negative gearing

[tobe]

theres been a few threads on this topic. Recent article went thorugh some of the numbers, and an interesting quote from Peter Costello, which was cute...

Work for a living and we’ll tax you at close to 50 cents in the dollar; speculate and we'll only take 25 cents. Not only that but, as a special deal – while stocks last – we’ll pay half your speculating costs.

http://www.propertyobserver.com.au/...edium=email&utm_source=Property+Observer+List

 

[BayView]

Waddabowt the Gubbmint charges?

Amazing how the bloody Gubbmint always neglects to mention how much of the total real estate pie is made up of their charges and fees.

What they pay back to the investors in tax refunds for IP's etc is a small % of their total revenue from the industry.

The GST alone on our last PPoR build was more than a year's wages for an above average income earner.

 

[BMW]

I don’t have an opinion either way on negative gearing, but what annoys me is reading that negative gearing is biased towards higher income earners. This is only because the tax system is biased AGAINST higher income earners.
Introduce a flat tax rate and the problem is solved, everyone gets the same deal. Although Australia seems to suffer too much from the tall poppy syndrome for this to ever happen. Why Fred should be forced to subsidise Paul is beyond me, it shouldn’t happen in a free country /rant

 

[Aaron Sice]

The GST alone on our last PPoR build was more than a year's wages for an above average income earner.

GST isn't a tax, per se. you can't really comapre apples with apples, there.

it increases the speed of money through the system, artificially pumping up the perception of a better economy.

it's the speed of money that guarantees a better economy, not how much money there is.

 

[tom32]

I don’t have an opinion either way on negative gearing, but what annoys me is reading that negative gearing is biased towards higher income earners. This is only because the tax system is biased AGAINST higher income earners.
Introduce a flat tax rate and the problem is solved, everyone gets the same deal. Although Australia seems to suffer too much from the tall poppy syndrome for this to ever happen. Why Fred should be forced to subsidise Paul is beyond me, it shouldn’t happen in a free country /rant

I don't think progressive taxation has a lot to do with whether one lives in a free country.

Putting aside the fact, I don't think Australia is as free as it should be around regulation and the likes progressive taxation of income does make a bit of sense.

When I look around I think the amount I pay in tax is fair given what this country has offered me. Sure I minimise what I can and some things really **** me off when they seem unfair. I always seem to miss out on handouts by about $1000.00 or one child... but overall I can understand why I have to pay more per dollar in tax than someone else who earns less.

To me it takes all sorts to make up an economy and those on the higher incomes are capitalising on what this country has to offer. Sure they earn it, but they are rewarded by being here. Whinging about some fella on 40k getting away with paying a lower amount of tax per dollar does not really enter into it for me, as I consider myself "lucky" compared to him and really don't resent him at all for at least having a go and working at all. If that was all I could earn I don't know I would bother getting off my **** at all?

People have to be incentivised to work and if you are going to tax people as soon as they earn any income why bother working at all.

All that said I agree with your initial assertion about it being more of a benifit of the rich than the poor around negative gearing. Indeed this could be said of super (till they started taxing it for high income earners at marginal rates) and other places you can put your money to avoid it being considered to make you income (or in the case of negative gearing reducing your income).

 

[equitymate]

Imagine there are two identical twins in the womb, both equally bright and energetic. And the genie says to them, “One of you is going to be born in the United States, and one of you is going to be born in Bangladesh. And if you wind up in Bangladesh, you will pay no taxes. What percentage of your income would you bid to be the one that is born in the United States?” It says something about the fact that society has something to do with your fate and not just your innate qualities. The people who say, “I did it all myself,” and think of themselves as Horatio Alger – believe me, they’d bid more to be in the United States than in Bangladesh. That’s the Ovarian Lottery - Warren Buffett

The above could also be applied to Australian, self interest blinds a lot of people but even as a conservative I can see this.

 

[gooram]

Amazing how the bloody Gubbmint always neglects to mention how much of the total real estate pie is made up of their charges and fees.

What they pay back to the investors in tax refunds for IP's etc is a small % of their total revenue from the industry.

