ALP funded think tank “reluctantly” supports ALP policy

Labor’s planned ban on refundable excess franking credits has been declared a “second-best policy in a third-best world” by respected policy think-tank, the Grattan Institute.

In its submission to Liberal MP Tim Wilson’s House of Representatives economics committee inquiry into Labor’s contentious proposal, the Grattan Institute reluctantly endorses the measure as perhaps one of the few ways to help put the federal budget on sustainable footing in preparation for an ageing Australia.

“In a world where there is no appetite for wholesale tax reform, where the government faces a long-term budget challenge, and where the income tax burden on working Australians continues to rise, a policy that indirectly requires richer older Australians to contribute may be the best we can do,” said Grattan Institute program director Danielle Wood and fellow Brendan Coates in their submission.

That’s from The Australian.

Living off your accumulated life savings is now the definition of rich in “richer older Australians”.

To be clear – these people are so rich that under our current progressive income tax system they face a zero tax rate. The ALP proposes to deny them a tax refund in order to subsidise the lifestyles of people who are usually in higher tax brackets. This is the inverse Robin Hood effect – taking from the poor(er) to give to the rich(er).

This entry was posted in Hypocrisy of progressives, Taxation. Bookmark the permalink.

12 Responses to ALP funded think tank “reluctantly” supports ALP policy

  1. Bruce of Newcastle

    It’s a totally stupid policy.

    Retirees who would get hit with the double taxation from the dividend imputation rip off are going to spend it all and go on the pension.

    Why would they not? They’ve been shown in spades that if the invest it Labor will just steal it all anyway. The tax change won’t raise a brass razoo, it’ll actually cost Treasury money because of increased pension takeup.

  2. eb

    Well, it’s a big bucket of money. And, most of the victims don’t vote Labor anyway.

    Labor is so far in front in the polls they’ll win the election even if there is a backlash.

  3. Tel

    Living off your accumulated life savings is now the definition of rich in “richer older Australians”.

    Ahhh so ya got savings do ya?

    LUXURY!

    Buck in muh day we yoooosda dream about savings.

  4. NB

    How about a policy of reducing red tape and absurd environmental regulations, using our available energy resources to provide the cheapest power, and thus encouraging economic activity to produce wealth?
    Government is not the solution, it is the problem.
    Get out, government!

  5. Hopefully the coalition can regroup to the right after their calamitous loss at the upcoming federal election and put proper policies in place to win the one after? Things like calling out the climate scam for what it is. Things like rewarding effort and punishing sloth! Things like ceasing Islamic immigration! Yup, I’m in la la land aren’t I.

  6. mareeS

    Tomorrow we sign off on changes to our family SMSF that will keep our dividend imputation credits flowing. Shorten and Bowen are too stupid to be running a tuck shop let alone a national economy.

  7. David

    Just moved my shares around now getting a bigger part pension The labor party dumb and dumber

  8. Rohan

    Living off your accumulated life savings is now the definition of rich in “richer older Australians”.

    So is this the reason why Sen. Leyonjelms supports nation wide euthenasia?

  9. The BigBlueCat

    Denying a tax refund for imputation credits for one class of taxpayer while allowing it for another is pure theft and morally wrong. Typical ALP policy really. And it will only hurt those with smaller shareholdings and no other forms of taxable income. It will drive them towards taking the pension! Shorten’s Plan is dumb, and won’t achieve the savings he says it will.

  10. iain russell

    The Gratins haven’t grasped that ‘richer, older Australians’ includes the backbone of the modern ALP, the bludging bureaucrats at all levels of government. That’s the inequity in Oz society – workers vs the creatures in the ‘Public Services’ wallowing in pay and conditions the workers can only dream of. I’ll believe the Gratins are serious about reducing inequity etc when they urge a Plibersek Law to stop or financially cripple double dippers at the tax trough like Ma’am and her hubby.

  11. FelixKruell

    To be clear – these people are so rich that under our current progressive income tax system they face a zero tax rate.

    I don’t support Labor’s policy, for many of the reasons you mention.

    But this line didn’t make sense to me. It’s not our current progressive income tax system though, is it? There are special rules for retirees where they pay less tax on income than a worker would earning the same income. Or am I missing something here?

  12. The BigBlueCat

    To be clear – these people are so rich that under our current progressive income tax system they face a zero tax rate.

    Of course, this is utter balderdash. Currently to calculate the tax on dividend earnings, the tax paid by the company is added back so that the taxable income of the recipient (individual or SMSF) can be determined and tax calculated on that assessable income. Whether there is a tax refund or not will depend on other income and deductions, and how they may be structured to minimise their tax exposure. What the ALP want to do is to deny the refund when no other tax has been assessed and collected, effectively taxing the individual at company tax rates. But it is false to say they face a zero tax rate (unless they fall below the tax-free threshold)!

    Where Bill Shorten and the ALP have it wrong is by granting a tax refund to some taxpayers where they have other taxable income, while those whose only taxable income is fully franked dividends won’t get the refund – they will be effectively paying tax at the company rate (or more if they end up in a higher tax bracket – but that’s as it should be). They want to make some investors a different class of taxpayer as individuals – ones that are treated differently simply because of their investment arrangements – tax them as a company rather than as an individual simply because their investments and income are below a certain level, but not low enough to draw a pension. It’s a disgraceful proposition.

    What the ALP is proposing is unfair, and will hurt many self-funded retirees who rely on dividend income (usually fully franked). It will push them onto the pension (partial or otherwise) when their desire is to be disconnected from social welfare systems and not be beholden to the government of the day. They are doing the right thing now when they declare their income – but the ALP want to financially punish them for it.

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