L-plate Treasurer trickles down the gurgler

Josh “L-plate Treasurer” Frydenberg is out again today in pursuit of Labor tax policies, at The Australian:

According to the most recent ATO data of 2015-16, there were 416,000 individual tax payers on the top marginal rate who contributed 30 per cent of the total personal income tax take.

According to Treasury, this number will increase to 580,000 this financial year and 820,000 in 2024-25, which by then will see those on the top rate pay 36 per cent of total personal income tax collected.

At 49 cents in the dollar, Australia’s top marginal rate is above the United States, United Kingdom, and New Zealand and is one of the highest rates in the world.

This ratio affects our international competitiveness and our ability to attract and retain the best and brightest.

Under Labor, this ratio worsens, sending our country backwards.

Does it? Only if you believe in such fairies at the bottom of the garden as “trickle down” economics. If you’re so rich as to make these levels of elite then your tax rate won’t matter at all to your investment choices.

The US and UK are not suffering from an excess of investment. They are suffering from a dearth of aggregate demand, owing in part to massive wealth imbalances arising from, you guessed it, under-taxed wealthy classes that simply can’t spend such a concentration of wealth no matter how hard they try.

When you combine this with the L-plate Treasurer’s other recent complaint about negative gearing reform, all he is doing is defending the same system of rich rorting that will take us down precisely the same path. He wants higher house prices and more foreign capital to fund them with the rich creamin’ it on top. This is the same depressing national vision that has taken us to the edge of calamity with a publicly-funded housing bubble and hollowing out of productive investment.

It is also the very reason why we are seeing politics fracture worldwide as ignored working classes get jack of lying in the trickle down wet spot. The L-plate Treasurer is completely out of step with the mood for change sweeping the globe.

While the L-plate Treasurer is stuck in a time warp, Labor’s tax vision is much fairer, economically constructive and in favour of the national interest.

Comments

  1. Next up for the LNP: Harakiri on the floor of parliament, plus rumours to legalise slavery to help reduce slack in the economy and drive household productivity and consumption.

    • I don’t know about anyone else, but I’m really, really tired of the Libs constantly attacking the opposition and not offering up any new policies for the majority of the country.

      All this negativity and the constant attacks just make the Libs look really bad.

      They need to go back to kindergarten and learn the basics like “If you can’t say something nice, don’t say anything at all”

  2. [I]f the income share of the top 20 percent (the rich) increases, then GDP growth actually declines over the medium term, suggesting that the benefits do not trickle down. In contrast, an increase in the income share of the bottom 20 percent (the poor) is associated with higher GDP growth.
    International Monetary Fund 2015 report

    • That’s because GDP is little more than a measure of consumption. The poor spend every cent they have while the rich save, so it makes sense, under the current definition, that GDP would be greater with more money in the hands of the poor.

      This blog has rubbished GDP as a measure of economic health (quite correctly), so what gives?

      Received wisdom, in the ranks of mainstream economics, calls for the redistribution of as much wealth as possible from rich poor in order to ensure a ‘better GDP outcome’.

      Quite astonishing how intelligent people haven’t called this garbage out. Savings, according to Keynes, are the enemy of economic progress and this remains the dominant narrative today. What is actually going on is that we are consuming our savings (seed corn) which is setting us up for the mother of all economic crises. Keynes (and all the worthless id1ots who champion his views) will not be judged kindly by history.

      • Keynes (and all the worthless id1ots who champion his views) will not be judged kindly by history.

        Yes, well, I’m sure that Keynes et Co. will start caring about that right about the time rapture strikes…

        Seems that it’s in the human (stupid) nature to make up some bullish•t model, then give it total and absolute control over ourselves, and then, 3 generations later when the searing pain the àss becomes unbearable, complain about it, but still not do anything, because, well, we’ve got nothing else to replace it with. (The bitter irony here being that it’s about ‘replacing’ the model with another one)

      • Ronin8317MEMBER

        Instead of just parroting what neo-liberal website tells you about Keynes, go read what he says yourself. Nowhere does he say that “saving is the enemy of economic progress”, what Keyne said was “Every such attempt to save more by reducing consumption will so affect incomes that the attempt necessarily defeats itself. “. The ‘enemy’ is the lack of economic activity.

