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).