Via the AFR:
Labor is unlikely to shift its opposition to the Coalition’s high-end income tax cuts but has signalled jettisoning a central plank of its climate change policy as it grapples with the loss of its blue-collar base.
Incoming Labor leader Anthony Albanese suggested on Thursday that the opposition would not support the government’s full $158 billion in income tax cuts, forcing it to either rely on the Senate crossbench or split the package.
While the position on tax is consistent with Labor’s pre-election stance, opposition environment spokesman Tony Burke has indicated the party may have to abandon once and for all its commitment to a market-based mechanism to tackle climate change.
The LNP’s tax flattening package is classic trickle down economics. Will it boost growth? No, as we have seen in the US, tilting income distribution towards the rich culminates in demand deficit. If you have one million dollars to give, and you give it all to one wealthy person, will they spend as much of it as giving $10k each to 100 poorer people? No.
Will it boost investment? No. Because the resulting demand deficit will deliver excess capacity. So the rich person will save even more of the $1m. This is a key driver of “secular stagnation” economics, not to mention social dislocation arising from class warfare.
Trickle down economics will not:
- enhance productivity to lift income;
- increase efficiency to maximise resource use;
- shift production to higher-value added output.
Pissing assumed commodity windfalls onto fat cats is not in the national interests. Labor should reject the package and insist on splitting the bill to pass today’s more sensible tranche.
