# Global economics expert slams Australia's capital gains



## sinner (8 March 2009)

Click 

http://www.abc.net.au/news/

Scroll down to audio...

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"PM: Protecting the rich: A global economics expert has slammed Australia's capital gains tax system as a 'tax shelter' for the rich."

Sorry, no transcript up yet for proper link and quote.

The expert is one Leonard Burman apparently.

Good night.


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## robots (8 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*

hello,

good, better than protecting the bludgers of society sitting on the pine doing nothing but whine

the rich contribute massively to society and very much underrated, the poor nothing

thankyou
robots


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## Sunder (8 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*



robots said:


> good, better than protecting the bludgers of society sitting on the pine doing nothing but whine




Funny, that sounds like a property investor to me...


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## noirua (8 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*



robots said:


> hello,
> 
> good, better than protecting the bludgers of society sitting on the pine doing nothing but whine
> 
> ...



Yep, the rich bankers, investment managers etc., have contributed in bringing down the whole world. It looks as if property investors have gone with it across the pond and Aus will follow with it.


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## shaunQ (8 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*



robots said:


> hello,
> 
> good, better than protecting the bludgers of society sitting on the pine doing nothing but whine
> 
> ...




pfft. The opposite of rich is poor, not unemployed bludgers. Many hard working class people probably work harder, longer and have more social contribution that many rich. Its a known fact the whole Finance, Insurance and Real estate industries are just leaches on society.

Nurses? Teachers? Firies, Police - yep they contribute nothing.


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## tech/a (8 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*

Typical 

The topics Capital gains tax and the response is anything but.

Government want self funded retiries.
Cant tax the bejeeses out of people and still expect self funding retirement.


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## Glen48 (8 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*

If we had CGT on Housing life would be much easier for all and we would not have people buying houses thinking they will double every 10 yrs and ex car sales men selling RE and creating all this greed and suckers buying a 2-3+ houses like a Phallic symbol


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## tech/a (8 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*



Glen48 said:


> *If we had CGT on Housing *life would be much easier for all and we would not have people buying houses thinking they will double every 10 yrs and ex car sales men selling RE and creating all this greed and suckers buying a 2-3+ houses like a Phallic symbol





We do.
Anyway down to the club for a spot of golf.


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## Tysonboss1 (8 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*



Glen48 said:


> If we had CGT on Housing life would be much easier for all and we would not have people buying houses thinking they will double every 10 yrs and ex car sales men selling RE and creating all this greed and suckers buying a 2-3+ houses like a Phallic symbol




Capital gains tax on property investments is not any different than share investments,

What is the problem the way Capital gains are taxed in australia. I can't see it as a tax shelter at all. as soon as you realise a capital gain you are taxed on it, sounds fair to me.

At the end of the day it's a tax on inflation, so one could argue that taxing capital gains may not be fair at all, But that's why the capital gains tax is discounted by 50% apparently, to make up for the inflation side of things.


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## robots (8 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*



Tysonboss1 said:


> Capital gains tax on property investments is not any different than share investments,
> 
> What is the problem the way Capital gains are taxed in australia. I can't see it as a tax shelter at all. as soon as you realise a capital gain you are taxed on it, sounds fair to me.
> 
> At the end of the day it's a tax on inflation, so one could argue that taxing capital gains may not be fair at all, But that's why the capital gains tax is discounted by 50% apparently, to make up for the inflation side of things.




hello,

spot on Tech & Tyson, another rich bashing exercise

thankyou
robots


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## Glen48 (8 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*

Sorry I should have said CGT on PPOR...


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## robots (8 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*



Glen48 said:


> Sorry I should have said CGT on PPOR...




hello,

no worries Glen48, i think the low income earners should be taxed way more as well,

more like 30% across the board no tax free threshold, just straight up flat rate

thankyou
robots


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## Naked shorts (8 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*

In case you didn't realize, we live in a capitalist system. You choose whether or not you become rich. stop complaining.


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## Wysiwyg (8 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*

It could be asked what is fair in the capital gains tax laws.For instance *the* *laws could be anything that doesn`t completely strip an individual *of the financial growth they have made through correct or fortunate (both ??) investment practices.

Realistically, the government can introduce any CGT law they like and as long as they don`t pinch too much we agree without a whimper.

