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Sunday, 28 March 2021

Australian Green's Party will make theft their official party policy to take to the next election

Apparently the existing top marginal income tax rate of 45%, plus a 2% medicare levy, plus a 1.5% medicare levy surcharge (if taxpayer does not have private medical insurance) i.e. a total of up to 48.5% tax on high level of income isn't enough taxation for the Australia Greens Party. Plus, of course, GST (10%) on most purchases when you spend the after-tax money you have left after paying income taxes. Plus, miscellaneous other taxes and charges out of the same 'after-tax' income...

So, the Greens Party has announced a new policy of a wealth tax of 6% of the wealth (each year? - the details have not been published yet, just a 'thought bubble') on Australia's wealthiest 122 individuals (not sure how they will work out who has exactly what wealth, as the ATO does not collect wealth data, only income - perhaps they will rely on the 'rich list' published by a magazine? That will be a fun court case for the ATO).

If applied, a 6% annual 'wealth tax' would effectively confiscate 100% of the average after-tax return generated on these assets. Some years the after-income-tax ROI would be more than 6%, but many years it would be less than 6%. Effectively transferring ALL the benefit of having these assets from the individual to the state. Which is effectively theft. Just imagine if financial planners or funds managers were charging 6% annual fee on AUM!

The NZ Greens Party has a more 'reasonable' wealth tax policy - they only propose a 1% wealth tax on anyone with a net worth above $1 million, and 2% wealth tax on those with more than $2 million net worth, so would 'only' be about 1/3 of real returns, but apply at a much lower threshold. Indeed 305,000 of New Zealand's 4.9 million adults have a NW over $1MM - which is around 6.2% of the adult population of NZ.

IMHO any wealth tax, inheritance tax, or other form of government confiscation of wealth is unfair, for the simple reason that the income used to accumulate wealth has already been taxed (at up to ~50% for high incomes when the medicare levy and MLS are included). Having already taken about half of a high income earning individual's income via income tax (or 30% if they make use of trusts to reduce the tax rate to that of company tax), to then take ~100% of the after tax ROI on whatever the individual invests is completely unfair. The fact that this will only apply to a small fraction of the population is beside the point - discrimination against minorities is never OK, be it migrants, LBGTQIA, women, children, the elderly, the rich, the poor, or whoever.

Of course the Greens have no chance of winning government in their own right (they only have one lower house seat at the moment - their best result ever), but are free to propose whatever loony ultra-left policies that will appeal to the neo-communist 7%-11% of voters that consistently give them a couple of Senate seats in most States. They currently have 1/151 house of representative seats (as you have to end up with >50% of the vote after preferences to win an electorates seat), but have 9/76 Senate seats (12% of Senate seats will only around 10% of the vote), so can hold the 'balance of power' in the Senate when Labor wins the lower house, so can have a disproportionate impact on government policy. One way to reduce the influence of the Greens would be for the major parties to be more co-operative in the Senate, regardless of which party happens to have won the last general election and have formed government. Unfortunately, the job of opposition is not to seen to be to challenge and improve government legislation, but simply to score political points and improve their own prospects of winning the next election.

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