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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

"on struggle street" « Previous | |Next »
April 3, 2013

Thanks to Howard and Costello Australia allows the wealthy to park more and more of their earnings in super accounts at discounted marginal tax rates. The Gillard Government is considering reducing superannuation concessions to the top 1 or 2 per cent of earners who get 9 per cent of the total value of the tax breaks. The bottom 30 per cent of income earners get just 1.2 per cent of the total value of superannuation concession.

PopeDsuperannuation.jpg David Pope

The Coalition plans to scrap the super tax offset for low-income earners which means going after 3.6 million Australians on salaries of $37,000 or less. Despite this, some members of the ALP (eg., Joel Fitzgibbon) talk in terms of those on incomes of $250,000 being battlers on struggle street in western Sydney, whilst the Gillard/Swan proposal to reduce the generous tax concessions to the top 1 or 2 per cent of earners is seen as "trashing" the Labor brand.

What is going on within the ALP these days? Shouldn't they be talking about reform of the system to fix its many failings? One of those failings is the excessive fees are being skimmed from people's savings and a superannuation industry "living of the public teat".

Reforms to make the superannuation system more sustainable, given that the cost of the concessions is set to climb 9 per cent next year, then 14 per cent, then 13 per cent. Or reforms to improve the adequacy of the Age Pension for those who have little or no access to the benefits of the tax concessions.

Eva Cox points out that:

problems arise partly because superannuation’s basic design reproduces the inequities of the distribution of earned income. Compulsory contributions as a set percentage of pay, means the “savings” will reflect the frequency of contributions and their amounts.The more time in paid work and the higher the pay received means the range of savings will reproduce the relative inequalities of labour force participation and rewards. This has obvious gender implications as women tend to earn less when in jobs and take more time out of paid work as well, so end up with substantially less.

Superannuation is designed to give the biggest subsidies to those who need them least, yet members of the ALP are publicly defending the generous superannuation tax breaks received by the very richest Australians.

| Posted by Gary Sauer-Thompson at 12:13 PM | | Comments (6)
Comments

Comments

Ross Gittens, in pointing out that super is taxed in a way that yields little benefit to the needy, but grossly favours the better off, says:

super contributions are, in fact, taxed concessionally. Just how concessional varies inversely with your need - the higher your income, the more you save per dollar. People like me save 30¢ in tax on every dollar they put into super (plus the 1.5¢ Medicare levy). What's more, income earned on money in super funds is also taxed at no more than 15 per cent, no matter how high your income.

The cost to the federal budget in revenue forgone is huge and rapidly rising. It was $30 billion last financial year and is projected to reach $45 billion by 2015-16.

Richard Denniss and David Richardson, of the Australia Institute in their Can the Taxpayer Afford ''Self-funded Retirement''?, advise that by 2015-16, the $45 billion forgone on super concessions is expected to equal the cost of the age pension itself.

It will dwarf federal spending on education or on Medicare, and be almost double what we spend on defence.

Why would ALP backbenchers run a scare campaign (one admittedly kicked off by ALP back about the Gillard government's proposed superannuation changes.

Income paid at the top marginal tax rate will cost high-income earners 45 cents in the dollar, while income paid into super attracts only 15. So for many top executives and high net worth individuals, self-managed super is really just a government-sanctioned tax haven.

Good grief.... so demonising and persecuting poor and powerless asylum seekers is seen as good for the Labor party, questioning the finances of the very rich, is slammed as "trashing" the brand???!!!?!?

This is what it has come to? These are their values? Well, to hell with them!

Those that earn more,pay more tax and end up self funded retirees should be treated better than those that earn less,pay less tax,bludge and end up needing the pension.