      • @Ronin
        I have never been near a ‘neoliberal’ website in my life (whatever neoliberal is) and in contrast to pr!cks like you I don’t run with the herd. Certainly, I’ve never seen a single original idea from you so who’s really doing the parroting round here? I’ll wager one thing for sure and that is that ‘neoliberalism’ and the Keynesian/Friedmanite ‘monster’ probably go hand in glove.

        Keynes had nothing against ‘savings’? Bullshit. Have you ever read his piece on Euthanasia of the Rentier? Obviously not, because you wouldn’t be challenging what I’ve just said. Do yourself a favour and instead of spouting off any garbage that comes to your pea-brain, why not learn something instead.

        Ever heard the phrase “lack of aggregate demand”? Straight out of Keynes’ mouth and into the mouths clueless Econo-parrots the world over, including chumps like you. Translated for the terminally stupid, Keynes is saying: “People are saving too much, they must be forced to spend.” Have you ever heard something so fvcking stupid in your life? Central bankers around the world (serving the neoliberal agenda) all believe that sh!t.

      • Instead of just parroting what neo-liberal website tells you about Keynes […]

        To be fair, he’s parroting what mises.org tells you about Keynes.

        Keynes had nothing against ‘savings’? Bullshit.

        http://socialdemocracy21stcentury.blogspot.com/2012/12/did-keynes-hate-saving.html

        Translated for the terminally stupid, Keynes is saying: “People are saving too much, they must be forced to spend.”

        No, he’s saying the economy is driven by demand, not supply.

      • @smithy
        Keynes is a fraud (that’s my view). If you’re an advocate of his theories, then be my guest: it’s a free world.

        I’ve seen both sides and I’ve chosen mine. End of.

    • The Beetrooter Advocate

      If GDP is consistently increasing year on year in Australia is it necessary to look into the horse’s mouth to establish why so deeply its gonads are visible?

  3. Mining BoganMEMBER

    You know, I don’t reckon he would react very well to a whole bunch of yellow vests in his street.

    There’s fear in that little man. Jay Weatherill showed that.

    • Media banshees will howl ‘racìalists’, ‘neo-nåżi’ and xenöphöbes… and then quickly bury the news under some false-flag or some such.

      Not much is heard these days about YV protest… at least not from your “impartial” ABC…

  4. “If you’re so rich as to make these levels of elite then your tax rate won’t matter at all to your investment choices.”
    Really?
    I thought one of the reasons all the rich people (never defined as to what income and/or assets constitute rich) negative geared was precisely because of their tax rates and their desire to reduce them.

  5. “under-taxed wealthy classes that simply can’t spend such a concentration of wealth no matter how hard they try.”

    $180,000 a year doesn’t put you anywhere near that category.

    • income =/= wealth.
      wealth is especially under taxed.
      Although given 180,000 a year puts you in the top 5% or so of income, if you can’t get yourself to a position of wealth on that income you are making very poor choices.
      How do you think people on median incomes of 80,000 or less are doing?

  6. Our top marginal tax bracket is not that high (45%) but it starts at very low incomes 180k. Nowhere in the world income at just over two times average wage gets one into top marginal tax bracket except here. Our top bracket is designed to heavily tax upper middle class (doctors, professionals, small business owners… ) not rich (a person making equivalent of two average wages in not rich because he’s indistinguishable from poor when compared to someone making $5m or $50m). At the same time our swiss cheese style tax law enables rich to deduct so much that tax rate doesn’t even matter to them (even 100% tax on 10% or real income would be nothing)

  7. Jumping jack flash

    The debt that everyone has, including (especially) the “rich”, has gummed up the whole system and trickle-down no longer works – if indeed it ever did work, it was tenuous at best.

    The truly insane amounts of debt that everyone owns now has in fact instigated wage theft which can be interpreted as “trickle-up”! The debt has turned the flow backwards.

    Quite simply, the would-be wage increases for the plebs due to any increased productivity are taxed by the “rich” (a little at first, and then completely) in order for these “rich” to pay their own gargantuan debts and keep up with the insane costs of living. (Costs of living which are gouged as much as possible for similar reasons and purposes.)

    Only after the debt is repaid can the economy begin to heal and trickle down can return.
    I don’t think the good Treasurer gets this.

    • The debt that everyone has, including (especially) the “rich”, has gummed up the whole system and trickle-down no longer works – if indeed it ever did work, it was tenuous at best.

      The natural direction of wealth transfer is upwards.

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