The recent cartoon by Bill Leak depicting impoverished Indians eating broken solar panels is not racism. If I was an Indian I would feel insulted and think the cartoonist was an idiot, but I would not feel racially vilified.
The cartoon is just a continuation of the campaign by The Australian newspaper to deny climate change and to promote the fossil fuel industry. Leak is saying that the first world should not fund solar power projects in India. Instead it should fund fossil fuel projects. His point is that solar power will not lift poor Indians out of poverty. He clumsily makes this point by saying that poor Indians cannot eat solar panels. But presumably they can't eat coal either. We get that he thinks that if they can get their power from fossil fuel they will be better off and consequently will have more to eat.
The problem with his and The Australian's position is that they do not assess all the pro's and con's. For example, it is estimated that 19,000 people per day die in China from pollution related illnesses. Why encourage people in third world countries to move from the dangerous burning of cow dung to fuel their stoves, to the dangerous burning of coal? Bill Leak and The Australian knows that energy technology is in a phase of rapid innovation. The advances in methods of clean energy production are extraordinary and include the development of battery technologies to store solar energy, both at the power plant and in the home. Why would we encourage the third world to build new coal fired power plants when at the time of writing they are becoming obsolete? A move from burning cow dung to getting energy from the sun and the wind is a huge improvement, and a healthy one at that.
And then there is the elephant in the room. The world has just come from a historic meeting aimed at reducing global warming and devastating climate change. All countries including the first world and the third would are being asked to cut their green house emissions to prevent the catastrophes that will beset all of us. Of course it would be terrific if coal did not produce dangerous pollutants and green house emissions. But it does. For Bill Leak to ignore this is stupid and an insult to the intelligence of his Australian audience and impoverished Indians alike.
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Friday, December 25, 2015
Sunday, October 04, 2015
Super Duper Tax Haven
The tax concessions bought in by Howard and Costello for the Superannuation system are so generous and so huge in money terms that they can only be described as a local tax haven.
The sheer quantity of money involved - $40 billion overwhelmingly benefiting the wealthy - being above and beyond any proper purpose of retirement policy, is an act of theft by the Liberals on behalf of their wealthy constituency. It is an example of Kleptocracy.
This is not the stuff of an academic policy debate. To bring into close, grotesque view, this week tens of thousands of people with retirement income from superannuation of $5,000 for the week, were exempted from paying tax of $1,700. Can they not live on $3,300 this week? The one million people living below the poverty line could certainly do with an extra $10 in their pocket.
What we have here is structural greed.
Wednesday, September 23, 2015
Morrison takes the batton
Well Scott steps into the position and the first things he says are crap. All the economists and senior economics journalists in the country have been arguing conviningly for two years that Australia has a revenue problem. Scott says we don't have a revenue problem. He thinks we have a spending problem. We have a revenue problem.
When challenged his justification for this is that he has control over spending and you have to concentrate on what you can control. This is a very strange statement because governments have control of both spending and revenue. Hmmm.
When pressed further he says, "You've always got to keep a healthy balance" (between spending and revenue). Well yes Scott, so why are you only focused on the spending side of the equation?
The new mantra: "We want people to work more, save more, and invest more". Great, but that is no argument against moderate equitable redistribution. But he seems to think it is.
If there are 800,000 unemployed and 400,000 jobs, then Scott's argument that the miserly Newstart allowance of $300 per week is a disincentive to work, is absolute crap.
New PM, Malcolm Turnbull, has said that his main philosophy is free markets and individualism. No mention of the actual society that provides those conditions, the infrastructure and the support that allows a lot of fortunate bods like him to actually be "individuals".
Looks like there is not going to be much financial joy from this government for anyone who isn't in the top 10%.
Thursday, August 27, 2015
Joe Hockey and his Pseudonomics
Joe Hockey is at it again. Every time he discusses economics he shows his profound lack of understanding of even the basics.
He is now promoting income tax cuts and a gigantic GST tax rise. In addition, by broadening the GST he is in effect introducing a completely new tax, that is a tax on fresh food or medical services or education to name a few. So a "Great Big New Tax" in Tony Abbott's parlance.
