The Election Battle between those who pay tax, and those who don’t

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Welcome to Finance and Fury

Today will be a quick update for the upcoming election and policies in response to the budget plans released last week. This election is becoming a battle for votes among salary earners.

In the past we have talked about class warfare strategy – it’s a tactic being used by both major parties.

Breakdown:
  • Where is each party is hanging their hats with incomes and taxes?
  • Liberals announced tax cuts at the last budget last year
  • Frydenberg’s affirming even more tax cuts for individuals and businesses, spending on education and infrastructure
  • A reward for effort, aspiration, and enterprise, upholding personal responsibility and providing a helping hand where needed
  • Next generation does not have to pick up the tab for the last generation
  • Liberals are promising other things too like a budget surplus of $7.1bn which is a massive turnaround from 6 years ago when they took office
Tax original plan under Liberals:
  1. Provide immediate relief by increasing tax offset
  2. Protect income earners from bracket creep – wage growth with no threshold increase pushes people into higher tax brackets
  3. Abolishing an entire tax bracket – incentivising hard work
  4. Doubling the low and middle-income tax offset from 2018 – 19
  5. Structural reform by lowering the marginal tax rate to 30% for earners of $45k to $200k
  6. Limit the amount of tax as a share of the economy
  7. Being in surplus now means the government can reduce their revenue
  8. The previous episode explaining Reagan’s approach
  9. Someone earning $300k was paying 10 times more tax than someone no $45k
  10. What is Shorten’s response? Calling the budget radical right wing?
Exposing shorten
  • Claiming tax reductions are the same as giveaways. A giveaway to let people keep what they work for?
  • What is Shorten’s background and what he represents vs what he has?
  • Morrison summed it up best – why would you work hard under the Labor government?
Labor’s budget plans:
  1. Alternative tax cuts and relief from bracket creep
  2. Said that 4.5 million workers earning between $48k and $90k will be better off under their plan, but are yet to release the details.
  3. ANU centre for social research has said under Labor there will be an increase in tax revenues of $39 bn over the years until 2024, which is a 5% increase from current revenues
  4. Analysts and professors say Labor’s plan will modestly lower income inequality but Liberal’s plan will modestly increase it because they pay more tax
  5. Let's have a look at some statistics
    1. FT Employed – 6.7m and PT employed – 3.9m – about 10.6m people
    2. 5m people shorten referred to are mainly PT or entry working positions
    3. Median Income (middle) for full-time workers - $78,268 p.a.
    4. Average Income of FT worker - $90,300
    5. Average earnings of all workers (Pt and FT) - $67,243

What does this mean? The good side

  • Simplified tax codes – this is a good thing
  • Global confidence reaffirming the AAA rating
  • Being on par with taxes in a global economy

What is bad?

  • Other bits of regulations, you need less regulation in conjunction with lower taxes to benefit
  • Abhorrent material on platforms tax
  • Encryption laws to get around privacy breaches
  • ISPs banning sites
Summary:
  • Some very good things here with tax cuts
  • Tax cuts are good, especially when they benefit low-income taxes
  • Income taxpayers fund the government, so its good to incentivise them to work

Thank you for listening today. If you want to get in touch you can do so here. Please don’t forget to review us and share us with your friends and family.

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