Fairfax ‘forgets’ to declare self-interest

There is a very indignant article in the Fairfax media today. Apparently Google doesn’t pay enough corporate income tax in Australia.

Pensioners, uni students, workers, families; we have all been told the age of entitlement is over. For Google, though, the halcyon days of entitlement remain in full swing.
Not only does Google Australia feel it is entitled to pay virtually no tax in this country, it also feels entitled to avail itself of tax breaks under Australia’s generous research and development incentive scheme.

So majestic is this company’s sense of entitlement that it has no qualms taking intellectual property that has been developed in this country and transferring it to Google entities elsewhere, despite claiming these R&D breaks.

Shocking.

So what does Google do? They sell advertising.

Google Australia is not what it appears to be. The Google that receives money from Australian advertisers – estimated at $2 billion a year – is in fact Google Singapore.

It seems to me that this is Fairfax’s business model too. It has a large on-line presence.

So the headline should read: “Competitor has more effective business model than we do”.

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132 Responses to Fairfax ‘forgets’ to declare self-interest

  1. And if Australia’s tax rates weren’t so internationally uncompetitive, Singapore companies would be basing their businesses in Australia. Duh!

  2. MemoryVault

    I asked this before on an open thread, but got no takers.
    Just why, exactly, do we have company tax at all?

  3. Great idea, MV. Us poor PAYE suckers can just pay it all!

  4. Sinclair Davidson

    Just why, exactly, do we have company tax at all?

    It is a mechanism to tax foreigners.

    Us poor PAYE suckers can just pay it all!

    That is how the dividend imputation system is supposed to work. The only net corporate income tax is due t o “leakages” from dividend imputation. (Albeit those leakages are massive).

  5. Balatro

    I take it that no solution to this problem was offered. Perhaps because the idea of an enterprise in Australia not being what it appears to be is too close the bone for a Fairfax acolyte.
    Fairfax is still claiming to be a publisher of quality journalism.

  6. Tel

    Competitor has more effective business model than we do.

    You mean Singapore has a more effective business environment than Australia does.

  7. stackja

    Maybe Fairfax should open up in Singapore.

  8. Joe Goodacre

    Competitor has more effective business model than we do

    A consultant who predominantly works in Australia providing consulting services from a business registered in a low tax jurisdiction and completes a supplier declaration probably has a more effective business model than the average wage earner in Australia.

    I’m not sure that’s a good way of looking at the issue though because the advantage is artificial and coming from loopholes in the particular tax regime.

    Whether we like it or not we have a welfare state and that needs to be funded. The question then becomes who will fit the bill. Australia produces a certain amount of goods and services. A portion of those goods and services go to fund the welfare state. The current system means that the portion of goods and services that go to Google do not serve that function. I don’t think it’s fair, and neither do I think that Google will withdraw its services from Australia if their cost of doing business here is higher. Why – because they have relatively low variable costs. It seems to me that we haven’t struck as lucrative balance in our favour which means more burden is placed on average wage earners and since we have a deficit, future generations as well.

  9. jupes

    Good to see you here David L.

    Too bad your more interested in this thread than the one you wrote a week ago.

    You bled a lot of votes while Dot and a couple of others tried vainly to defend your poorly thought out policies. Sad really.

  10. Infidel Tiger

    What a fucking surprise. Libertarian Joe comes out in favour of high taxes.

    You are a contrarian troll. Sod off.

  11. Ren Hoek

    I am not in favour of high taxes.

  12. Dan

    Maybe Fairfax should sell to Conrad Black so they can blame evil foreigners when it shuts down

  13. JC

    Badacre,

    You’re now starting to grate on all our nerves as a poor imitation of a Hi Alan. Fuck off.

    ————–

    Does Google actually do business in Australia in the real sense of the word? I don’t think it does.

    If I purchase something online from Amazon, I am most likely doing a deal with an online entity based somewhere in the world, possibly the US. Now amazon say makes a profit on the transaction, which hits the P/L account in the US where it will have to deal with the IRS.

    If Google is set up in a similar way as Amazon or other online providers it has absolutely no tax liability in Australia even if fees for services are transacted in Australian Dollars.

    In other words Fairfax, the ATO and the rest of the taxeaters can fuck right off.

  14. Tel

    The current system means that the portion of goods and services that go to Google do not serve that function. I don’t think it’s fair, and neither do I think that Google will withdraw its services from Australia if their cost of doing business here is higher.

    Are you serious? Imagine a Prime Minister standing up on the ABC and explaining that blocking traffic to every google web page was in Australia’s best interests.

  15. MemoryVault

    blockquote>Great idea, MV. Us poor PAYE suckers can just pay it all!

    No, Whisperer, you miss the point. I’m not suggesting that the profits of companies shouldn’t ultimately be taxed, I’m asking why we do it via company tax, which seems a very complicated, and very expensive exercise.

    A company is legally severely restricted in what it can do with its profits. It can only pay down debt, make allowance for future investment, buy back shares etc. What’s left has to be distributed to shareholders as dividends. Those shareholders in turn are other companies including investment companies, superannuation funds, and ultimately, individual shareholders.

    If the profits end up with another company, then wash, rinse, and repeat. Eventually they must end up with super funds, or individuals, or headed overseas, which I’ll come back to. If we leave them untaxed with super funds, then that’s the end of the so-called “age pension crisis” right there. If they end with an individual, then that is the point where they get taxed as income.

    The only complication comes when those profits are headed overseas, either to other companies, or to individuals. Surely it cannot be too hard to create a “carrot and a stick” tax regime that mildly encourages overseas companies and individuals to re-invest at least some Australian profits back into Australian business, and mildly castigate them if they choose not to?

    I suspect Australian companies collectively spend billions of dollars a year on taxation compliance paperwork. To accomplish what?

  16. Monkey's Uncle

    Great idea, MV. Us poor PAYE suckers can just pay it all!

    The point, bird brain, is that companies cannot distribute profits to individuals without the individual incurring tax. If they pay out the profits as dividends, the shareholders will pay income tax on those dividends. If the profits are retained and reinvested in the company, this should lead to higher capital gains and therefore higher capital gains tax incurred when the shares are sold.

    So it is a legitimate question as to whether company tax is necessary or not.

  17. sabrina

    International corporate tax rates here.
    Rates are one thing, enforcement of laws is another matter.

  18. Joe Goodacre

    Imagine a Prime Minister standing up on the ABC and explaining that blocking traffic to every google web page was in Australia’s best interests.

    Why would that happen?

    The issue is not about Australia blocking access to Google. Google wants that and will deal with the devil to get it (see their incursion into China). The issue is whether Google can collect tax revenue from Australian based businesses. Since the ATO manages to make businesses all around Australia withhold tax for them, the banking system included I don’t imagine that it would be that much of an issue.

  19. Joe Goodacre

    Correction – Google wants to collect advertising, not tax revenue.

  20. Baldrick

    Can’t see why Fairfax is going after Google.

    Fairfax’s biggest opposition/threat comes direct from the ABC, which is given $1.2 billion annually, tax free, by our Government, compliments of taxpayers. I would have thought that would be a bigger story for Fairfax.

  21. Joe Goodacre

    JC,

    No one is talking about dialing back Australian government spending anytime soon.

    Spending has to be paid for either by inflation or taxes.

    If there are some segments of Australia’s industry and output that are not paying a proportionate tax, then unless the spending is dialed back (which it isn’t), the burden is shared amongst a smaller pool resulting in high tax rates for them.

    The question could be put right back at you – why do you want higher tax rates than would otherwise be the case for average wage earners? Whose liberty matters more – google shareholders who are predominantly foreign based or average Australians.