The latest `adjustment` to the CGT was in 1999 after a report by some bloke.



> From the 21st of September 1999, after a report by Alan Reynolds the 50% capital gains tax discount has been in place for individuals and some trusts that acquired the asset after that time and have held the asset for more than 12 months,




Why 12 months?


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## numbercruncher (8 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*

Yes double capital gains and in return give more to those of us who are productive .....


Good stuff ....


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## theasxgorilla (8 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*

Is he talking about CGT???  He highlights negative gearing as a key tax loophole.  Then he explains how the US hasn't had such a mechanism in their system since 1986.  Why has nobody shot down his argument with the most obvious of criticisms?  Isn't the US on the ropes (again) due to people investing (speculating) in "unproductive assets" a la property?  Negative gearing or no negative gearing!

And in the US you can make negative gearing like deductions on your PPOR.  Same as Sweden, same as the Netherlands.  Both of the latter countries have very large state provided social housing systems.  In Australia negative gearing property investors inadvertently provide this kind of service by subsidising rent for renters by running their properties at a loss.


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## drsmith (8 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*

*Drsmith's simplified tax schedule*

Base income tax, company tax and social security around average weekly ordinary time earnings (AWOTE) and the corporate tax rate as follows;

For income progressive tax scales as follows;

1) No tax on the first 25% of AWOTE (this too would be the unemployment benefit/aged pension level).

2) Tax income from 25% of AWOTE to 4 x AWOTE at the corporate tax rate.

3) Tax income above 4 x AWOTE at twice the corporate tax rate.

For salary income no deductions should be allowed. Decuctions could however be claimed against investment/business income. This would effectively abolish negative gearing for wage income.

Households with dependants claim a rebate of the tax from 25% of AWOTE for a spouse and 12.5% for each child up to a maximum of two children. Thus a family consisting of a married couple and two children would not pay income tax until household income exceeded AWOTE. All other rebates (including child care, health insurance etc) for wage earners abolished.

For CGT the only concession would be that the maximum rate would not exceed the corporate tax rate regardless of the amount.

Income from superannuation (in the accumulation phase) could be given concessional treatment by applying tax scales 1 and 2 above but there would be no deduction for contributions.

Now, just set the corporate tax rate to balance the budget over the economic cycle. With most of the leaks from deductions and rebates plugged it would be interesting to see what that corporate rate would be.

30%, 25%, 20% ?????

Oops!
There goes the unemployment rate with all those tax accountants and former ATO employees out of work.

*EDIT:* and one final thing;
Expand the GST (10%) to cover all consumption expenditure.


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## GumbyLearner (10 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*



robots said:


> hello,
> 
> no worries Glen48, i think the low income earners should be taxed way more as well,
> 
> ...




I prefer Lindsay Fox's ideas on tax for low-income earners. 
The same bloke that owns Luna Park on Acland St in St.Kilda. 
The tax-free threshold should be raised to $20,000 for low-income earners.


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## Beej (10 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*



Tysonboss1 said:


> Capital gains tax on property investments is not any different than share investments,
> 
> What is the problem the way Capital gains are taxed in australia. I can't see it as a tax shelter at all. as soon as you realise a capital gain you are taxed on it, sounds fair to me.
> 
> At the end of the day it's a tax on inflation, so one could argue that taxing capital gains may not be fair at all, But that's why the capital gains tax is discounted by 50% apparently, to make up for the inflation side of things.




Remember the original CGT brought in under Hawke/Keating allowed you to index your cost basis by CPI, and then only pay CGT (with no discount) at your full marginal rate on the after inflation gain only.

This business of discounting the rate to half your marginal rate if you hold for 12 months (change brought in by Howard/Costello), was accompanied by the removal of the ability to index your cost base by inflation. In many cases you actually end up worse off as compared to the old system, but everyone "feels" like they are paying less tax because the actual rate cannot exceed 24% (half top marginal rate + medicare levy). The change was done primarily to simply the calculations and tax returns if I recall, and for political points through the lower tax illusion it created.

Cheers,

Beej


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## drsmith (10 March 2009)

*Re: Protecting the rich: A global economics expert has slammed Australia's capital ga*



Beej said:


> The change was done primarily to simply the calculations and tax returns if I recall, and for political points through the lower tax illusion it created.



For longer terms investors it was very much a increase in taxation by stealth.


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