On the government’s inept response to Labor’s trust tax

Martin Gordon writes: Re. “Scott Morrison is doing Shorten’s job for him in selling a trivial trust tax” (Monday).

Bernard seems to have correctly identified a few issues with the Shorten tax proposals, and the Coalition’s inept response. Having read the TAI paper on trusts, and seeing tax assessing and social security means testing up close, I was amazed by Shorten’s revenue claims, but not surprised by his oversell or the inept Coalition response. 

The revenue estimates of about $1 billion a year does not stack up (hence the 10 year projections, which looks like a ski ramp in profile), firstly as the income attracts tax now, and if the additional revenue is correct there must be a lot more beneficiaries than everyone thinks from income splitting. Exempting charities, disability trusts and farm trusts certainly suggests the ALP has learnt from its missteps in farm assets testing in the social security sphere. Incidentally the Howard Coalition Government can claim credit for ensuring that trust assets and private company investments were properly taken into account for social security eligibility, undoing a 17 year inequity created by the ALP.

The imagery of trusts being for rorting tax ignores estate protection as a primary motivation for farms in particular, but it is a handy way of protecting assets generally, plus a very common business structure. Bernard has hit on a good point, an agitated small business sector should not be discounted in its potency.

I am sure tax planners (who are very creative) will be looking at options like changing the character of trust distributions to salary and wages, which would give the impression of improving equality statistically and open up the bonus of access to concessional tax treatment on superannuation contributions!

The oversell of revenue and motives also applies to the negative gearing proposals of both the ALP and Greens. I personally favour a change of capital gains taxation back to taxing in-excess of inflation gains only (as is Access Economics Chris Richardson), but I oppose undoing a long term tax principle of allowing a deduction for expenses incurred in generating taxable income. There seems to be a static model mindset in place, which seems to assume that the market (and tax planners) do not respond to changes. All that will happen under the ALP and Greens proposals is that tax planners will change what their clients invest in. If housing becomes unattractive, then invest in something else. This of course will not improve housing affordability at all, and put a ding in private investment in rental housing.

The bottom line is that the revenue projections are optimistic and way off. I was bemused to see the Bill Shorten concerns about the level of and growth of federal debt, given that his parliamentary antics has helped it no end.

Ralph Brading writes: Re. “Scott Morrison is doing Shorten’s job for him in selling a trivial trust tax” (Monday).

The tired old cliches “class warfare” and a mangled version of “the politics of envy” predictably popped up in the Weekend Australian, and was noted in several places in today’s Crikey.

Knock it on the head with the following quote from Warren Buffet, one who should know: “There’s class warfare all right, but its my class that making war, and we’re winning.”  

On Chris Lilley and Sacha Baron Cohen

Joe Boswell writes: Re. “If we find Chris Lilley’s blackface racist (and it is), what do we make of Sacha Baron Cohen?” (Monday) 

While reading Luke Buckmaster’s succinct description of Sacha Baron Cohen’s character Borat it occurred to me there is an even more significant example of this comedy technique, so I changed the names in this extract from his piece:

Consider [Donald Trump]’s famous, decorum-obliterating [white American] character [POTUS], a feral misogynist and rampant [xenophobe]. In the many times when [POTUS] has elicited support from real-life Americans for his disgusting antics […] the real outrage comes not from [Trump], but from the sincere zealousness of the people around him…

This is dangerous terrain for any comedian. And, to be frank, probably not the sort of comedy anybody should be suggesting anyone make any more of. But at least with [Donald Trump] and [POTUS], there are meaningful layers to the satire — even if the cost of getting them means being exposed to grotesque caricature.

If only being exposed to a caricature was the whole cost we pay for Trump’s comedy. The laugh is on us.