  22. Joe Goodacre

    Agreed Baldrick – the ABC is what is killing Fairfax since there’s only so much leftism that the market can support. I would have thought in order to survive Fairfax would be seeking cost savings coming from the ABC.

  23. jupes

    I would have thought that would be a bigger story for Fairfax.

    They’re hoping that the ABC will employ them when Fairfax bites the dust. Best not to upset them.

  24. Tel

    A company is a construct, like software. Saying “I’m going to tax a company” is equivalent to finding the NOTEPAD.EXE program on you hard drive and saying, “I’m going to tax that!”

    You can use the company as a tax collector, you can tax the owners of the company (those who are human), or you can tax the customers of the company. The company itself does not eat, sleep, consume, nor even does it do work as such, it merely forms a framework for other people to operate under.

    I suspect Australian companies collectively spend billions of dollars a year on taxation compliance paperwork. To accomplish what?

    So they can collect tax on behalf of the Australian government (and hide it a bit so it doesn’t look much like tax). Mostly they collect tax from Australian people, and government transfers the money to different Australian people. In some cases, some of this transfer involves foreigners as well.

  25. stackja

    jupes
    #1340346, posted on June 9, 2014 at 6:42 pm

    I would have thought that would be a bigger story for Fairfax.

    They’re hoping that the ABC will employ them when Fairfax bites the dust. Best not to upset them.

    ABC collective do not want anyone else’s collective.

  26. Baldrick

    ABC collective do not want anyone else’s collective.

    You mean some Leftard’s don’t like other Leftard’s muscling in on their territory.

    Hmmmm reminds me of Fairfax and Google.

  27. Monkey's Uncle

    Whether we like it or not we have a welfare state and that needs to be funded. The question then becomes who will fit the bill. Australia produces a certain amount of goods and services. A portion of those goods and services go to fund the welfare state.

    True. But whenever you have a large government and welfare state, and consequently higher taxes to fund it, there will always be incentives to minimise tax contributions and maximise one’s demands on the system. There is really no sustainable way to fund a large government and welfare state. It always grows beyond the ability or willingness to fund it, sooner or later. The only sustainable solution is to limit the size of government in the first place.

    Secondly, corporations do not derive most of the benefit from government spending on health, education, income transfers, pensions etc. Most of that benefit goes to individuals. So why should corporations pay more of the cost of funding that? If anything, people will be more inclined to vote for more benefits and programs if they think the cost can be passed on to someone else (i.e. very high-income earners or companies).

  28. Tom

    FXJ’s Michael West thinks corporate Australia and corporate multinationals should adopt a morality that supports big government and the payment tax to cocksucking socialists:

    While Google has gone to extreme lengths to concoct an entire global corporate framework specifically designed to avoid (if not evade) tax, other multinationals have gone down the same path, to varying degrees, in recent years in an effort to also reduce what tax lawyers refer to as “leakage” (tax).

    Avoidance is gaining momentum and Western governments are looking hapless in the face of it. If any tax lawyers – or retired tax lawyers with no skin left in the game – would care to contribute to the debate by proffering a view on Google’s R&D claims and the matter of permanent establishment please contact the author of this story.

    Too many years spent working inside the rotting shell of a doomed company, Michael. If you want companies to pay more tax, stand for parliament, you fucking moocher. It is the duty of every corporate executive and director to minimise the tax they’re paying.

    That was almost as comical as this:

    Whether we like it or not we have a welfare state and that needs to be funded.

    You mean like the doubling of the size of the federal government in the past seven years? Fuck off, you tax-thieving communist.

    JC, I think Joe Badacre is actually Stepford’s new gmail identity.

  29. Joe Goodacre

    Agreed Tel, so I’m advocating that foreigners like Google shareholders should be paying more towards the upkeep of the market that they enjoy here. Particularly when we are no where near charging them a price that would discourage them from providing advertising services here.

  30. Joe Goodacre

    The only sustainable solution is to limit the size of government in the first place.

    Agreed – that’s not an option on the table though.

    Secondly, corporations do not derive most of the benefit from government spending on health, education, income transfers, pensions etc. Most of that benefit goes to individuals.

    Corporations are ultimately individuals, in the case of Google foreigners, their Australian employees and the businesses that seek their advertising services.

    Google shareholders will continue offering services in Australia so long as it is profitable. As intellectual property after its development has very low variable costs they will continue offering advertising services in Australia probably with higher than average tax rates.

    Australian employees will continually be provided with wages comparable to other businesses here – Google can only fund the tax increase by decreasing employee benefits to the extent other businesses do.

    Australian businesses have many options that they can advertise with – if Google tries to pass the costs on to them and they don’t want to pay them, they’ll advertise with the likes of Fairfax etc.

    If anything, people will be more inclined to vote for more benefits and programs if they think the cost can be passed on to someone else (i.e. very high-income earners or companies).

    People think that already – in this case they’re mistaken so we’re left a situation where the population thinks a large corporations are paying for benefits, but actually it’s not. This means that someone else (average wage earners) are picking up the tab. Either we get rid of the spending (which doesn’t seem to be happening) or we get the contribution from people who aren’t paying much tax at all.

  31. Token

    You would think FauxFacts would be more concerned about the content harvesting of creators. Instead they waste their time on tax.

    Great aim, wrong goal. Dopes.

  32. Token

    I’m advocating that foreigners like Google shareholders should be paying more towards the upkeep of the market that they enjoy here…

    Economics doesn’t work like that, but we understand the vibe.

  33. .

    Joe Goodacre
    #1340403, posted on June 9, 2014 at 7:19 pm
    The only sustainable solution is to limit the size of government in the first place.

    Agreed – that’s not an option on the table though.

    ??? Yes it can be. all it takes is political will.

    Joe Goodacre
    #1340337, posted on June 9, 2014 at 6:39 pm
    JC,

    No one is talking about dialing back Australian government spending anytime soon.

    Two new Senators will be. Mayor Mead is. Peter Phelps is.

    JC
    #1340274, posted on June 9, 2014 at 6:15 pm
    Badacre,

    You’re now starting to grate on all our nerves as a poor imitation of a Hi Alan. Fuck off.

    Hmm. My initial analysis may have been correct.

  34. Token

    …I’m advocating that foreigners like Google shareholders should be paying more towards the upkeep of the market that they enjoy here

    They have quite a number of Aus based employees paid at Australian rates (i.e. globally high) paying PAYGWT thanks to the shareholders.

    The one’s I know are in the 10% who pay the majority of income tax. Seems the shareholders really are pitching in, in a way tax hoovers like the soon to be departed car companies have not been for years.

  35. Rabz

    Joe Goodacre
    #134033x

    FFS, he’s not at it again, is he?

  36. Notafan

    Do many countries have imputation? I know the US doesn’t. Our company tax rate for domestic shareholders is kind of nominal, isn’t it? It ends up the marginal rate, which might be 0.

  37. Combine_Dave

    No one is talking about dialing back Australian government spending anytime soon

    Then they should be.

    Unless they wish to bring about a decline in our living standards by following the Southern Euorpean debt-fuelled model of Government.

  38. Bruce of Newcastle

    Methinks they doth protest too much. Our ‘local’ paper Fairfax’s Newcastle Herald is entirely produced in New Zealand.

  39. Tom

    …the population thinks a large corporations are paying for benefits, but actually it’s not. This means that someone else (average wage earners) are picking up the tab.

    You fucking moocher. “Average wage earners” in this country pay no net tax.

    No, the rich don’t pay a ‘fair share’ of tax. They pay all of it

  40. Chris

    From what I’ve read what google does to reduce the tax it pays in Australia is not particularly unusual – it’s just the scale of it. I know of IT companies that are based in Ireland even though they don’t actually really do any business there. However I suspect one side effect is that we probably have a lot more software developers employed in Australia on high salaries because they are effectively used as just another way to reduce tax as well as a bit of a carrot to governments not to crack down on the taxation laws.

