Superannuation, the ultimate government cash cow?

[craft]

On the one hand it's not right to ask the elderly to leave the community they've been part of for much of their life to unlock the equity in their home.

On the other hand

Why should my taxes be higher so someone can inherit their parents home?

One of the issues Australia needs to have a grown up debate about. (god help us)

An easier way would be to let them live in their million dollar houses and receive their age pension but upon their death some of the proceeds of the sale go to the taxpayer.

probably too sensible to see the light of day.

 

[Julia]

total net income of $31,920.

Whilst, that isn't super comfortable by any means. If you could protect that income stream from inflation there is no reason you could not live on it for the rest of your life assuming that you owned your own PPOR.

That's pretty presumptuous of you. You have no idea what expenses they might have.
Neither is it your business to decide how much anyone needs to live on.

Believe me or not, but myself and my partner, excluding mortgage payments (which you shouldn't be paying in retirement if you plan properly) get by on around $30,000 to $35,000 living expenses.

Well, that's your business and your decision.

But I'm not here to judge their investments, just comparing the income to my own situation.

Something that's completely irrelevant.

- - - Updated - - -

A link would have been nice.

I'm sure the few people who would want to know actual limits are just as capable as you are of accessing the Centrelink website.

 

[Ves]

That's pretty presumptuous of you. You have no idea what expenses they might have.
Neither is it your business to decide how much anyone needs to live on.


Well, that's your business and your decision.

Something that's completely irrelevant.

- - - Updated - - -



I'm sure the few people who would want to know actual limits are just as capable as you are of accessing the Centrelink website.

Why so aggressive and intent on destabilising the discussion with your willingness to antagonise me?

 

[sydboy007]

The below graph shows the economic headwinds we're facing

4800 hitting pension age every week and reasonable growth in that as the years go by.

So when tax free super came about we had around 4.6 workers per retiree (2007).

We're down to about 4 now, and projected to be about 3.5 by 2020 - and it keeps on getting worse.

We may need to move towards a system that spain has decided to use from 2019

The Spanish government will end the link between pensions and inflation. Instead, the level of pensions will depend on the development of the Spanish economy and Spain’s life expectancy. In the future, pensions will not increase more than 0.25 per cent above inflation. Their total level will also be linked to the amount of contributions paid into the social security system, and from 2019 pensions payments will also be coupled to longevity. In other words, as Spain gets older (which it will), its pensions will fall (as they must).

Why is a couple who earns more than 50% of households entitle to welfare? What are people who can have millions of dollars in assets (when you factor in the primary residence) entitled to welfare?

Because they are one of the most powerful voting blocks.

 

[tech/a]

Why is a couple who earns more than 50% of households entitle to welfare? What are people who can have millions of dollars in assets (when you factor in the primary residence) entitled to welfare?

Why should a couple who have lived off the dole and used public housing all their life --- MORE entitled to welfare than the couple above?

 

[tech/a]

In my working career my businesses have paid millions in Taxes.

Without the company turning a profit I would not have payed.

All my employees PAYE Tax
GST
Fringe benefit tax
Payroll Tax.
Company Tax.

Capital gains tax.

I have contributed more in taxes to my country than 30 average families.

And YOU think I should be denied $30K a year?????

WHY?

- - - Updated - - -

How about linking welfare to the contribution made to tax revenue.
No contribution no welfare.

Might get a few off their butts.

 

[CanOz]

Tech, c'mon now, the only reason you pay taxes is to support others....its not for you silly!

 

[Julia]

Why should a couple who have lived off the dole and used public housing all their life --- MORE entitled to welfare than the couple above?

Yes, especially considering they are not high income earners, they've done OK to have got to where they have imo.

We are a married couple aged 70 and 63, both working, with a combined income of $80,000 gross, and plan to retire in two years.

Two people only receiving $80K.

I'm a bit puzzled about all the indignation on this thread apparently being directed toward the tax breaks for those who have provided for their own retirement, rather than the great majority who have an expectation of being cared for by their fellow citizens throughout their lives.

Plenty of people have worked all their lives, no dependants, yet failed to save to fund their own retirement.

Vixs makes good points above. Maybe a compromise on the family home could be that it's exempt from Centrelink assessment up to a certain value, say around $500,000, but anything over that is counted in assessable assets. The obvious difficulty with that, however, is the huge discrepancy between housing costs in capital cities and small towns.

 

[McLovin]

In my working career my businesses have paid millions in Taxes.

