the richer a person gets the more
>his business will be expanded.

This is generally true is it not?

> 
>>So added up, the package is a large net transfer of wealth from
>>poor to rich. This is partly why it has been so hard to sell (to
>>non-Liberal traditionalists that is). The only justification is
>>the "trickle down leap of faith" one - that is, the now much better
>>off high income earners will both use more services (thus employing
>>service providers like butlers), and invest more, hopefully in
> 
>I suppose they have got to find somewhere for their money. But if
>savings are relatively tax free (are they?) what incentive is there to
>invest their money in some business or productive aspect of the
>economy?
The first $2k are tax free, this creates a large pool of cheap funds
available locally for expansion. It should be a win for industry,
an increase of our saving pool and a win for our current acct.

>>industries employing people and not into negatively geared real
>>estate or other asset speculation. Mind you, the disincentive to
>>consume (I wouldn't call it an incentive to save) is an attractive
>>feature.
> 
>Yes I believe that most will shift there money into the unproductive
>areas of real estate where the market will once again undergo a rise
>which further takes the price of the average house out of the grasp of
>the average person.

Imputation credits have made the share market a rather nicer
punt that housing stock.

>If you are unemployed you are definitely in the "basket-case"
>category. Sure you have a higher tax threshold on your social security
>payments, but what other compensation do you get. The big selling

Unemployment benefits go up by 8%.

>point seems to be "well you'll get more in child endowment". Well what
>happens if you are single or married and without children. Does this

Tax cuts below $15k average 4.8%, CPI effect of GST is 4.7%
or 4.4% if you don't include tobacco.

>mean that to be better off economically you have to have a few
>children? You are definitely correct in saying that the unemployed
>will be hit so hard they may never get up.

People with children on the same income as people without are given
an allowance to help them offset the extra costs, it is effectively
a doubling of any current child allowance entitlements.