Talking Politics

[frickenel]

My super is on fire atm. gone up by $23k this quarter alone. I always suspected it wouldn't last.

You can always go Cash based and lock it in, and just see what happens over the next few months, bearing in mind that Ocotber is the traditional CRASH month. THen just buy backinto units when the price is lower. I'm not an investment advisor but thats what i'd be doing.

If my word isn't good enough, Warren Buffet over the lest few months has liquidated a massive number of shares and has billions in cash reserves right now.

We know what he does. Sells high, buys low, so there is no doubt he's loading up to buy low as he's expecting something to happen.

 

[MB78]

Ordinary mums and dads investors are a good thing. It reduces the burden of the state when people get to retirement, by increasing the level of assets held by individuals outside of super. There is a benefit to society of doing this. The alternative is to disincentivise investing and having everyone just spend everything now, and save nothing other than super for retirement for most people which is a disaster and what our country is trying to do away with, ie. we are actively trying to decrease the number of people that need help (ie. state pension) when they retire.

However, maybe we do have the wrong system in place, its maybe too advantageous, especially to people with a lot of money rather than helping mum and dad investors. Capital gains are not really income and shouldn't really be included in income tax calculations but they are in Australia, which is partially what complicates things.

I think most on here know I grew up in the UK, they have a seperate capital gains tax rather than grouping it with income tax. It has its only tax free allowance (ie used to be very generous at 12k GBP but has dropped to 3.5k GBP) and its own tax rates. The UK also provides some favourable investments called ISA's where again you have an annual limit that you can put in there, and the returns made on the assets within the ISA are tax free for life (I think the limit is around 4k GBP per year).

Its a much fairer system, essentially in that there are caps on the tax free benefits that you receive, unlike the unlimited tax free discounts that we receive in this country for capital gains. Ie. if you were so lucky to gain $1m on an investment in AU and you held it for more than 12 months, then you immediately get $500k tax free essentially due to the discount, whereas in the UK, you'd get something like $7k tax free. It seems a much fairer system to provide tax free benefits (they also have govt matching on ISA's for those with lower incomes) to more people, whilst capping those benefits for the richest in society.

Whatever system we have, needs to be fairer but also needs to incentivise investing for most "normal" people in the country. Your scenario of removing all benefits probably does the 1st one, but it completely removes any incentive to invest and try and build your own retirement savings outside of super.

Also it needs to be acknowledged if they want tax reform on property by the Federal Government, they need to stop excessive state government taxes. Our State Government is out of control on taxes with the property sector.

 

[DavidSSS]

The big picture is its better for the economy to reduce the outgoing of government funds for retirees particularly as the population ages. The burden on the tax payer just keeps growing so allowing some incentive to grow out of super earnings makes sense.

Your proposal means that people take risk, which some will not do because of the risk / reward of what they could do with the money now. Providing a relatively small incentive to invest makes sense for smaller investors. Again take a look at the UK's example of earnings. I can guarantee you, risk-averse investors will still take out some of these products, even if they don't have a lot of disposable income. Again, if you look at the limits shown in my post, these aren't mass gains for those with massive portfolios, they are incentivises for those lower income earners in the economy, who it would benefit the country to have them grow their out of super retirement savings.

Clearly you have a very steadfast approach on this which I disagree with. I agree that the current 50% discount uncapped is not the right approach, but there should be some incentive to have people invest their money and take that risk, for what are essentially fairly moderate gains per year (think of tracker funds etc).

Yes, the big picture is that superannuation has been great, I have already said that.

But let's look at this notion of incentives.

Well, we're incentivised owning multiple homes . . . and now barely anyone can afford to buy a house. Great result.

We have an over-cooked stock market with record price to earnings ratios . . . yeah, that makes sense. Looks more like a Ponzi scheme by the day, can't see that helping small investors, quite the contrary.

The reality is that tax incentives are a very very minor part of any investment. Investments are made on the basis of expectation of future return. Geez, Keynes pointed this out in the 1930s.