Without the company turning a profit I would not have payed.

All my employees PAYE Tax
GST
Fringe benefit tax
Payroll Tax.
Company Tax.

Capital gains tax.

I have contributed more in taxes to my country than 30 average families.

And YOU think I should be denied $30K a year?????

WHY?

Yes, I do. Do you need $30k/year courtesy of the taxpayer?

I'm a bit puzzled about all the indignation on this thread apparently being directed toward the tax breaks for those who have provided for their own retirement, rather than the great majority who have an expectation of being cared for by their fellow citizens throughout their lives.

As I've said previously in this thread, I think it's great people provide for their own retirement. But I think the amount of income that can be taken tax-free needs to be capped. The idea that someone should not pay tax merely because they're a saver doesn't compute with me. I'm 31, I live off my own savings, should I be allowed to live tax free?

 

[VSntchr]

Yes, I do. Do you need $30k/year courtesy of the taxpayer?



As I've said previously in this thread, I think it's great people provide for their own retirement. But I think the amount of income that can be taken tax-free needs to be capped. The idea that someone should not pay tax merely because they're a saver doesn't compute with me. I'm 31, I live off my own savings, should I be allowed to live tax free?

Im 23, teach me

 

[McLovin]

Im 23, teach me

Those halcyon pre-GFC days gave me a massive leg up. Banking just don't pay like it used to pay, unfortunately.

 

[Judd]

Yes, I do. Do you need $30k/year courtesy of the taxpayer?



As I've said previously in this thread, I think it's great people provide for their own retirement. But I think the amount of income that can be taken tax-free needs to be capped. The idea that someone should not pay tax merely because they're a saver doesn't compute with me. I'm 31, I live off my own savings, should I be allowed to live tax free?

I'm more than 20 years older than you so could be classed as in the "You owe me" brigade. However, I'm more inclined towards your concepts.

Interesting how people can turn the principle of a need based on welfare into an entitlement.

 

[craft]

In my working career my businesses have paid millions in Taxes.

Without the company turning a profit I would not have payed.

All my employees PAYE Tax
GST
Fringe benefit tax
Payroll Tax.
Company Tax.

Capital gains tax.

I have contributed more in taxes to my country than 30 average families.

And YOU think I should be denied $30K a year?????

WHY?

- - - Updated - - -

Interesting that you see tax on your employees labour as tax that has been levied on you. Reckon your employees probably see it as tax they have paid.

As to why for you – Makes no sense to tax somebody just to hand it back again – inefficient and distorting.

How about linking welfare to the contribution made to tax revenue.
No contribution no welfare.

Might get a few off their butts.

I guess there is an argument as to whether there should nothing, a quasi insurance scheme or a welfare safety net in place. From my perspective I’m glad to live in a country where we have a welfare safety net. – I think Mclovin described it to me one day as enlightened self interest.

The real issues for me is how we ensure that the safety net is set at the right level, not abused and does not create disincentives for recipients to get off it. Get those aspects right/fair and you will have the lowest distortion to the economy from the transfer system intervening whist still being humane.

 

[tech/a]

Yes, I do. Do you need $30k/year courtesy of the taxpayer?

Hell yeh!


Every time one of my guys hits me up for a wage rise---do they NEED IT?
If interest rates go to 10% and inflation hits hard.
I get Ill or My passive income streams dry up.
When My father retired and he is still alive---he had enough invested for 10 houses. (400K)
Back in 1975
He was considered wealthy.

Today He and mum are on struggle street!

 

[McLovin]

Every time one of my guys hits me up for a wage rise---do they NEED IT?

I don't know. It's fairly non-sequitur to the discussion. I'm not quite sure how one can equate a welfare payment with wages and salaries paid by a, presumably, profitable company. Some of your posts make it sound as though you're running some benevolent organisation and your employees are an incredible burden.

If interest rates go to 10% and inflation hits hard.
I get Ill or My passive income streams dry up.

And that's the point of having a safety net, rather than a US style carte-blanche system where Gates and Buffet are entitled to the pension. It's there if you need it.

 

[jmoz]

How about linking welfare to the contribution made to tax revenue.
No contribution no welfare.

Might get a few off their butts.

um yeh that would work great. I'm sure there would be no increase in crime at all

 

[sydboy007]

How about linking welfare to the contribution made to tax revenue.
No contribution no welfare.

Might get a few off their butts.

