Expect Pain on Tuesday

[Belu]

Hi GreatPig,
I read in yesterday's Age that Medicare levy threshold for couples, will rise from $100k to $150K.


Lily

I really don't get the reason for this - I thought the point of the levy was to encourage medium to high income earners to get their own private health care to take the cost away from the government?

 

[Pushka]

I really don't get the reason for this - I thought the point of the levy was to encourage medium to high income earners to get their own private health care to take the cost away from the government?

They are saying that $100k is not a high income threshold anymore. Seems those battling working class families earn a bit more than we think

 

[mrfish]

sigh........... This will be worst budget year for me in my working history...

being single, 30, on 120K and 2 investment properties....

absolutely no benefits for someone like me.....

 

[alexlee]

sigh........... This will be worst budget year for me in my working history...

being single, 30, on 120K and 2 investment properties....

absolutely no benefits for someone like me.....

Though to be fair, the previous couple of budgets have significantly decreased taxes for people on more than 100k. I looked at tax rates for 00/01 (when I left Sydney to work overseas) and 07/08 (when I came back) and was shocked at how big a difference there is.

I suppose the idea is that someone like you doesn't need more benefits, fish. (I'm roughly in the same boat as you).
Alex

 

[landlubber]

I looked at tax rates for 00/01 ....and 07/08..... and was shocked at how big a difference there is.

...and these lower tax rates/ higher thresholds have also significantly and silently reduced the effect/benefit of negative gearing over that time.

LL

 

[alexlee]

...and these lower tax rates/ higher thresholds have also significantly and silently reduced the effect/benefit of negative gearing over that time.

LL

True, but in that period my salary has gone up much more than my negative gearing, so all in all I'm ahead.
Alex

 

[GoAnna!]

As a family living off one wage the tax system is frustrating. If a family has one sole breadwinner earning say $100K they pay a lot more tax than if they each worked at $50K. But at other times they are looked at as a unit (retirement pension for example or entitlement for unemployment benefits) when it suits the ATO.

The one I really love is if you have zero income and a negatively geared property (ie your income is actually minus) then you receive less benefits than if you did not have the property. They say its because you have the negatively gearing benefit. What benefit is it if you have no income to offset it against?

I think its easy to think that another group is getting it better but most of us pay for many services that others use and we don't. And at least kids will pay for other people's pensions and services in years to come....

 

[Pushka]

As a family living off one wage the tax system is frustrating. If a family has one sole breadwinner earning say $100K they pay a lot more tax than if they each worked at $50K. ....

Yes GoAnna, I agree with you totally. Maybe economists will disagree but a major improvement for families would be to allow them to be taxed as a couple and not individuals where there are dependents. This would be far more beneficial than any baby bonus, would raise the self esteem of the 'stay at home person' because in that sense, their efforts in raising children would be recognised as though they were earning 'half of the breadwinners income' - I just cant see any negatives really.

 

[LynnH]

I agree, Goanna and Pushka!! Only trouble is that I can't see any pollie going down that track. Howard talked about it several times over the years, but nothing ever came of it - and that concept doesn't seem to fit into Labor's policy framework, somehow.

Cheers
LynnH

 

[landlubber]

Howard talked about it several times over the years, but nothing ever came of it

I'm TOTALLY in agreement with splitting incomes. But I think the reason it doesn't happen is the up-front-cost in lost tax revenue is just too great. As I recall, the PAYE component of the total tax "grab" is HUGE. Perhaps Kev's overhaul of the tax system will inject some creativity ....naaah ....I'm being way too optimistic !

LL

 

[lizzie]

As a family living off one wage the tax system is frustrating. If a family has one sole breadwinner earning say $100K they pay a lot more tax than if they each worked at $50K. But at other times they are looked at as a unit (retirement pension for example or entitlement for unemployment benefits) when it suits the ATO.

i totally agree - and it peeves me off too ... we would pay less tax, get more benefits and generally be better off if we both worked for half each of what one earns.

i really hope the belt-tightening is on the spending side of the equation, as we don't "spend" much - rather than the "trying to get ahead" side.

i do agree with the government not spending at the moment on infrastructure tho. if they tried to compete in a tight skills market, then it would only drive up wages, costs and inflation ... better to wait a year or so and then take up those workers let go because of the folding companies ...

harsh, but true.

 

[GreatPig]

Why Investors Fail
by John Mauldin
...
Copyright 2008 John Mauldin. All Rights Reserved

Sheesh Willair, if you're going to post the whole article, copyright notice and all, you could at least post a link to it as well:

http://www.frontlinethoughts.com

GP

 

[WinstonWolfe]

John Mauldin puts out the only investment newsletter I read weekly, and have been doing so for 18mths or so. COnsistent level headed insightful perspective from John and guest writers.