Sintiger, Income is income, it should all be taxed in the same way. You can't argue that capital gains tax should somehow be spread over the years of ownership of the asset and at the same time argue that it should not be taxed until it is realised - which do you want? I don't know about stamp duty and land tax, but you want that refunded? Give me a break, these taxes impact on the income from asset price appreciation, which means they effectively add to the purchase price of the asset and reduce the gain - that is a cost of owning the asset and is accounted for, you want to be able to get a full refund? It reduces the capital gain and is accounted for, that's plenty. Don't get a full refund on work-related expenses, it just reduces taxable income, why should capital gains be treated more favourably?

You get income from an appreciating asset, you pay tax on it because it is income.

Can't see any justification for preferential tax treatment for income "earned" by just owning an asset.

DS

 

[Sintiger]

Yes, the big picture is that superannuation has been great, I have already said that.

But let's look at this notion of incentives.

Well, we're incentivised owning multiple homes . . . and now barely anyone can afford to buy a house. Great result.

We have an over-cooked stock market with record price to earnings ratios . . . yeah, that makes sense. Looks more like a Ponzi scheme by the day, can't see that helping small investors, quite the contrary.

The reality is that tax incentives are a very very minor part of any investment. Investments are made on the basis of expectation of future return. Geez, Keynes pointed this out in the 1930s.

Sintiger, Income is income, it should all be taxed in the same way. You can't argue that capital gains tax should somehow be spread over the years of ownership of the asset and at the same time argue that it should not be taxed until it is realised - which do you want? I don't know about stamp duty and land tax, but you want that refunded? Give me a break, these taxes impact on the income from asset price appreciation, which means they effectively add to the purchase price of the asset and reduce the gain - that is a cost of owning the asset and is accounted for, you want to be able to get a full refund? It reduces the capital gain and is accounted for, that's plenty. Don't get a full refund on work-related expenses, it just reduces taxable income, why should capital gains be treated more favourably?

You get income from an appreciating asset, you pay tax on it because it is income.

Can't see any justification for preferential tax treatment for income "earned" by just owning an asset.

DS

You’ve missed the point David

If you want capital gains treated as normal income then you need to treat them the same as other income. They shouldn’t have any taxes that wages and salaries don’t have and they should have access to the same deductions. Work related expenses are tax deductions they are not taxes. Allowing those taxes to reduce the capital gain only reduces the net tax to the extent of the reduced CGT but they are taxes that wage earners don’t pay, they make it inequitable.

Be consistent. If capital gains are income then treat them the same. Tax them at the same rates in all the years they are earned, get rid of other taxes that wages don’t incur, provide the same tax deductions.

We can’t do this of course because stamp duty and land tax are state taxes and ingrained into tax base, calculating gains by year and recalculating the relevant marginal tax rate is messy and difficult.

Then you have the point that if an investment goes up by the inflation rate there is no gain in reality, so why should it be taxed?

Taxing capital is different to taxing wages and salaries. What we need to do is find a fair and equitable way of taxing it that recognises that but does not disincentivise investment. That’s not a 50% discount on CGT and it’s not unlimited access to negative gearing but it is also not treating it the same as earning a wage.

 

[TigerMasochist]

Yes, the big picture is that superannuation has been great, I have already said that.

But let's look at this notion of incentives.

Well, we're incentivised owning multiple homes . . . and now barely anyone can afford to buy a house. Great result.

We have an over-cooked stock market with record price to earnings ratios . . . yeah, that makes sense. Looks more like a Ponzi scheme by the day, can't see that helping small investors, quite the contrary.



DS

Yet where do all the mega trillions of superannuation money go? There's only two places I can think of that the money will end up. Into funding the govt development projects whereby the funds get interest n capital return paid back through govt revenue of taxes n charges. So then the plebs in the street n businesses are simply circling round n doubling their input into their own super money.
Or invested even more heavily into an already overcooked ponzi stock market.
While all the time workers who are forced to save 10% to 12% of their life time earnings in super so that the govt doesn't have to fund their old age, pre death bed retirement. Don't have the money they need to save a deposit, repay a loan for the home they need while they are young n healthy to have their own little corner to raise their kids in.