  41. Joe Goodacre

    Token,

    Economics doesn’t work like that

    In what respect?

    Foreign shareholders of Google would like to profit worlwide by selling advertising services.

    The intellectual property has already been developed. The product is already developed for markets other than Australia. To provide advertising services to Australian businesses adds minimal variable costs.

    Australia is a viable market for those services because of our standards of education, infrastructure, political stability and intellectual property protections. We know that these things can be provided without taxation, however for this market, they have been funded by tax.

    In order to access this market, they can be charged a premium by the people – effectively a discount is being offered to the net recipients of government spending in Australia out of the pockets of google’s shareholders. If the discount (tax) is too high, they won’t provide the services. At the moment, it seems to me that the discount is to low meaning that there is one less contributor to the welfare state we have here than there otherwise would. Since the welfare state is not disappearing anytime soon, I’d like if people who are benefiting from the stability here (of which the welfare state plays a part) offered a discount in the form of greater taxes to contribute to the upkeep of that system.

    Have I gotten the incentives wrong?

  42. brc

    I believe the correct response from Google to Fairfax should be:

    “suffer in yer jocks”

    California certainly gets its pound of flesh in state taxes on income and property from the Googleplex and associated employees. Maybe if Australia developed a competitive tax structure and didn’t periodically elect politicians hostile to capital we could grow our own billion dollar companies. But who am I kidding? If Google was actually here they would have copped an advertising super-profits tax.

  43. Joe Goodacre

    Dotty,

    You know as well as I do that ‘the top fifth of households ranked by their income’ is a fluid group.

    People slip in and slip out. The young are rarely in it, the old are really in it, it’s mostly made up of people at their peak earning stage. They were however one day outside that group and in the future, they will probably be out of that group again. As for the mega wealthy, well they benefit more than most people from private property rights and the rule of law. How many of us clog up the courts sytem like Packer and Murdoch with their One.Tel claims? So yes, some people at some stages of their life pay lots into the tax system. Other times they don’t. That’s not news.

  44. Joe Goodacre

    Sorry Dot, meant Tom – the above comment was a response to his claims that the rich pay all the tax.

    Tom – socialists use similar groupings to complain about income inequality.

    The same deficiency in the socialists argument is in yours – the groups are not individuals, they’re brackets and different households slip in and out of those groups depending on what stage of life they’re in.

  45. Joe Goodacre

    Dotty,

    Yes it can be. all it takes is political will.

    Building political will takes building consensus unless you plan to enact a dictatorship. I don’t see a lot of consensus building talk, nor revolutionary talk so it’s a pretty safe bet that things aren’t changing for the next 5 years at least.

  46. Monkey's Uncle

    Since the welfare state is not disappearing anytime soon, I’d like if people who are benefiting from the stability here (of which the welfare state plays a part)

    Oh I see. So now the welfare state is not merely a fact of life that is politically impossible to wind back, as you seemed to indicate previously. Now it is apparently also a force for good, i.e. social stability.

    You do seem to be a statist troll trying to dress your arguments up to be slightly more libertarian friendly. You are not doing a very good job of it.

  47. .

    Building political will takes building consensus unless you plan to enact a dictatorship.

    So you need a unanimous vote in Parliament or libertarians are actually totalitarians, therefore, we need to support the highest tax rates possible?

    This is completely fucking ridiculous.

    Piss off, you pathetic, low rent, shit stirring Z grade pro Gillard concern troll.

  48. Joe Goodacre

    Dotty,

    Are you arguing that ‘households’ are a fixed groups with the same people and the same income distribution each year?

  49. Monkey's Uncle

    Building political will takes building consensus unless you plan to enact a dictatorship.

    Fuck me, now you are just being a dickhead. “Consensus” implies no opposition whatsoever, rather than merely enough support to get the numbers for some change in the political process.

    If it took “consensus” to take away any benefit that anyone enjoyed from government, or to reduce the power of any vested interest, nothing would ever change.

  50. .

    Joe Goodacre are you, or have you ever been, or do you know of anyone who has ever joined the ALP, Greens or other left wing political parties (SA, NDP, AD), left wing grassroots organisations or union movements or have do you otherwise or have you ever or do you know of anyone who has ever donated to the ALP, Greens or other left wing political parties (SA, NDP, AD), left wing grassroots organisations or union movements or have you ever been paid to work for or volunteered for these groups in any way?

  51. .

    Furthermore do you currently support or did you in the last election vote for, or have you ever voted for the ALP, Greens or any other left wing political party (for example, SA, NDP, AD)?

  52. Monkey's Uncle

    Dot is right. This Joe is clearly a concern troll and a pretty shithouse one at that.

    Go crawl back to the shitter you came from feller

  53. .

    Joe Goodacre
    #1340753, posted on June 9, 2014 at 9:52 pm
    Dotty,

    Are you arguing that ‘households’ are a fixed groups with the same people and the same income distribution each year?

    Z grade far left wing moronic troll: From year to year, they vary very little. Even in intercensal periods they don’t vary much. Even over 3-4 intercensal periods they may not vary much.

    Chump.

  54. Joe Goodacre

    Correction – consensus was the wrong term. I mean a bare majority – at least more people than not agreeing with the change.

    With the Liberals at low poll numbers with a relatively soft budget that still increases spending in absolute terms, I don’t think there’s much chance for a bare majority to be reached to change these things. Not demonstrated by some commentators on this blog anyway.

  55. Monkey's Uncle

    Nice try Joe, but there is no point backtracking now. You have left too many clues that you are a vacuous concern troll.

  56. .

    “Oh shit, I’ve been caught out, I meant something completely different.”

    Funny, coming from a condescending prick like Joe Goodacre.

    A simple majority after an election win is impossible, and actually changing policy to lower taxes and less spending is totalitarian?

    Joe Goodacre is a few brain cells short of a retired punch drunk streetfighter.

    Continuing lame attempts to dishonestly politically active libertarians as oppressive and anti freedom.

    No one is fooled here.

    At all.

  57. Joe Goodacre

    From year to year, they vary very little. Even in intercensal periods they don’t vary much. Even over 3-4 intercensal periods they may not vary much.

    Most people live longer than year to year and 3-4 intercensal periods.

    You’re saying that the household incomes distribution and tax paying distribution doesn’t change much.

    This doesn’t accord with common sense.

    When people are young they are a non-income or tax contributing member of a household.

    When they leave home and start a new household with another professional, they fall into the top income producing households.

    When they have children and the wife stops working, they may stay in the top bracket if the father has a good job. If he doesn’t they may fall out of it.

    When both parents retire their income drops and they are not in the top fifith of households as measured by income.

    So this same person may be a moocher according to you and a contributor depending on when the snapshot of their life was taken.

    All these numbers on households indicate is that when people earn the most income in their life, they generally pay the larger share of tax.

  58. Joe Goodacre

    So I used consensus flippantly when I should have said political consensus (implying a bare majority). Oh the horror.

  59. Monkey's Uncle

    Since when does “political consensus” imply a “bare majority”. Political consensus would imply that all significant factions and parties support a policy position.

    Fuck off you boring troll.

  60. Token

    If the discount (tax) is too high, they won’t provide the services. At the moment, it seems to me that the discount is to low meaning that there is one less contributor to the welfare state we have here than there otherwise would.

    Great speech. You are supposed to each such statement s with ceteris parabis.

    Makes as much sense as the theories on unionism & organised labour as developed post WW2 to today.

    We have borders and live in a multilateral world. Not every citizen who pays PAYGWT was educated in AUS. So many global assumptions which shatter your model designed for a single nation.

