Jason Falinski backs estate tax hike
“More and more money is being accumulated by lazy capital, and that’s problematic.”
“But if you try and it works, we’ll tax the shit on you.”
After Labor jumped on the comments on Tuesday, Mr Falinski later clarified he was not in favor of an inheritance tax as it would be ‘double taxation’.
More than $120 billion was passed on in 2018, and baby boomers will bequeath an estimated $224 billion each year by 2050 through record housing and super wealth, according to the Productivity Commission.
Concessions behind “a waste of human capital”
Unlike many countries, inheritance and monetary gifts are generally exempt from tax in Australia, with the exception of a limited inheritance tax of 17% on a superannuation fund for non-dependents , including adult children. It excludes owner-occupied homes and other non-super assets.
Personal income tax provides around half of government tax revenue – among the highest in the advanced world – and is on track to hit a 30-year high later this decade, despite tax cuts of the Morrison government that largely result in tranche drift, according to analysis by the Parliamentary Budget Office. .
Mr Falinski also said the wide range of tax benefits were causing a ‘waste of human capital’ in Australia, as many of the smartest people in the country became tax lawyers and accountants to exploit concessions for customers. .
“If you live in Israel or the US or the UK, the really smart graduates go into IT or engineering,” said the MP for Sydney.
“In Australia, you become a tax lawyer.”
A bipartisan push is building behind the scenes for the Coalition and Labor to seriously consider overhauling the outdated tax system after the election, despite resistance from political leaders.
Craig Emerson, a former labor minister in the Rudd-Gillard governments and official reviewer of the party’s 2019 election defeat, said economic reform “would necessarily include fiscal reform, in which the Morrison government has no discernible interest”.
“If the Albanian opposition dared to mention the words ‘tax reform’, the coalition frontbenches would shout ‘death tax’, ‘housing tax’, ‘pensioner tax’ and ‘carbon tax’, then let them scour the papers for what Albanese told NSW Labor Conference 30 years ago when, wait, he called the conference president a ‘comrade president’, writes Dr Emerson in The Australian Financial Review.
“Building the political case for microeconomic reform would require the next prime minister and treasurer to spend time explaining the problem they are trying to solve, as Hawke and Keating did in the 1980s.”
“Treasurer Josh Frydenberg tasking the Productivity Commission with undertaking its second five-year review of Australia’s productivity performance is a good start. Hopefully the report, due in a year, triggers a new reform effort by whoever forms the government.
No appetite for tax reform talks
Shadow Treasurer Jim Chalmers said Labor’s priority was to ensure multinationals pay a fair amount of tax where they make their profits.
“We have not offered a tax review, but we will always take seriously the views put forward by experts and all corners of the community to ensure our tax settings are right for working families and the economy.” , did he declare.
Labor and coalition backbenchers have privately said their leaders have no desire to talk about tax reform ahead of the election.
Labour’s surprise election loss three years ago was partly blamed on its tax crackdown on franking credits, negative gearing, trusts and capital gains.
Liberal Senator Andrew Bragg said Monday that tax reform “never ends. As I said in my first speech in 2019: we must again consider reducing the direct tax burden on workers and businesses.
The great technological revolution cannot be ignored
“Inevitably, we must discuss with states the possibility of achieving a significant change in tax composition that enhances efficiency and competitiveness while maintaining fairness.
“This reform effort is even more important in the face of the great technological revolution.
“This revolution will ultimately eat away at the corporate tax base by disrupting traditional businesses and traditional business structures.
“The race to remain globally competitive is real. If we are not competitive in the age of big technology, we will be a banana republic.
“The good news is that we have reached important milestones.
“Frydenberg’s patent box and the Board of Tax’s review of the crypto tax make it clear that Australia is open for business.”
Personal income tax reductions
The top 10 corporate taxpayers contribute about one-third of the $100 billion in annual corporate taxes.
Mr Frydenberg avoided questions from the media about holding a serious tax review, saying the government was already introducing a 17% rate for new patents in the medical and biotech sectors and eliminating the income tax bracket individuals by 37%.
About 95% of taxpayers would face a top marginal rate of 30% (plus the 2% Medicare levy) by July 2024, he said.
Michael Buckland, chief executive of the left-wing, Labour-aligned McKell Institute, said: “The pandemic has proven the need for strong government services and they cannot be delivered without an equally fair and efficient tax system.
“We won’t hear much during the election, but it can’t be ignored forever.”
Australian Council of Social Services chief executive Cassandra Goldie has criticized the government’s planned income tax cuts, which Labor has backed.
“ACOSS called on the federal government to prioritize investments in essential services and to increase the incomes and wages of the bottom 40% rather than further tax cuts in the next budget,” said the Dr. Goldie.