The election thread - Medicare Vs cost of living Vs OMG China! Vs housing Vs I'm not Trump! Vs prehistoric fish Vs nuclear energy Vs tariffs Vs AUKUS

[Oddjob]

Fuck me, the ABC is playing with the book How To Lie With Statistics. Such a DUMB comparison.

They compare a single salary - for one year.

Compared to taxes on thousands of people - over ten years.

It might make a nice picture - but its totally meaningless in reality.

I think it made the comparison of tradeoffs very effectively.

The tax cuts are a bad idea. If anything we should be using taxes to do more of the heavy lifting to tame inflation, rather than just relying on the blunt regressive instrument of monetary policy.



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[Freediver]

Fuck me, the ABC is playing with the book How To Lie With Statistics. Such a DUMB comparison.

They compare a single salary - for one year.

Compared to taxes on thousands of people - over ten years.

It might make a nice picture - but its totally meaningless in reality.

A single average salary is a bloody good comparison. It's a number the average person understands.
I don't see a lie, just a representation of something not liked by the few people that stand to benefit from the deductions.

 

[Oddjob]

A single average salary is a bloody good comparison. It's a number the average person understands.
I don't see a lie, just a representation of something not liked by the few people that stand to benefit from the deductions.

I stand to benefit, and I still think the tax cuts are stupid.

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[pink poodle]

I stand to benefit, and I still think the tax cuts are stupid.

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You know...if you embraced them, the rest of us might see some trickle down as you think out that collection of bikes and load up on new bikes!

 

[Oddjob]

You know...if you embraced them, the rest of us might see some trickle down as you think out that collection of bikes and load up on new bikes!

That's what Kten and Wake Jake are for. I'm much more of a useless NEET hoarder.

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[pink poodle]

That's what Kten and Wake Jake are for. I'm much more of a useless NEET hoarder.

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But ... But...you're in my state you greedy hoarder!

 

[Dales Cannon]

I've decided not to pay tax any more.

 

[Asininedrivel]

I've decided not to pay tax any more.

Prince Leonard needs a successor.... would probably mean having to move to WA though.

 

[Halo1]

How many stadiums could the stage 3 tax cuts buy? Asking for the AFL

 

[Mr Crudley]

I've decided not to pay tax any more.

I now identify as a 'non tax paying human'. Why haven't the cookers jumped on this easy way out already?

 

[dirtdad]

I think it made the comparison of tradeoffs very effectively.

The tax cuts are a bad idea. If anything we should be using taxes to do more of the heavy lifting to tame inflation, rather than just relying on the blunt regressive instrument of monetary policy.

Inflation is already a tax on everyone though. Bracket creep is real, and the govt essentially gets more tax revenue than before. So brackets should move.

To the question of whether the proposed changes are too low/high… ? I don’t know. Haven’t really looked at it that closely. But I do think the abc piece was more opinion than analysis.

As I said in the other thread, looking at the tax revenue forgone by the changes represents around a 3.6% reduction in annual tax revenues. Compared to inflation at around 7%. Problem is the inflation effects on tax are regressive and most quickly impact taxes like GST that are immediate on consumption.

Interested how you’d use taxes to tame inflation. Did you mean increase tax rates? To try and curb spending?

 

[Oddjob]

Inflation is already a tax on everyone though. Bracket creep is real, and the govt essentially gets more tax revenue than before. So brackets should move.

To the question of whether the proposed changes are too low/high… ? I don’t know. Haven’t really looked at it that closely. But I do think the abc piece was more opinion than analysis.

As I said in the other thread, looking at the tax revenue forgone by the changes represents around a 3.6% reduction in annual tax revenues. Compared to inflation at around 7%. Problem is the inflation effects on tax are regressive and most quickly impact taxes like GST that are immediate on consumption.

Interested how you’d use taxes to tame inflation. Did you mean increase tax rates? To try and curb spending?

Monetary policy tries to reduce inflation by reducing the amount of money available for consumption, i.e. the money supply. The problem is that the cost of interest rates are borne by mortgage holders and landlords. This in turn impacts low to middle income earners.