  61. Roger

    “Competitor has more effective business model than we do”.
    Given that there are different taxation jurisdictions involved, this is an over-simplification.
    For an economics lecturer, you’re not a very subtle thinker, Sinc.

  62. iainnahearadh

    Joe Goodacre,
     
    You miss the point, by a mile.
     
    It’s my money. I am the guy who chooses to invest it or not.
    I won’t even get out of bed if I see a rent seeker like you in the queue.
    I don’t see any reason to hand over my money to the tax man under any circumstance, short of duress and force.
     
    Again, it’s not their money. It’s mine.
    Given the choice, I am just as happy to piss off to Singapore and earn and spend my money, there.
     
    Socialist crap and welfare states aren’t a solution to anything and should be abolished.
    Prior to Whitlam, in this Country, things actually worked, like morals, capital and common-sense.
     
    Only when you get a welfare handout mentality as considered normal, do you get a need to rape my pocket for your own personal largess.
     
    Did you ever stop to think that there are some people who might just get pissed off with your crap and want to protect their income from your State sanctioned theft?
     
    IDIOT

  63. frederic

    That is how the dividend imputation system is supposed to work. The only net corporate income tax is due t o “leakages” from dividend imputation.

    Que?

  64. JohnA

    Joe Goodacre #1340674, posted on June 9, 2014 at 9:39 pm

    Dotty,

    You know as well as I do that ‘the top fifth of households ranked by their income’ is a fluid group.

    People slip in and slip out. The young are rarely in it, the old are really in it, it’s mostly made up of people at their peak earning stage. They were however one day outside that group and in the future, they will probably be out of that group again. As for the mega wealthy, well they benefit more than most people from private property rights and the rule of law. How many of us clog up the courts sytem like Packer and Murdoch with their One.Tel claims? So yes, some people at some stages of their life pay lots into the tax system. Other times they don’t. That’s not news.

    However, the debate is framed in those broad terms and the emotive arguments employed remain, so I believe the rebuttal is valid, within that context.

  65. Fairfax Journalists and others can see if Fairfax are holding themselves to the same standard they expect of others. After all, despite their recent financial travails they are a multinational; they publish the Dominion Post, Press and Sunday Star Times newspapers.

    Apparently, Fairfax New Zealand paid no company tax last year.

    hth

  66. No, Whisperer, you miss the point. I’m not suggesting that the profits of companies shouldn’t ultimately be taxed, I’m asking why we do it via company tax, which seems a very complicated, and very expensive exercise.

    I get what you’re saying, MV, it’s just that if you consider taxation to be theft, then company tax is no more theft that personal income tax. Company tax reduces reinvestment, paying down debt and dividends, the same as personal income tax reduces consumption, paying down debt and investment.

    It seems intuitive to only charge companies tax on profits, but in effect punishes success and not failure. This reduces the effect of good investment while not doing the same for poor investments. This must distort investment, and eliminating company tax would only increase that distortion.

    Companies exist to enable capitalization, thus they are an investment vehicle, not a tax minimization one.

  67. That is how the dividend imputation system is supposed to work. The only net corporate income tax is due t o “leakages” from dividend imputation.

    Que?

    What Sinclair is saying is that it effectively shifts the company tax onto investors through their dividends, paid with the tax already paid. This of course doesn’t include re-investment, which is of course essential just for a company to remain competitive.

    Of course, I could be wrong. Sinc?

  68. Joe Goodacre

    iainnahearadh,

    I used to sound like you verbatim so it’s not as if what you’re saying is foreign.

    No one is forcing you to earn what you do, invest what you do or live in this country.

    That is the undeniable truth.

    You choose to live here and work here. Taxes are a cost of the opportunities available here.

    The welfare state is crap and should be abolished – but this entitlement mentality you have that people owe you the cost free protection of your property and liberty is just another form of the entitlement mentality that we witness in the welfare state. Just like the Right don’t like an entitlement mentality for people on welfare, the Left don’t like the entitlement mentality of people who think they have a God given right to make others protect their liberty and property for nothing.

  69. Token

    Interesting to note that The Australian picked up on the organisations which produce no content and market other organisations material.

    As noted above, it would’ve been more productive for FauxFacts to focus on that gaping wound which is stripping its shareholders of value.

  70. Aristogeiton

    Whether or not individuals are mobile between quintiles is besides the point. The point is that at any given time, the median member of 80% of the income distribution spread pays no net tax.

    Also, this proposed double taxation would be a boon for economic relations with our neighbours:

    Treasury – Income Tax Treaties.

    I’m certainly no expert on economics (unlike Joe ‘Slave’ Bloviacre, who is an expert on everything), but even I can see the massive problems with what you propose and the massive leaps of logic required to get there.

  71. Aristogeiton

    Joe Goodacre
    #1342833, posted on June 11, 2014 at 10:26 am
    [...]
    Just like the Right don’t like an entitlement mentality for people on welfare, the Left don’t like the entitlement mentality of people who think they have a God given right to make others protect their liberty and property for nothing.

    Yes, all those ‘right-wing’ libertarians. LOL!

  72. Aristogeiton

    Also, the idea of the ‘left’ protecting me from anything but my own freedom to choose is laughable.

  73. Joe Goodacre

    Except the median member doesn’t stay constant – we have been and will one day again be a median tax payer that pays no tax.

    To make the point that the tax burden is unfair on anyone individual, we need to compare the total taxes and the total benefits received over a person’s life. The same individual, not a bracket they maybe in today but not in, in ten years time.

  74. .

    You choose to live here and work here.

    Bullshit! I chose to be born here? Who am I, Jesus Christ?

  75. Aristogeiton

    Joe Goodacre
    #1342860, posted on June 11, 2014 at 10:55 am
    Except the median member doesn’t stay constant – we have been and will one day again be a median tax payer that pays no tax.

    To make the point that the tax burden is unfair on anyone individual, we need to compare the total taxes and the total benefits received over a person’s life. The same individual, not a bracket they maybe in today but not in, in ten years time.

    But the numbers show rising progressivity. This is dribbling sophistry.

  76. Joe Goodacre

    Dotty,

    Perhaps one of the stupidest comments you make is when you complain about being born in Australia.

    As Buffet says, if anyone of us was given the choice of putting our marble back into a bag and being able to choose from one hundred marbles for the chance of being born somewhere better, none of us would do it. Being born in Australia is at the pointy end of the 1% in the world.

    Complaining about it, like you’re somehow stuck living here and have no choice in the matter is pretty lame.

  77. Aristogeiton

    Joe Goodacre
    #1342875, posted on June 11, 2014 at 11:03 am
    Dotty,

    Perhaps one of the stupidest comments you make is when you complain about being born in Australia.

    As Buffet says, if anyone of us was given the choice of putting our marble back into a bag and being able to choose from one hundred marbles for the chance of being born somewhere better, none of us would do it. Being born in Australia is at the pointy end of the 1% in the world.

    Complaining about it, like you’re somehow stuck living here and have no choice in the matter is pretty lame.

    Lol. NO CHANGE! WE ARE IN A PANGLOSSIAN WONDERLAND!

  78. .

    I didn’t complain you idiot, you falsely presented the idea I chose to come here.

    Stop lying FFS.

  79. Joe Goodacre

    You choose to stay here. The point remains unchanged.

    Tomato Tomato.

  80. Aristogeiton

    .
    #1342881, posted on June 11, 2014 at 11:05 am
    I didn’t complain you idiot, you falsely presented the idea I chose to come here.

    Stop lying FFS.

    He can’t. He’s a dedicated ignoramus. He learns nothing. He’s too smart for all those ‘leather bound books’ with the old ideas of dead men (except for Hobbes; he might have once read a Wikipedia page on Leviathan). He prefers to blaze his own path of ignorance and stupidity while gorging himself on your income tax.

