I don’t usually read Craig Emerson’s column in the Australian but Gab prevailed on me to do so.
So he makes several misleading statements but one, in particular, is very naughty.
In removing the carbon price and the mining tax, an Abbott government would also remove the government’s small-business tax breaks and reverse the trebling of the tax-free threshold to $18,200 by taking it back to $6000.
The evil (future) Abbott government will tax poor people! If only they would, but no. The rich – and even not so rich – will continue to bear the tax burden.
ALMOST 13 million Australians file a tax return each year, but only the top fifth of households really contribute to Australia’s vast and complex social-security apparatus.
For the other 80 per cent, the value of cash welfare payments and social security in kind – health, education and housing, for instance – typically exceeds their total tax payments, even incorporating indirect taxes like the GST and tobacco excise.
So what is the story?
It is true, the Gillard government increased the tax-free threshold from $6,000 to $18,200. But that ignores the low income tax offset that used to be quite generous. This has always been the source of confusion. Here is former PM Kevin Rudd getting it wrong.
On the question of the tax system, though, let’s just go to how it’s structured. What we have is what we call a tax-free threshold. I think, from memory, it’s about $12,000 or $15,000. That means for that first $12,000 or $15,000 that you earn you’re not taxed.
At the time the tax-free threshold was $6,000 but as then Finance Minister Lindsay Tanner quickly explained
He told The Australian Online that Mr Rudd was really referring to the Low Income Tax Offset (LITO) which allows people on lower incomes a higher tax-free threshold.
He argued that in the context of the question this was the appropriate benchmark to refer to.
“What it means is that for people on low incomes, the effect of the Low Income Tax Offset is that people on low incomes enjoy a much higher tax-free threshold than people like me on high incomes,” Mr Tanner said.
So the argument that Gillard government have increased the tax-free threshold from $6,000 to $18,200 is technically correct – but practically irrelevant. For low-income individuals what they have done is effectively increase the tax-free threshold from $16,000 to $18,200. Nothing to sneeze at, but not really the generous reform that it is made out to be.
Presumably an incoming Abbott government would restore the LITO to its previous generosity if it lowered the tax-free threshold. At the same time it could reduce the marginal tax rates that some low and middle income earners face – these tax rates were increased by the current government. We discussed this issue at the time.
While I hesitate to say it, perhaps he should stick to singing.
As he did, with monotonous regularity, about pretty much everything.
But hey, let’s bring him back, to ensure a good government gets back on track!*
*Rhyming entirely unintentional.
Rabz
2 Feb 13 at 6:28 pm
They can’t stop lying…
ar
2 Feb 13 at 7:00 pm
Has anyone in the govt been as relentlessly unimpressive relative to original expectations?
We new swan was hopeless, for instance, and roxon was downright crackers, but emmo was seen as one of the bright lights. He’s sure been hiding it under a bushel.
Pedro
2 Feb 13 at 7:19 pm
LOL. You’re joking right?
jupes
2 Feb 13 at 7:24 pm
Unrequited love will do that to you
Rousie
2 Feb 13 at 7:28 pm
Two thousand dollars is a lot to someone too lazy to get a job. It’ll sway a lot of voters who would never have voted conservative anyway, so is utterly ineffectual.
WhaleHunt Fun
2 Feb 13 at 7:45 pm
I vaguely remember thinking that Gillard would be an improvement over Rudd three years ago. What a naive idiot.
entropy
2 Feb 13 at 7:49 pm
ergh. Suppose it is Stalinist. My bad. especially since I am such an admirer of his work
WhaleHunt Fun
2 Feb 13 at 7:53 pm
Under no circumstances ever are the words “too clever” and “Emerson” to be used in the same fucking paragraph ever again.
Never.
Ever.
Mutually exclusive.
Unpossible. (What, me fail English?)
Huckleberry Chunkwot
2 Feb 13 at 8:13 pm
From the ATO:
84.7% of 14.6 million is 12.3662 million. He’s either got access to more up to date stats, or he doesn’t understand how to round.
boy on a bike
2 Feb 13 at 8:33 pm
Another stat from the ATO:
Or to put it another way, 40% of taxpayers forked out 90% of all income tax.
boy on a bike
2 Feb 13 at 8:34 pm
Huckleberry
“Unpossible. (What, me fail English?)”
Never mind, you certainly pass Newspeak.
John A
2 Feb 13 at 9:46 pm
John A , unfortunately I can’t take credit for the word, it is from the mouth of Ralph Wiggum (The Simpsons).
Huckleberry Chunkwot
2 Feb 13 at 9:52 pm
Biggest problem with the tax scale the way they are is the huge jumps between each marginal rate. Would be better with more and smaller steps.
grumpy
2 Feb 13 at 9:53 pm
Grumpy,
why does it need any steps?
Just have a tax free threshold (to avoid non-productive paperwork primarily) and a fixed rate.
duncanm
2 Feb 13 at 9:59 pm
Thank you, Sinclair.
“Several misleading” statements indeed! Emerson’s entire article is misleading if you don’t scratch the surface a little. However he writes in such simple terms that I fear many find him believable.
Gab
3 Feb 13 at 1:33 am
Juxtaposed on the same page of The Weekend Oz:
Emmo
Judith
and
Who to believe? The Legover Man or Judith?
Steve of Ferny Hills
3 Feb 13 at 10:06 am
The other thing to note about Labors tax brackets – they have never adjusted them for inflation, and infact the brackets issued with the carbon tax compensation crap show the same brackets remaining in place through 2017. That going to be a fair bit of bracket creep.
mundi
3 Feb 13 at 4:02 pm