The GST alone on our last PPoR build was more than a year's wages for an above average income earner.

Well said.

Not to mention the whole idea behind negative gearing was to subsidise the outsourcing of public housing. The government could never afford nor manage a rental market without private landlords, so it's in their best interest to subsidise it, and to keep that subsidy going.

 

[gooram]

I don’t have an opinion either way on negative gearing, but what annoys me is reading that negative gearing is biased towards higher income earners. This is only because the tax system is biased AGAINST higher income earners.
Introduce a flat tax rate and the problem is solved, everyone gets the same deal. Although Australia seems to suffer too much from the tall poppy syndrome for this to ever happen. Why Fred should be forced to subsidise Paul is beyond me, it shouldn’t happen in a free country /rant

You will probably find that the majority of high income earners are happy to pay more tax if those tax dollars are being put to good use. That's probably where it breaks down, in how people percieve their dollars are being spent.

I am very happy for my tax dollars to go to those less fortunately that I, and I would pay more tax if I thought it would help more poeple.

It was interesting on Q&A when Barnaby Joyce ridiculed this suggestion and asked the audience who would be prepared to pay more tax to support the NDIS and the Gonski recommendations, over half put up their hand.

 

[tobe]

Well said.

Not to mention the whole idea behind negative gearing was to subsidise the outsourcing of public housing. The government could never afford nor manage a rental market without private landlords, so it's in their best interest to subsidise it, and to keep that subsidy going.

I cant remember that being the reason before the fact. That argument has been used plenty since then, but where is the evidence that subsidising landlords by negative gearing and low income earners with rent assistance is cheaper than just subsidising low income earners?
the cost benefit just hasnt been done.

 

[Aaron_C]

It was interesting on Q&A when Barnaby Joyce ridiculed this suggestion and asked the audience who would be prepared to pay more tax to support the NDIS and the Gonski recommendations, over half put up their hand.

That's because the people who go to Q&A don't actually work or pay tax so it's a stupid argument.

 

[BayView]

GST isn't a tax, per se. you can't really comapre apples with apples, there.

it increases the speed of money through the system, artificially pumping up the perception of a better economy.

What is it if it isn't a tax - Goods and Services TAX. Even the Gubbmint call it a tax, and they are the Kings of never calling a spade a spade.

I didn't label it as a tax btw - it is another cost that is making houses more expensive, but never gets mentioned as a cause - even in the media..

Whinging about some fella on 40k getting away with paying a lower amount of tax per dollar does not really enter into it for me, as I consider myself "lucky" compared to him and really don't resent him at all for at least having a go and working at all. If that was all I could earn I don't know I would bother getting off my **** at all?

I the lower earners should pay less tax, but the increase in % for the higher earners; I don't.

A flat rate of tax across the spectrum would be fair, with incentives based on investment, saving and spending built in accordingly.

The incentive to work more hours and/or harder is taken away when the % per dollar you pay increases. So many folk would willingly do more overtime, a second job etc if this wasn't the case.

it's the speed of money that guarantees a better economy, not how much money there is.

Having houses which are unaffordable for many, and thus Banks won't lend them funds due to serviceability and/or LVR issues doesn't help with the speed of money.

 

[plusnq]

GST isn't a tax, per se. you can't really comapre apples with apples, there.

it increases the speed of money through the system, artificially pumping up the perception of a better economy.

it's the speed of money that guarantees a better economy, not how much money there is.

http://en.wikipedia.org/wiki/Velocity_of_money

The amount of money in circulation is part of the velocity of money equation. FYI

Cheers

Shane

 

[tobe]

http://www.propertyobserver.com.au/...d4-December_14_201212_4_2012&utm_medium=email

Another article on negative gearing, this time from an RP data economist.

His argument seems to be, negative gearing costs the government, but it costs less than if the government were to build those houses themselves.

Why would the government need to build the rental accomodation themselves? They could just give NG to new builds, or just keep providing rent assistance to low income households. The argument doesnt bear wieght in my opinion, because it only compares the cost of NG to some kind of soviet model of government housing......