  81. .

    No Goodacre, I want change towards smaller government, lower taxes and renewal of hard won civil liberties. Which you then describe as – promoting change the direct opposite way.

    You’re a transparent, obvious left wing concern troll.

  82. Joe Goodacre

    Ari,

    You can’t conclude what you want to conclude from the numbers.

    It’s that simple and Creighton is talking out of his ass when he says the following…

    But the overwhelming bulk of people in Australia pay no net tax at all. High-income earners have become a giant pinata that the majority hit for extra money to pay for whatever new social spending programs the political class proposes to stay in office.

    Why – because the information he’s using to draw that conclusion doesn’t provide any light on that conclusion.

    What evidence does he use:

    Only the top fifth of households ranked by their income – those with incomes of more than $200,000 a year in the financial year ending June 2012 – pay anything into the system net of the value of social security in cash and kind received, according to data from the latest Australian Bureau of Statistics survey of household income.

    The top fifth of households is a statistical bracket. It doesn’t say anything about what’s going on with individual taxpayers inside.

    A person who sold their investment property in one year and recognised a large capital gain may for that year be included in the top fifth of households, yet one year later when they don’t have another property to sell, may have dropped out of that bracket. A retired couple who own their own home in Mosman who had a lean year in the GFC because their shares didn’t pay dividends may not be in the top fifth of households measured by income, yet they could be quite wealthy. Next year they sell a couple of shares and enter that top fifth bracket.

    It is pointless drawing any conclusions from changes in these statistical brackets about the tax burden on individuals. The data doesn’t shed any light on that question.

    The distribution of personal income tax – the federal government’s biggest source of revenue, raising about 45 per cent of the total ($165 billion this year) – is far more progressive than headline marginal tax rates suggest. Including the 1.5 per cent Medicare levy, Australia’s income tax rates range from 19 per cent for every dollar of income above $18,200 to 46.5 per cent for every dollar above $180,000. Most taxpayers face a 34.5 per cent marginal rate.

    Yes we know that we have proportional taxation – what this doesn’t show is that people don’t have consistent incomes from year to year. They can change. Sometimes people enter into a high tax bracket (realise capital gains), sometimes they don’t (have a child or lose a job). We can’t draw any conclusions again on the total tax burden and total tax benefits on particular individuals from this.

    But average income tax rates on households’ privately generated income (ordinarily wages and salaries, but dividends and rental income too) ranged from 1.5 per cent for the bottom fifth of households in 2012 to 22 per cent for the top fifth.

    This is saying what we already know. If a household does enter the top fifth as measured by income, they are going to pay more tax. Again it doesn’t shed any light on whether we’re talking about the same households year to year.

    The 1.73 million households in the middle quintile paid an average tax rate of 12.3 per cent on average incomes of $88,900. But the ABS survey estimates these households received $31 a week in Age Pension payments, $13 in disability payments, $48 in child-related payments and $12 in unemployment benefits, along with a host of others that whittle their average net tax payments down to $84 a week.

    Again a statistical bracket and a survey inferring theoretical benefits received. Square peg round hole.

    Notwithstanding the enormous variation in the circumstances of individuals and households within each of these five buckets – for instance, childless, healthy workers will pay in much more than unemployed families with sick children – the disparities are as remarkable as they are little-known.

    There he drops the massive caveat and then ignores it – ‘notwithstanding the enormous variation in the circumstances… within each of these five brackets’.

    Then he neglects to measure the other massive caveat – year on year different households may be in different brackets.

    Separate data from the Australian Taxation Office confirm rising progressivity. Based on income tax returns from the 2010-11 financial year, the top 1 per cent of individual income earners – who in the 2010-11 tax year were those with taxable incomes of more than $281,800 a year – paid $23.55bn or 17.7 per cent of the total income tax haul, up from 17 per cent in 2009-10.

    This is ridiculously simplistic.

    If every taxpayer in the top bracket went bankrupt in 2009-2010 and they were replaced by a whole new cohort of people who made more money in 2010-2011, Creigthon’s data would stay unchanged.

    What’s going on – Creighton, Ari and Dotty have a preconception of what’s going on and will use whatever statistics they want to try and bamboozle anyone silly enough to take their word for it as opposed to think about it themselves.

    Do people who earn more income pay more tax? Yes. Does this mean the tax burden is unfair on anyone one person and they pay much more than they receive – it depends – show us the individual where over their life those circumstances are shown, not statistical brackets.

  83. .

    Don’t you ever accuse me of fraudulently using statistics you halfwit.

    Do people who earn more income pay more tax? Yes. Does this mean the tax burden is unfair on anyone one person and they pay much more than they receive – it depends – show us the individual where over their life those circumstances are shown, not statistical brackets.

    THIS is dishonest. You are implying that everyone moves to the top bracket over their life cycle.

    What a complete crock of shit.

  84. .

    PS

    Learn the difference between data and statistics, FFS.

  85. .

    If every taxpayer in the top bracket went bankrupt in 2009-2010 and they were replaced by a whole new cohort of people who made more money in 2010-2011, Creigthon’s data would stay unchanged.

    This is bullshit.

    If!

    …plus a whole heap other “assume a can opener” nonsense.

    What a dishonest fucking shill you are.

    You’re a disgrace, Goodacre.

  86. Token

    THIS is dishonest. You are implying that everyone moves to the top bracket over their life cycle.

    What a complete crock of shit.

    Des-per-ate

  87. Aristogeiton

    TLDR. Ergas has run the numbers as well, and comes to the same conclusion. I’ll take the opinion of two qualified economists over the guy who has a dual degree in Accounting and Law and thinks that defamation law is about protecting ‘hurt feelings’, and that the executive branch controls the judiciary.

  88. Joe Goodacre

    What can we conclude from these numbers?

    1) When the performance of our economy is improving, year on year the top brackets will earn more money and pay more tax than prior years (though these individuals may be different).

    2) When do we contribute the largest share to Australia’s tax system? When we earn the most income. We will not always earn high amounts of income over our life and the data shows that when we are young or we retire, the tax burden substantially falls.

  89. Joe Goodacre

    Dotty, I haven’t implied any such thing.

    There will probably be people who don’t reach the top income bracket in their life.

    What’s your point?

  90. Aristogeiton

    Aristogeiton
    #1342868, posted on June 11, 2014 at 11:01 am
    [...]
    But the numbers show rising progressivity. This is dribbling sophistry.

  91. Joe Goodacre

    Ari, If Ergas was crunching the same numbers and reaching the same conclusion he probably has a similar bias.

    He’s also the the fellow who manipulated the numbers to prove that Howard was a lower spending PM than others and did so by leaving out the years when Howard was higher and the others lower.

    Believing has nothing to do with it. I have no doubt you have the faith – whether that means you’re correct or not is another story.

  92. Aristogeiton

    You should have stuck to bullshitting about the law. While there are relatively few lawyers here, this is an economics blog, and is full of economists. You have no chance of bullshitting about economics here.

  93. Joe Goodacre

    Yes we know you like playing the man not the ball.

    How about you actually outline how those numbers show an increased burden on an individual taxpayer?

    I’m happen to be proven wrong and have picked up a lot from people here – you’re just particularly crap at it.

  94. Aristogeiton

    Joe Goodacre
    #1342936, posted on June 11, 2014 at 11:44 am
    [...]
    He’s also the the fellow who manipulated the numbers to prove that Howard was a lower spending PM than others and did so by leaving out the years when Howard was higher and the others lower.