Older, wealthier consumers tend to have very low levels of debt. Typically less than 20% of their overall asset pool. So the impact of raised interest rates on them is very muted and they go on consuming and driving inflation. If on the other hand you change tax rates by a few percentage points in the upper brackets, they notice and respond quickly.

If you eliminated tax creep by indexing tax brackets you would get a situation where everyone's tax bill would change every year. Some people see that as a problem for personal budgeting, but I see that as a perfect opportunity to allow the tax rates to also change a little bit every year to control the money supply in a progressive (in a taxation sense) way.

Interest rates for a business are a bit of wash. If they are low, inflation is low and businesses don't really need to pass them on. If they are high, inflation is high, so it's easy to pass on the cost to consumers.

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[dirtdad]

If on the other hand you change tax rates by a few percentage points in the upper brackets, they notice and respond quickly.

Not sure this response follows that quickly though. Perhaps some discretionary spending gets cut immediately. But I don’t think upper bracket types will stop buying general goods and services so it won’t affect overall inflation much. I think raising rates in low/middle income has an immediate effect, but that’s probably worse than interest rates increases.

 

[pink poodle]

I feel the interest rate rises don't have a wide enough scope to curb the spending.
- investors can either pass the cost on (such as land lords to tenants) or deduct it from their income, and as the number of new entrants to the market reduces it becomes easier for them to increase their holdings. Businesses can pass it on to consumers, fueling higher prices.
- people already relying on credit to balance their life rely on it more and their debt continues to grow.
- people who have over committed to big debts (like home loans) get stuck in a risky game trying to stay afloat.
- pressure for ages growth has been on for years and this increases that.
- conversely even through covid we witnessed many companies recording record profit growth...and not sharing that with their employees.

 

[Oddjob]

Not sure this response follows that quickly though. Perhaps some discretionary spending gets cut immediately. But I don’t think upper bracket types will stop buying general goods and services so it won’t affect overall inflation much. I think raising rates in low/middle income has an immediate effect, but that’s probably worse than interest rates increases.

A couple of percentage points of tax can lead to a change of $10,000s for people in the $500k a year category. This could be the difference between buying a new car this year as opposed to putting it off for a couple of years.

Same with house renovations, business class holidays overseas, fancy clothes, plastic surgery etc etc.

Humans aren't so great with relative calculations under uncertainty, all the cognitive shortcuts tend to focus on absolute numbers. And if this is enough to reduce the money supply and further encourage people to put off spending, the tax increase has done it's job in reducing inflationary pressure.

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[Dales Cannon]

There is a huge difference between changes reducing discretionary spending and that impacting on living expenses.

 

[pink poodle]

There is a huge difference between changes reducing discretionary spending and that impacting on living expenses.

And smashing the discretionary spending with a mallet that also smashes the living expenses isn't the best way to go about it.

 

[dirtdad]

A couple of percentage points of tax can lead to a change of $10,000s for people in the $500k a year category. This could be the difference between buying a new car this year as opposed to putting it off for a couple of years.

I’m not convinced it would work like you think. I’m no economist, but people are rational enough that if you’re well off you won’t flat out skip your holiday or car, you might just buy a slightly cheaper one. So demand for more reasonably priced goods could actually increase rather than decrease.

interested to know if such a policy has been used effectively anywhere.

 

[pink poodle]

I’m not convinced it would work like you think. I’m no economist, but people are rational enough that if you’re well off you won’t flat out skip your holiday or car, you might just buy a slightly cheaper one. So demand for more reasonably priced goods could actually increase rather than decrease.

interested to know if such a policy has been used effectively anywhere.

Cheaper...correct me if I am wrong here, but doesn't cheaper have some synonymous relationship with less?

 

[dirtdad]

@pink poodle - I mean “relatively” cheaper than their usual expensive car/holiday/etc.

So your usual boutique frame/bike buyers are now buying relatively cheaper frames/bikes. But the tax increase didn’t affect the low/middle income people so they keep buying the same number of bikes. And overall the demand for those bikes (and so pressure on their prices) increases.