Before anyone I can remember.

One thing is for sure, somebody will be paying the baby tax, and it will be a combination of shareholders, customers and employees.

There are a lot of questions here for you. Don’t do a runner with your tail between you legs.

……calculating the payout ratio from a loss perspective and see what happens.

Independent grocery retailers to join miners in anti-MRRT ads.

The United Retail Federation will soon begin television advertisements against the [federal government's proposed mining] tax, with national president Scott Driscoll saying the flow-on effects of the tax to non-mining sectors was ‘a grave concern’ to 90.5 per cent of its members.

‘We intend to tap into social media as well,’ Mr Driscoll told AAP…

The National Association of Retail Grocers of Australia (NARGA), which represents about 4,500 members including IGA and Metcash but does not speak for Coles or Woolworths, also fronted media to oppose the tax.

Looks like these real-world businessmen have decided that Ken Henry (and certain academic eggheads) are gilding the lily.

Let’s have a look at what happens in this scenario calculating the payout ration from a loss perspective and see what happens.

Investment of $10,000

There’s 30% of losing all the investment, but a 70% chance of making $100,000.

The probability factor is

30% * $10,000 = $3,000 and adjusted return of $30,000

What happens if there’s the 40/40 tax refund split .

10,000-4000 = 6,000 * 30% = $1,800 and adjusted return of :

100,000 * 40% = 40,000 * 30% = $12,000

so we go from

30,000 /3,000 = 10

12,000 / 1,800 = 6.6

In other words the effect of the tax has reduced the chances of a higher return on the payout ratio and of course the reason is the expectation of large returns to compensate for risk.

Around 88% of the profits in the mining industry are made by mega established firms.

1. He’s asking you to believe that large firms will have their major projects turn unprofitable and the government will fund them 40% of the losses. What are the chances that BHP’s iron ore and coal operations for instance are going to turn profitable in the foreseeable future?

2. Investors tailor their risk according to their own investment philosophies and limitations. So they don’t need or want downside government protection if the top side opportunity is going to have a fairly hefty ceiling.

in other words I’d tailor my risk capital allocation according to perceived sense of where it is.

However to believe this means harry will call you a liar. Amazing.

However we’re being theoretical here.

Here’s my point.

Harry claims the tax will not adversely affect the level of new entrants with the 40 40 proposal. He utters that with enough confidence and aplomb that he’s calling people who disagree liars.

I’ve asked him to provide evidence but all he’s done is repeat the proposal to me and confidently suggest how no one would take it, deliberately refusing to provide evidence.

Personally I would have thought he had the evidence at his finger tips.

After yeras in the Tax industry, I can tell you that tax legislation always looks different to what governments announce it to be. Hence, in the good old days before Rudd, the Government always released the legislation before announcing a new tax.

Can anyone believe that the LAbor government (Bogan’s Heroes) would really refund costs to a miner that made a loss?