    No he criticised reportage of an IMF working paper for concentrating only on the years where spending under Howard was the highest.

    http://www.theaustralian.com.au/opinion/columnists/deceptive-attack-on-howards-record/story-fn7078da-1226553110377#

    Your mask has slipped, ‘Libertarian’ Joe Bloviacre. You really are a left-wing concern troll.

  95. Joe Goodacre

    I’m referring to the following – his article in December of last year.

    http://catallaxyfiles.com/2013/12/30/fiscal-facts-sure-to-make-a-prestidigitator-proud/

    So you’ve got nothing useful to contribute – jeez you take a lot of words to bluster about everything other than the facts under discussion.

    I’m off – but let us know when you get around to explaining how statistical brackets tell the story for individuals.

  96. Aristogeiton

    Joe Goodacre
    #1342944, posted on June 11, 2014 at 11:50 am
    Yes we know you like playing the man not the ball.

    How about you actually outline how those numbers show an increased burden on an individual taxpayer?

    I’m no expert on matters of economics. I happen to know firsthand, however, that on matters I do know something about, you are a know-nothing bullshitter who has received a very poor education. So I weigh your opinion accordingly.

    I’m happen to be proven wrong and have picked up a lot from people here – you’re just particularly crap at it.

    Bullshit. When you are proven wrong you either:

    1) deny that it is the case; or
    2) very rarely, reluctantly concede the point de minimis but insist ‘my analysis remains valid’, even when it rests on the very same point.

    You have fought me tooth and nail over issues relating to the law, and yet when shown chapter and verse how and why you are wrong you continue to make your false assertions. You are a shameless liar; an arrogant who considers himself to be a mighty intellect despite a complete lack of knowledge and rational faculty.

  97. Aristogeiton

    Joe Goodacre
    #1342952, posted on June 11, 2014 at 11:57 am
    I’m referring to the following – his article in December of last year.

    http://catallaxyfiles.com/2013/12/30/fiscal-facts-sure-to-make-a-prestidigitator-proud/

    So you’ve got nothing useful to contribute – jeez you take a lot of words to bluster about everything other than the facts under discussion.

    I’m off – but let us know when you get around to explaining how statistical brackets tell the story for individuals.

    From the actual article:

    Pity there is a problem: Gittins has deleted from his analysis the Howard government years of spending restraint. Had he included those years, and gotten his sums right, the growth rate of spending under Howard would have been 3.3 per cent, compared with the RugRats’ 3.6 per cent.

    Moreover, measured in accrual terms (i.e. taking at least partial account of future liabilities), the gap would have been even greater, with annual spending growth under Labor exceeding that under Howard by about 0.4 per cent.

    You’re confusing Gittins with Ergas. You dumb shit.

  98. Joe Goodacre

    Read the comments on the Ergas article on the Catallaxy Files thread – it’s covered in detail there.

  99. Aristogeiton

    Joe Goodacre
    #1342960, posted on June 11, 2014 at 12:06 pm
    Read the comments on the Ergas article on the Catallaxy Files thread – it’s covered in detail there.

    Right. Where you said so, and the only person who agreed was m0nty, who has been banned for trolling:

    m0nty
    #1128266, posted on December 30, 2013 at 6:13 pm
    [...]
    Well said, Joe G. Refreshing to see someone with full command of the facts set it all out like that on this site.

  100. .

    Wow, just wow.

    monty who said the NBN was worthwhile and the highest income tax rate should cut in at 60k.

  101. Token

    Who else was in the habit of calling you Dotty?

  102. Aristogeiton

    Token
    #1342991, posted on June 11, 2014 at 12:40 pm
    Who else was in the habit of calling you Dotty?

    It’s just Joe, because he’s an insolent fuck.

  103. Aristogeiton

    I’ve seen it used by Philippa and other female members here as a term of endearment on rare occasion.

  104. Joe Goodacre

    Actually I use it as a term of endearment too.

    I don’t mind Dotty.

    He may have been quick on the projection and the insult but he didn’t go around googling my employer and threatening to reveal activities on the Cat either.

  105. Aristogeiton

    Joe Goodacre
    #1343009, posted on June 11, 2014 at 12:59 pm
    [...]
    [T]hreatening to reveal activities on the Cat either.

    Quote where I made such a threat or stop lying about it.

  106. .

    Projection!

    Projecting projection!

    FFS

    Utterly pathetic.

  107. Joe Goodacre

    You’re real clever – you don’t actually say things like I’m going to make trouble for you. You just say things like…

    Aristogeiton
    #1338736, posted on June 8, 2014 at 8:43 pm

    Hey, dickwit, are you the same Joe Goodacre who is currently:

    delivering projects on time

    http://www.wem.com.au/index.php/overview/people/103-joe-goodacre

    and…

    Aristogeiton
    #1338861, posted on June 8, 2014 at 9:48 pm

    So you have no objection to your employer being public knowledge then?

  108. Aristogeiton

    Joe Goodacre
    #1343018, posted on June 11, 2014 at 1:06 pm
    You’re real clever – you don’t actually say things like I’m going to make trouble for you. You just say things like…

    You’re ‘real clever’, making up things I actually didn’t say. Remember that you are the one who said:

    Joe Goodacre
    #1231504, posted on March 19, 2014 at 6:05 pm
    [...]
    The difference between us is that my real name is associated with my personality and opinions – warts and all.

    The idea that I would call your employer to complain about you commenting here is ridiculous; like I could give a fuck. They are free to choose to employ a bloviating know-nothing like you. Your reaction does put paid to your assertion that you are proud of what you write here and that all anonymous posters are scumbags, however.

  109. Joe Goodacre

    I was surprised as well that anyone would threaten that. It reminded me of a Godfather scene – ‘nice little job you have there. Shame if anything happened to it.’

    Like I said – I don’t mind putting my name to my comments. We know you don’t because well, you don’t.

    Tell whomever you want.

    As an example some other people use their names on here. I could google them and let their employees know what their opinions are. Even if they said they didn’t care – just to create a brief bit of trouble for them. The point is to what scumbag would that option even cross their mind

    It’s the lameness of the threat and the cavernous echo where your integrity should be that I think should be mocked. Particularly when you’re pro liberty for the good of humanity etc etc and not at all because you’re a prick who thinks the world owes him their protection of your life and property for nothing.

    .

  110. Aristogeiton

    Joe Goodacre
    #1343042, posted on June 11, 2014 at 1:26 pm
    I was surprised as well that anyone would threaten that. It reminded me of a Godfather scene – ‘nice little job you have there. Shame if anything happened to it.’

    But nobody threatened it, you inveterate liar.

  111. Aristogeiton

    Joe Goodacre
    #1343042, posted on June 11, 2014 at 1:26 pm
    [...]
    The point is to what scumbag would that option even cross their mind

    You, it seems.

  112. Aristogeiton

    Anyhow, this is a nice way of getting around the fact that you lied about Henry Ergas upthread, and consider m0nty (and yourself, of course) to be more qualified economists than he.

  113. Joe Goodacre

    Of course you didn’t threaten it. Why would anyone get that impression. You did just mean it was a nice little job, and (good naturedly) that it would be a shame if anything happened to it (how considerate of you). People project so much on to you. How unfair.

  114. Aristogeiton

    Joe Goodacre
    #1343063, posted on June 11, 2014 at 1:40 pm
    Of course you didn’t threaten it. Why would anyone get that impression. You did just mean it was a nice little job, and (good naturedly) that it would be a shame if anything happened to it (how considerate of you). People project so much on to you. How unfair.

    Well, it just demonstrates the misery of your character that you would think that.

    In fact, you had earlier said:

    Joe Goodacre
    #1231504, posted on March 19, 2014 at 6:05 pm
    [...]
    The difference between us is that my real name is associated with my personality and opinions – warts and all.