I grew up in a family that bounced around the poverty line. We survived because of welfare and a lot of HARD WORK that never earned us the kind of income your effort was rewarded with. My dad is dyslexic. He left school in year 8 because his father had passed away and being one of the older children he had to work the farm. As the economy changed through the 80s he had trouble getting enough work. Throw in getting 3rd degree burns to a third of his body due to employer negligence (they admitted such during the coronial inquest) in the early 90s and I'm surprised he's still a pretty happy person who goes off to do his odd jobs each morning for a little extra money to supplement the pension, same as my mum.

We were definitely NOT A LAZY FAMILY! We mowed lawns in 30+ degree summer days, put up fences on farms, roof bats in 30 degree summer days (still remember that birthday). I count myself very lucky to have had the luck and motivation to get a good education and move into the income elite of this country. I doubt I would have if I'd grown up in the USA.

By your definition my parents should be starving right now with no pension support.

The majority of people on welfare wished they weren't. Most people on welfare hate it, especially when they have to put up with attitudes like yours. You'd fit in better with your attitude in the USA. There it's sink or swim.

 

[Julia]

As I've said previously in this thread, I think it's great people provide for their own retirement. But I think the amount of income that can be taken tax-free needs to be capped.

That sounds reasonable enough. What would you suggest as the capped level?

The idea that someone should not pay tax merely because they're a saver doesn't compute with me. I'm 31, I live off my own savings, should I be allowed to live tax free?

Whilst I congratulate you on achieving such a successful position at such a young age (it took me until my late 40's), I don't think you can reasonably compare the two situations, in that the couple in the example above would presumably have paid into the tax system all their working lives, viz up to about fifty years. Not so for you. I'm sure you'll have considered the option of using the tax free threshold and then placing the remainder into Super in order to only be taxed at 15% in accumulation phase.

The real issues for me is how we ensure that the safety net is set at the right level, not abused and does not create disincentives for recipients to get off it. Get those aspects right/fair and you will have the lowest distortion to the economy from the transfer system intervening whist still being humane.

Certainly this is the point which concerns all of us. At present we have ridiculously high levels of unwarranted middle class welfare whilst failing to properly support those in genuine need.
I don't envy any government trying to get this right. Obviously a case by case determination of welfare requirements would be ultimately desirable, but less than practical from a cost point of view.

 

[McLovin]

That sounds reasonable enough. What would you suggest as the capped level?

Taking a very "macro" approach, I'd say the level should be set as a % above the basic pension. Whether it's 25%, 50%, 100% I don't know.

Whilst I congratulate you on achieving such a successful position at such a young age (it took me until my late 40's), I don't think you can reasonably compare the two situations, in that the couple in the example above would presumably have paid into the tax system all their working lives, viz up to about fifty years. Not so for you. I'm sure you'll have considered the option of using the tax free threshold and then placing the remainder into Super in order to only be taxed at 15% in accumulation phase.

Valid points and I don't disagree. To clarify what I was saying (and related to my comments above), the superannuation system shouldn't become a tax-shelter for those who should otherwise pay tax and by that I don't mean the person with $500k in super. I'm in a generation that will have to carry a very high tax burden if the tax system isn't reformed soon.

In many ways I think Australia has become a victim of its own success. People my age, by-and-large, don't know what a recession is and are used to the idea of ever increasing wages, the ability to find a job at the drop of a hat, and a government that "hands back" plenty of money. Sometimes I think we have become fat and lazy. It's weird to think that the last time we had a recession (and unlike most I remember it acutely because my parents almost lost their business) I was in year 3.

 

[sydboy007]

Valid points and I don't disagree. To clarify what I was saying (and related to my comments above), the superannuation system shouldn't become a tax-shelter for those who should otherwise pay tax and by that I don't mean the person with $500k in super. I'm in a generation that will have to carry a very high tax burden if the tax system isn't reformed soon.

I do wonder if we'd not be better off with just giving everyone the pension and taxing super at a 15% discount to your marginal rate with a 0% tax on the first 10K of earnings each year and the rest at 15% discount rate.

The tax from super will be quarantined for funding the pension.

This way everyone gets relatively the same level of support and hopefully the cost to the budget of the super and pension sytem will be a lot lower.

The present system benefits those most able to save for retirement, while others have the mentality that it's my money and entering retirement with large amounts of debt and expect their super to pay it off. Maybe we need to have full taxation on super with a rebate as I've proposed above which cannot be taken as a lump sum in retirement. That isn't your money - it's taxpayer funds and should be used to provide some form of annuity during retirement.