As we know the GST is a regressive tax. For example, people on a low income, below the tax free threshold of $18,200, get a large tax increase in that they will now be paying a 15% tax on these additional goods and services. This is on top of having their GST tax increased on all existing goods and services. Since low income earners spend a much higher proportion of their disposable income it is they who will get the largest tax increase in percentage terms.
As for the idea of income tax cuts, his argument is that high income earners pay a disproportionately high percentage of income tax. But that is exactly what progressive tax is, isn't it? It is like he was reading some treasury paper and came across this astounding fact that high income earners pay higher tax rates. Hells bells! This has obviously come as a shock to Joe. It's also like he has never heard of progressive taxation, or understood why it is considered good policy, by, er, nearly everyone in the modern era.
I guess progressive taxation is, well progressive. It is a civilized and balanced policy that still allows the rich to get richer, but affords some redistribution to those less well off. It underlines a trait of Australian culture called fairness. Not socialism of the "nationalization of industry" type, but a reasonable, moderate policy that both major political parties have included in their policy platforms ever since income tax was collected in Australia by the Commonwealth.
Anyhow, Joe doesn't like it, probably because it is one of those "fair" things. But we do have to pull him up on his lying via sophistry and omission. He says that the top income tax rates in Australia are some of the highest in the world. He knows, but omits to mention it, that the high income earners in Australian don't actually pay those taxes. He fails to mention that we have many attractive tax deductions and concessions that those other countries do not have, and that as a result our high income earners, whilst having a higher headline rate, do not actually pay more tax than those high income earners in countries that have, on the face of it, a lower top marginal rate.
In short, Australian high income earners pay the same tax, and often less, than high income earners in countries with lower top marginal tax rates, after taking our higher tax deductions and tax concessions into account.
Mr Hockey claims that he is concerned about bracket creep, but bracket creep is no more important when it comes to money in the pocket than higher wages. But Joe is against wage rises. In fact he is in favor of wage decreases if you look at his response to the recent Productivity Commission report into penalty rates. He is obviously not concerned about the well-being of those on low to middle incomes. He tried to make them pay for doctors visits, while at the same time maintained the massive tax concessions to the very wealthy via the superannuation system.
Now to the pseudonomics. It has been well known in economics that the classical "trickle down" thesis is highly conditional. It applies inside narrow margins and thresholds. And it has now been proved that the equity thesis is more correct and more important. In short, the lower the gap between the top 10% of income earners and the bottom 40% the higher economic growth will be. Inside reasonable parameters it is no longer thought that money given to very wealthy people finds its way, via investment in innovative and productive resources, into a driver of economic growth. On the contrary, it is healthy universal incomes that drive economic growth.
Joe talks of incentives, but again, it has been proven and peer reviewed economic science that the idea of incentives are highly conditional and also operate within narrow margins and only over high thresholds. Joe says he worries that people will withdraw their labour if they are taxed at high marginal rates, but studies and research have proven that executives paying 70% tax will still go to work for the additional $30 in every $100. They are very goal orientated, very results orientated, very competitive, and have a strong work ethic. Nothing much stops these people from earning the extra dollar. But we are only taxing our top execs 45% at the margin. And because of the tax free threshold and the lower marginal rates on the way up, lets not forget that somebody earning $200,000 per annum only pays an average tax rate of 32%. And after all the tax deductions and concessions, it can be anywhere from there down to zero!
So why has this so called treasurer decided that the biggest issue is income tax cuts, especially when he has told us that we have a budget emergency? It either doesn't make sense, or the only sense that it makes is that he is just a guy whose job it is to further enrich the already very rich at the expense of low to middle income earners, and at the expense of national prosperity.
He is now promoting income tax cuts and a gigantic GST tax rise. In addition, by broadening the GST he is in effect introducing a completely new tax, that is a tax on fresh food or medical services or education to name a few. So a "Great Big New Tax" in Tony Abbott's parlance.
As we know the GST is a regressive tax. For example, people on a low income, below the tax free threshold of $18,200, get a large tax increase in that they will now be paying a 15% tax on these additional goods and services. This is on top of having their GST tax increased on all existing goods and services. Since low income earners spend a much higher proportion of their disposable income it is they who will get the largest tax increase in percentage terms.