    Then, in response to questions about your identity:

    Joe Goodacre
    #1338822, posted on June 8, 2014 at 9:26 pm
    What a surprise – instead of researching an answer, you research me.

    Will you put your own name to your comments?

    Joe Goodacre
    #1338856, posted on June 8, 2014 at 9:46 pm
    [...]
    I haven’t said anything discourteous to anyone who hasn’t abused me first [which is false] which explains why most of my conversations on here are courteous with the exception of a few – you included.

    To which my response was:

    Aristogeiton
    #1338861, posted on June 8, 2014 at 9:48 pm
    Oh, so you’re a discourteous prick, but that’s ok because you’re using your real name? So you have no objection to your employer being public knowledge then?

    Since you’ve reposted the link since, I suppose that the answer is ‘No’.

  115. Aristogeiton

    Anyhow, please explain how Ergas is wrong and you and m0nty are world-beating economists.

  116. Joe Goodacre

    From memory my comments on Ergas’ December article were ray it was misleading. You have the link – there’s more detailed references to the budget appendices which explain why. So far your response is ‘Monty agreed therefore it must be wrong’. I have no idea who Monty is and don’t care – what about the analysis is wrong.

  117. Aristogeiton

    Joe Goodacre
    #1343096, posted on June 11, 2014 at 2:10 pm
    From memory my comments on Ergas’ December article were ray it was misleading. You have the link – there’s more detailed references to the budget appendices which explain why. So far your response is ‘Monty agreed therefore it must be wrong’. I have no idea who Monty is and don’t care – what about the analysis is wrong.

    In fact what you actually said was:

    Joe Goodacre
    #1342936, posted on June 11, 2014 at 11:44 am
    [...]
    [Ergas was] the fellow who manipulated the numbers to prove that Howard was a lower spending PM than others and did so by leaving out the years when Howard was higher and the others lower.

    When pushed as to what you meant, you stated:

    Joe Goodacre
    #1342960, posted on June 11, 2014 at 12:06 pm
    Read the comments on the Ergas article on the Catallaxy Files thread – it’s covered in detail there.

    Is said thread, only you monty advance this interpretation.

    Since this is in the broader context of you criticising Ergas’ objectivity and qualifications as an economist, please explain how Ergas is wrong and you and m0nty are world-beating economists.

  118. Aristogeiton

    In fact, in the thread you linked to, you say:

    Joe Goodacre
    #1128756, posted on December 31, 2013 at 12:51 am
    Thanks for the source to the latest figures David.

    Agreed wholeheartedly – Labor are undoubtedly less fiscally responsible.

  119. Joe Goodacre

    You’re comparing apples and oranges.

    You’re taking a quotation about spending and equating it with a quotation about being fiscally responsible. They are not one and the same.

    You can increase spending more than someone else while still spending less than the receipts you take in (fiscally responsible). Spending less, but spending what you don’t have would be fiscally irresponsible. Labor have done a lot of that. Spending more what Labor did in absolute and real terms and increasing spending proportionately more (which Howard clearly did after Hawke and Keating) was a fact glossed over by Ergas and didn’t support his argument.

  120. Joe Goodacre

    If you’re lazy you’ll keep badgering the same point… ‘Ergas is right, you’re not an economist’.

    If you actually care about the answer you’ll check the budget appendices yourself which was Ergas’ source data and do you own comparison of the % and absolute increases in expenditure between the Hawke/Keating and the Howard years.

    You’ll then note that the years he highlighted in the main picture of the article excluded the worst years of Howard and the best years of Hawke Keating. I’m not claiming to be an economist – I’ve just checked myself the claims that both Gittens and Ergas make from the same data and think that Ergas has glossed over some numbers that don’t suit the narrative that Labor always spends more.

  121. Aristogeiton

    Joe Goodacre
    #1343140, posted on June 11, 2014 at 2:48 pm
    You’re comparing apples and oranges.

    You’re taking a quotation about spending and equating it with a quotation about being fiscally responsible. They are not one and the same.

    You can increase spending more than someone else while still spending less than the receipts you take in (fiscally responsible). Spending less, but spending what you don’t have would be fiscally irresponsible. Labor have done a lot of that. Spending more what Labor did in absolute and real terms and increasing spending proportionately more (which Howard clearly did after Hawke and Keating) was a fact glossed over by Ergas and didn’t support his argument.

    What you said was that Ergas:

    [manipulated] the numbers to prove that Howard was a lower spending PM than others and did so by leaving out the years when Howard was higher and the others lower.

    What Ergas said was:

    Pity there is a problem: Gittins has deleted from his analysis the Howard government years of spending restraint. Had he included those years, and gotten his sums right, the growth rate of spending under Howard would have been 3.3 per cent, compared with the RugRats’ 3.6 per cent.

    Moreover, measured in accrual terms (i.e. taking at least partial account of future liabilities), the gap would have been even greater, with annual spending growth under Labor exceeding that under Howard by about 0.4 per cent.

    And the gap would be larger again if one added the commitments Labor made under the disability, Gonski and hospital funding agreements, as well as the contractual obligations for the NBN, taking the difference in accrual terms to well over 1 per cent a year.

    The chart, to which m0nty referred, was titled ‘Flying start: Labor vs Coalition’, and the second column is headed ’1st three Budgets’. Can you read?

    So where are the numbers ‘manipulated’, you economic genius?

  122. Aristogeiton

    Let’s chart the change in your rhetoric:

    Aristogeiton
    #1342927, posted on June 11, 2014 at 11:38 am
    [...]
    Ergas has run the numbers [on holistic average tax rates] as well, and comes to the same conclusion. I’ll take the opinion of two qualified economists over the guy who has a dual degree in Accounting and Law and thinks that defamation law is about protecting ‘hurt feelings’, and that the executive branch controls the judiciary

    Joe Goodacre
    #1342936, posted on June 11, 2014 at 11:44 am
    Ari, If Ergas was crunching the same numbers and reaching the same conclusion he probably has a similar bias.

    He’s also the the fellow who manipulated the numbers to prove that Howard was a lower spending PM than others and did so by leaving out the years when Howard was higher and the others lower.

    Now:

    Joe Goodacre
    #1343150, posted on June 11, 2014 at 2:56 pm
    [...]
    I’m not claiming to be an economist

    Joe Goodacre
    #1343150, posted on June 11, 2014 at 2:56 pm
    [I] think that Ergas has glossed over some numbers that don’t suit the narrative that Labor always spends more.

    So accusations of a ‘manipulation’ to smear Ergas and Creighton and bolster your own credibility in economic matters, becomes an admission that the ‘manipulation’ was merely a ‘glossing over’ (in your view as a non-economist).

    You are an inveterate liar.

  123. Joe Goodacre

    I agree with that part of the article – your point?

  124. Aristogeiton

    Joe Goodacre
    #1343232, posted on June 11, 2014 at 3:51 pm
    I agree with that part of the article – your point?

    Where is:

    [Ergas' manipulation of] the numbers to prove that Howard was a lower spending PM than others and did so by leaving out the years when Howard was higher and the others lower[?]

    Or is it now just a ‘glossing over’? I can’t keep track of your ever-changing lies.

  125. Joe Goodacre

    The article we’re discussing is Fiscal ‘facts’ sure to make a prestidigitator proud dated the 30th of December 2013.

    You have focused on the following quotations of mine regarding this article:

    Ergas’ manipulation of the numbers to prove that Howard was a lower spending PM than others and did so by leaving out the years when Howard was higher and the others lower

    The article starts with an image, showing the first three budgets of the last 6 governments.

    Hawke is listed second. Keating fourth. Howard fifth.

    Ergas accuses Gittens of the following – Gittins is a practitioner of the Sweeney Todd school of statistics: the bits he doesn’t like, he chops off.

