The fact that this is the most ambitious reform in decades says a lot since it doesn’t do all that much. Most countries don’t tax labour and capital gains at the same rate, and Australia isn’t exactly a leader in capital investment.
This is a tax increase used to fund public sector expansion, except the productivity of the public sector is stuck around the level of the 2000s and isn’t improving.
It also creates weird incentives where growth stocks will be less desirable than stocks that pay high dividends – this makes VC a lot less attractive as well for both investors and company founders.
FOSSBabe on
Submission statement: Australia’s centre-left Labor government just introduced a budget that increases taxes on capital (primarily focused on cooling the housing market) and reduces taxes on labor. In addition to rebalancing the tax system away from greatly favoring wealth, this move also serves to advance intergenerational fairness. Subsidies for property owners (who are mainly older) are being phased out while the tax burden on workers (who tend to be younger and have difficulty entering the property market) are being reduced.
This budget may be a harbinger of things to come throughout the developed world. Like Australia, all developed countries face aging populations and stagnating wages, while simultaneous facing expenditure pressures to support that aging population, who has benefited from policies that that favored owners of capital (especially in the form of real estate) over workers. While Australia’s Labor government, with it’s young support base, may have the political capital to introduce these changes now, governments in other countries may be forced to adopt something similar in the future if they want to maintain services for their aging populations.
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The fact that this is the most ambitious reform in decades says a lot since it doesn’t do all that much. Most countries don’t tax labour and capital gains at the same rate, and Australia isn’t exactly a leader in capital investment.
This is a tax increase used to fund public sector expansion, except the productivity of the public sector is stuck around the level of the 2000s and isn’t improving.
It also creates weird incentives where growth stocks will be less desirable than stocks that pay high dividends – this makes VC a lot less attractive as well for both investors and company founders.
Submission statement: Australia’s centre-left Labor government just introduced a budget that increases taxes on capital (primarily focused on cooling the housing market) and reduces taxes on labor. In addition to rebalancing the tax system away from greatly favoring wealth, this move also serves to advance intergenerational fairness. Subsidies for property owners (who are mainly older) are being phased out while the tax burden on workers (who tend to be younger and have difficulty entering the property market) are being reduced.
This budget may be a harbinger of things to come throughout the developed world. Like Australia, all developed countries face aging populations and stagnating wages, while simultaneous facing expenditure pressures to support that aging population, who has benefited from policies that that favored owners of capital (especially in the form of real estate) over workers. While Australia’s Labor government, with it’s young support base, may have the political capital to introduce these changes now, governments in other countries may be forced to adopt something similar in the future if they want to maintain services for their aging populations.