Bill Gross of Pimco, and of course Buffett, cannot be ignored.

 

[Ausprop]

couldn't believe it, they are squabbling about means testing a $5000 baby bonus and then drop a lazy $550 million on indigenous housing in the NT... have they completely lost the plot?

 

[lizzie]

I really don't get the reason for this - I thought the point of the levy was to encourage medium to high income earners to get their own private health care to take the cost away from the government?

but ... if we are an example of a "high" income earner - we would probably go to the doctor once a year (if that), haven't used hospital since 2003 when junior was born etc ... so supplying us the health care rebate is actually costing the government more than we would otherwise claim from medicare.

perhaps combined with the admin costs, they've worked that out and will remove the rebate.

 

[Apocalypse]

I don't get where the article implies CGT discount will be shelved? The title speaks of $8 billion worths of cuts to tax breaks, and mentions 2/3 of $51 billion of foregone revenue is due to the CGT discount and 'super perks'.

Cutting the CGT discount would surely 'net' far more than the $8 billion in one fell swoop, without touching anything else.

 

[tubs]

This thread has gone at a million miles an hour. So, while we're at it, my (random) thoughts are:

- Removal of novated leases - wont ever happen. People use it to buy a new car every 3 years so it's propping up the Aus. car industry. Without it, there'd be NO car industry here, and lots of union jobs would go.

- The means testing of the baby bonus would be bad (esp if it came in before November...). It would cost as much to administer as would be saved. If this is labor's strategy I imagine there'd be a new department called the DMT, or the Department of Means Testing set up, and it'd be HUGE. If labor had the chance, you'd have your pay slip scanned at the supermarket so they could work out how much tax you had to pay on your groceries. More bloated public service, and just when Rudd said he was going to reduce it!

Swann effectively said that high earners had to contribute back to those who didnt earn as much. I hope this comment made all people who have gone out and put themselves on the line to earn money really angry.

My wife and I get up at 6am every day, both work very hard and take on a lot of responsibility, look after our families and I even work on my own startup business at home at night. I probably get 5-6 hours sleep a night at MOST! So if I get to the point when I can afford a really expensive car, I am offended by the implication that I should pay more so dole bludgers and people who just want to do their 7 hours a day and go home and sit on the couch and drink can get lots more from the government.

The politics of envy. Turnbull is 100% right. Labor are starting to create the divide between the haves and have nots by playing the 'selfish rich barstads should start giving back to the poor, hard done by masses' card. Makes me angry. Dont know why we bother sometimes. I'm not a bloody cash machine for the 'battlers'. Well, I am actually, I just dont WANT to be.

- And another thing. Why raise taxes anyway when the surplus (the inherited surplus) is going to be huge.

- Oh, and while we're at it. Why have a 'belt tightening' budget at all when the ALP state govts, esp in Victoria are spending money like its going out of fashion at the moment. Do they want to curb inflation or not???

 

[Pushka]

Unfortunately the tax system punishes anyone who earns a high income, and they dont care if their income comes from them having to work 60 hours a week to achieve it. It does not encourage hard work at all. If you then go and buy an expensive car, well, it thinks you must be rich!

It has to cut spending in order to curb inflation; the surplus is kind of irrelevant.

But while petrol is part of the inflation index we will continue to have high inflation, even if the only things we are spending money on is petrol, food and mortgages.

Can this government ride through it - I am not sure it can. Time will tell.

 

[Mike F]

I'm not a bloody cash machine for the 'battlers'. Well, I am actually, I just dont WANT to be.

Love this quote, thats exactly how it feels sometimes. why bother to work hard if they are just going to take it and give it to the 'working families'.

I think Rudd has also annoyed some of the younger voters who gave give him a go with his large increase to alcohol tax.

 

[steveadl]

Swann effectively said that high earners had to contribute back to those who didnt earn as much. I hope this comment made all people who have gone out and put themselves on the line to earn money really angry.

My wife and I get up at 6am every day, both work very hard and take on a lot of responsibility, look after our families and I even work on my own startup business at home at night. I probably get 5-6 hours sleep a night at MOST! So if I get to the point when I can afford a really expensive car, I am offended by the implication that I should pay more so dole bludgers and people who just want to do their 7 hours a day and go home and sit on the couch and drink can get lots more from the government.

The politics of envy. Turnbull is 100% right. Labor are starting to create the divide between the haves and have nots by playing the 'selfish rich barstads should start giving back to the poor, hard done by masses' card. Makes me angry. Dont know why we bother sometimes. I'm not a bloody cash machine for the 'battlers'. Well, I am actually, I just dont WANT to be.

Bloody great post Tubs, kudos!

...... damn, can't give you any more kudos atm. Stop making so much sense!