    He then correctly notes that Gittens has left out some years of Howard restraint and corrects his figures.

    Ergas then states that (by Gittens)… denigrating the Howard government, that gambit seeks to exculpate Rudd and Gillard; and in the process it helps hide the flaws that have scarred Labor’s economic policy from Whitlam to the present day.

    This clearly leaves the reader with the impression that Gittens has manipulated the statistics to hide Labors flaws – including those of the Hawke and Keating governments. This impression is cemented by the initial picture in the article listing Hawke and Keating governments as higher spenders out of the block.

    Ergas calculates the growth rate of spending under the Howard government to show that it is lower than Rudd’s. He accuses Gittens of distorting the picture which otherwise would show Labor spending like crazy. What is the statistic that Ergas doesn’t share? The rate of spending growth under Hawke and Keating which was lower than under Howard. He does the same thing he accuses Gittens of doing – partly calculating it, leaving out the years where those Labor governments actually had real decreases in the spending (something the Howard government never achieved).

    The Ergas article doesn’t provide much information on the Hawke and Keating increases in spending. A reader who wants to know the full story and not the Sweeney Todd version Ergas and Gittens style has to go to the budget papers themselves to get it. What do they find – perhaps a reason why the numbers weren’t included in the Ergas article was because they didn’t fit the narrative (from the Ergas article) that…

    As soon as Labor comes to power, spending explodes, with Whitlam, Hawke and Rudd each initiating expansions in their first two budgets that increased outlays by two to four times their long-term rate of growth. Those increases then cause a rapid deterioration in the budget position

  126. Aristogeiton

    Right, so you can’t read a clearly-labelled graph. Got it.

  127. Aristogeiton

    Link to the article for those interested:

    http://www.theaustralian.com.au/opinion/columnists/fiscal-facts-sure-to-make-a-prestidigitator-proud/story-fn7078da-1226791607532

    What Joe here is saying is that he can’t read a graph, and that in rebutting Gittins, Ergas should have said something that he preferred him to say. Which is a ‘misrepresentation’. In Joe’s mind.

    Now piss off, I have drinking to do and it can’t wait.

  128. Joe Goodacre

    What’s that got to do with Ergas doing exactly what he accuses Gittens of doing – omitting from his calculation of the rate of spending growth, the years where the Hawke and Keating governments were actually negative in real terms.

  129. Aristogeiton

    Fiscal ‘facts’ sure to make a prestidigitator proud

    THE AUSTRALIAN DECEMBER 30, 2013 12:00AM

    Henry Ergas

    http://resources2.news.com.au/images/2013/12/30/1226791/700518-277cd5ec-708f-11e3-b9b9-531497580fa4.jpg

    THE news would have sent the champagne corks popping.

    Merely two days before Christmas, Ross Gittins, the sage of the Fairfax press, had crunched the numbers and the verdict was in: Rudd-Gillard-Rudd may not have been models of fiscal rectitude, but Howard was far worse.

    In fact, if we are suffering budget woes, “the Howard government did most to add to the existing problem”.

    Gittins, of course, has form on fiscal issues. This is the man who hailed pink batts and school halls as “carefully designed” while claiming Rudd’s stimulus spending would “do nothing to slow the budget’s return to surplus when the economy recovers”. But, even compared with such prescience, his retelling of our fiscal history sets new benchmarks.

    As is so often the case, the trouble starts with the data. Gittins is a practitioner of the Sweeney Todd school of statistics: the bits he doesn’t like, he chops off.

    Nor do Gittins’s readers get much warning of the razor’s slice: one wouldn’t want to trouble innocent minds. Better to pull the magic trick, letting the gasps of delight follow.

    After all, the results would make a prestidigitator proud. For the seer finds that with real outlays rising at an average annual rate of 3.7 per cent, Howard actually outspent the RugRats, who barely managed annual spending growth of 3.5 per cent.

    Pity there is a problem: Gittins has deleted from his analysis the Howard government years of spending restraint. Had he included those years, and gotten his sums right, the growth rate of spending under Howard would have been 3.3 per cent, compared with the RugRats’ 3.6 per cent.

    Moreover, measured in accrual terms (i.e. taking at least partial account of future liabilities), the gap would have been even greater, with annual spending growth under Labor exceeding that under Howard by about 0.4 per cent.

    And the gap would be larger again if one added the commitments Labor made under the disability, Gonski and hospital funding agreements, as well as the contractual obligations for the NBN, taking the difference in accrual terms to well over 1 per cent a year.

    One might have thought Gittins’s readers should have been warned of these inconvenient facts. But, as Christopher Fry put it, a halo is merely one more thing to keep clean; and why strive for accuracy when these debates barely seem relevant to the difficult choices ahead?

    Yet Gittins’s claims are integral to a moral equivalence gambit that risks becoming part of the conventional wisdom. By denigrating the Howard government, that gambit seeks to exculpate Rudd and Gillard; and in the process it helps hide the flaws that have scarred Labor’s economic policy from Whitlam to the present day.

    Those flaws have played themselves out with the scripted rigidity of a Noh play. As soon as Labor comes to power, spending explodes, with Whitlam, Hawke and Rudd each initiating expansions in their first two budgets that increased outlays by two to four times their long-term rate of growth. Those increases then cause a rapid deterioration in the budget position, ultimately forcing a spending pause and tax hikes. Little wonder that since 1983-84 Labor governments have accounted both for all six of the spending splurges and for three of the four years of sharp fiscal tightening.

    Nor is this Keynesian “fine tuning” at work, for the fiscal gyrations have scarcely tracked economic activity.

    Rather, Labor’s destabilising stop/go cycle reflects political pressures, as it tries to deliver on promises to the unions and the social welfare lobby that are soon shown to be unsustainable.

    Time and again, however, the constituencies to which those promises are owed have proven powerful enough to prevent the initial fiscal expansion being fully reversed. From Hawke in 1983 to Rudd in 2013, each of Labor’s stretches in office has therefore resulted in steeply rising net debt.

    Substantial unfunded commitments to entitlement spending, stretching from Whitlam’s social security to Rudd and Gillard’s promises on hospitals, schools and NDIS, have further poisoned each Labor government’s fiscal legacy, with the quantum of the unfunded liability rising each time around.

    Gittins’s claim that “Keating’s return to budget surplus in 1987-88″ inaugurated a “period of exemplary fiscal policy” is little more than fiction. Rather, Howard inherited a fiscal mess every bit as challenging as that which Rudd and Gillard left behind.

    The Howard government’s achievements in correcting that mess surely speak for themselves: 10 budget surpluses in 12 years, despite the Asian economic crisis of 1997 and the “tech wreck” of 2000-01; and net debt per capita in 1996-97 of $7993 in today’s dollars transformed into per capita net assets of $2473 in 2007-08. Treasury estimates show a structural budget surplus that even during Howard’s heavily criticised final term averaged 0.7 per cent of GDP, while net debt continued to fall.

    To those achievements must be added labour market and tax reforms, including cuts to severely distorting taxes on income and on superannuation, which boosted the economy’s flexibility and growth potential.

    These outcomes, unparalleled since the 1960s, helped us weather the global financial crisis without imposing a crippling burden on future generations. But Rudd and Gillard were determined to tear those achievements down: and in that they succeeded all too well.

    Yet Gittins can’t bring himself to recognise any of that. And, instead of exposing the Rudd-Gillard governments’ failure, he provides Labor with an alibi: as everyone is equally responsible for our current predicament, no one is truly responsible.

    That doesn’t do Labor any favours. For rather than wallowing in the illusions of consolation, it needs to confront the fiscal lessons of 40 years of Labor governments. Until it does, the cycle of failure will continue, and with it the drama of a party that promises only to disappoint.

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