 

[MD Jazz]

Gee, just tried watching a bit of Bolt on Sky. He has RW guest after RW guest. He quotes RW sources as evidence.

And he keeps pushing the narrative that the Liberal party is not far enough right and needs to move that way in order to win the next election.

George Pell got about 6 mentions too.

 

[DavidSSS]

Tax is only charged on capital gains, it is hardly going to be a disincentive to invest if you are paying tax on a gain. You sold the asset for more than you paid for it. Maybe it should be taxed differently, after all, you made no effort, made nothing, provided no service in order to earn the income - so tax it at a higher rate.

DS

 

[Brodders17]

Gee, just tried watching a bit of Bolt on Sky.

Why?
Are you preparing yourself for a Cats v Port GF?

 

[MD Jazz]

Why?
Are you preparing yourself for a Cats v Port GF?

Trying to get both sides, balance etc etc. Boy it is tough watching though.

Hard to understand how you can buy what he is selling, apparently without question. My mum and her partner think he is great, lucky they are too tight to pay for Foxtel so only get snippets. Otherwise I'd be forever hearing about the constant bias against Trump, the bemoaning of conservative values being lost, the apparent lurch of the Liberals to the left......

 

[Sintiger]

Trying to get both sides, balance etc etc. Boy it is tough watching though.

Hard to understand how you can buy what he is selling, apparently without question. My mum and her partner think he is great, lucky they are too tight to pay for Foxtel so only get snippets. Otherwise I'd be forever hearing about the constant bias against Trump, the bemoaning of conservative values being lost, the apparent lurch of the Liberals to the left......

Anyone who thinks the Libs have lurched left needs to read about their original policy positions when formed.

These words came straight from Robert Menzies' mouth as an example, just after the war. He would turn in his grave at what the Libs have become.

The Liberal Party stands for good wages and conditions; for the prompt re-examination of the Basic Wage by the Arbitration Court, the wage-pegging regulations being relaxed to include any new basic wage so determined; for the provision of adequate tribunals for the timely rectification of grievances; for incentive payments beyond the minimum; for profit sharing wherever it is practicable; for ample security against unemployment and old age and sickness; for a close, generous and friendly contact between employer and employee; for a fair day’s work for a fair day’s pay. It believes in Trade Unionism and in the protection by law of the rights secured by wage-earners. And, because it believes in all these things, it stands for a fair industrial law which will be enforced without fear, favour or greaten, against employer and employee alike.

 

[Brodders17]

Trying to get both sides, balance etc etc. Boy it is tough watching though.

Hard to understand how you can buy what he is selling, apparently without question. My mum and her partner think he is great, lucky they are too tight to pay for Foxtel so only get snippets. Otherwise I'd be forever hearing about the constant bias against Trump, the bemoaning of conservative values being lost, the apparent lurch of the Liberals to the left......

Balance? What do you watch that is the "left" equivalent?

 

[MD Jazz]

Balance? What do you watch that is the "left" equivalent?

Read a few pages of www.victoriansocialists.org.au

 

[Brodders17]

Read a few pages of www.victoriansocialists.org.au

I thought you were suggesting there was a "leftist " equivalent of sky or other Murdoch media.
Which there isn't.

 

[MD Jazz]

I thought you were suggesting there was a "leftist " equivalent of sky or other Murdoch media.
Which there isn't.

No, you brought the word media into it. I mentioned watching SKY to try and understand the right wing message.

I can get my left wing message from left wing sources, doesn't need to be broadcast media.

Unfortunately SKY/The Hun have a huge reach and influence.

 

[DavidSSS]

One weird thing with all the right wingers on Fox is that their ratings are abysmal, they get way too much coverage given their (lack of) audience.

DS