As for the idea of income tax cuts, his argument is that high income earners pay a disproportionately high percentage of income tax. But that is exactly what progressive tax is, isn't it? It is like he was reading some treasury paper and came across this astounding fact that high income earners pay higher tax rates. Hells bells! This has obviously come as a shock to Joe. It's also like he has never heard of progressive taxation, or understood why it is considered good policy, by, er, nearly everyone in the modern era.
I guess progressive taxation is, well progressive. It is a civilized and balanced policy that still allows the rich to get richer, but affords some redistribution to those less well off. It underlines a trait of Australian culture called fairness. Not socialism of the "nationalization of industry" type, but a reasonable, moderate policy that both major political parties have included in their policy platforms ever since income tax was collected in Australia by the Commonwealth.
Anyhow, Joe doesn't like it, probably because it is one of those "fair" things. But we do have to pull him up on his lying via sophistry and omission. He says that the top income tax rates in Australia are some of the highest in the world. He knows, but omits to mention it, that the high income earners in Australian don't actually pay those taxes. He fails to mention that we have many attractive tax deductions and concessions that those other countries do not have, and that as a result our high income earners, whilst having a higher headline rate, do not actually pay more tax than those high income earners in countries that have, on the face of it, a lower top marginal rate.
In short, Australian high income earners pay the same tax, and often less, than high income earners in countries with lower top marginal tax rates, after taking our higher tax deductions and tax concessions into account.
Mr Hockey claims that he is concerned about bracket creep, but bracket creep is no more important when it comes to money in the pocket than higher wages. But Joe is against wage rises. In fact he is in favor of wage decreases if you look at his response to the recent Productivity Commission report into penalty rates. He is obviously not concerned about the well-being of those on low to middle incomes. He tried to make them pay for doctors visits, while at the same time maintained the massive tax concessions to the very wealthy via the superannuation system.
Now to the pseudonomics. It has been well known in economics that the classical "trickle down" thesis is highly conditional. It applies inside narrow margins and thresholds. And it has now been proved that the equity thesis is more correct and more important. In short, the lower the gap between the top 10% of income earners and the bottom 40% the higher economic growth will be. Inside reasonable parameters it is no longer thought that money given to very wealthy people finds its way, via investment in innovative and productive resources, into a driver of economic growth. On the contrary, it is healthy universal incomes that drive economic growth.
Joe talks of incentives, but again, it has been proven and peer reviewed economic science that the idea of incentives are highly conditional and also operate within narrow margins and only over high thresholds. Joe says he worries that people will withdraw their labour if they are taxed at high marginal rates, but studies and research have proven that executives paying 70% tax will still go to work for the additional $30 in every $100. They are very goal orientated, very results orientated, very competitive, and have a strong work ethic. Nothing much stops these people from earning the extra dollar. But we are only taxing our top execs 45% at the margin. And because of the tax free threshold and the lower marginal rates on the way up, lets not forget that somebody earning $200,000 per annum only pays an average tax rate of 32%. And after all the tax deductions and concessions, it can be anywhere from there down to zero!
So why has this so called treasurer decided that the biggest issue is income tax cuts, especially when he has told us that we have a budget emergency? It either doesn't make sense, or the only sense that it makes is that he is just a guy whose job it is to further enrich the already very rich at the expense of low to middle income earners, and at the expense of national prosperity.
Thursday, May 28, 2015
Hockey an advocate of Pseudonomics
First we hear from Joe Hockey that government taxation receipts belong to the tax payer - "It's their money". Well no, it is the Commonwealth's money Joe. Once the parliament, acting on behalf of the citizenry, legislates the taxes to be collected, that proportion of a taxpayer's income becomes the rightful property of the Commonwealth.
Australia, along with most other civilized countries, has a progressive system of taxation. Should the government need to adjust tax rates to improve the equitable effects of tax laws, it is not an argument in the negative to say it shouldn't be done because taxpayers tax obligations are "their money". If that were the case then there would no taxation, no Commonwealth, no welfare, and a state of anarchy.
Then Joe doubles up on the pseudonomics and says that to tax the income from certain superannuation accounts would amount to retrospective taxation. Well no, Joe. retrospective taxation is when you tax income from previous years. Changing tax rates for income in years to come is not retrospective taxation.
Why is this pseudo economist our federal treasure?