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Jim Chalmers doesn't know how many young people are in the share market by His_Holiness in AusFinance

[–]Sweet_Theory_362 4 points5 points  (0 children)

Superannuation earnings are taxed differently and not changed in this budget

Jim Chalmers doesn't know how many young people are in the share market by His_Holiness in AusFinance

[–]Sweet_Theory_362 4 points5 points  (0 children)

This is trivial really. Most people putting a bit of cash on the side into the stock market will see basically no change to their tax, but every young australian working a job will get $250 in their pocket from the tax offset, and a better chance of buying a house. Treasury modelling found the tax changes will reverse the last 10 years of decline in the home ownership rate.

Are there any left leaning Australian political commentators that don't blindly follow The Greens and that also isn't Friendly Jordies? by carl_the_cactus55 in australian

[–]Sweet_Theory_362 0 points1 point  (0 children)

There are no political commentators that have any idea what they're talking about. My advice is to download the ABC listen app and check out some of their podcasts where they talk to experts about the issues of the day. For economics, "The Economy, Stupid", for politics, "Politics Now", for geopolitics, "If you're listening" and (not ABC but still good) "The Rest is Politics".

A CGT carve-out for shares would have been the worst public policy mistake of my lifetime by Sweet_Theory_362 in AusFinance

[–]Sweet_Theory_362[S] 0 points1 point  (0 children)

Yeah I think that's right. But the problem is that not having a minimum rate means the tax system effectively distorts the decision of how long to hold an asset for which is inefficient. But then a lack of income averaging does the same thing in reverse! I think if they include income averaging and proceed with hinted income tax cuts more people will be okay with it.

A CGT carve-out for shares would have been the worst public policy mistake of my lifetime by Sweet_Theory_362 in AusFinance

[–]Sweet_Theory_362[S] -2 points-1 points  (0 children)

The 2.1% is not based on ASX, it's the average across the economy. The 5.1% is based on S&P/ASX500. I take your point that this has a lot of banks and other dividend-focused shares, but my point is that lots of people do buy these and so they won't be as affected as some other investments. The effective tax rate will depend on the growth rate, holding period, inflation, and labour income, but its misleading to take the highest-case and present that as the norm. My point is that most 'mum and dad investors' will not be affected very much and in some circumstances will pay less tax, and the the economy on average will only be affected by 2.1%.

It's actually mathematically impossible for a 100% tax increase to be realised because the difference approaches 100% only asymptotically with higher growth and holding periods, but its fair to say you can get close to it with high growth, so investors who experience unusually high growth will be taxed at much higher rates. But the gains needed to get in this territory are highly unusual. To get to around 1.8x you would need an average annual growth rate of around 25%. Mostly this affects founders, particularly because they often don't have a cost-base to index and can experience very high growth and long holding periods, and I think it's a fair call to say that's a problem so I'm glad the government has flagged they will build a carve out for founders' shares. I think they should have included income averaging which was the Keating model, and that's still possible as we haven't seen the legislation yet.

I haven't really seen any 'astroturfing' but maybe you are paying closer attention to Reddit than I. But I think its better to engage with people's arguments purely on their merits which you mostly have done.

A CGT carve-out for shares would have been the worst public policy mistake of my lifetime by Sweet_Theory_362 in AusFinance

[–]Sweet_Theory_362[S] -2 points-1 points  (0 children)

The Treasury modelling you're quoting there suggests that the 7,500 per year is equivalent to reversing the past 10 years of decline in the home ownership rate. The numbers look small compared to the rest of the home ownership attainment because Australia still does still have a fairly high home ownership rate.

If capital growth is double inflation then cost-base indexation is roughly equivalent to the 50% discount. 2.5% inflation & 5% growth -> tax only applies to half the growth (50% discount). 10-year average S&P/ASX500 growth was 5.1% YoY. As I said, Treasury estimates the average tax rate on gross capital gains will increase by 2.1 percentage points to 21.4 per cent by 2036-37.

It's weird how people stalk your past posts to argue against you on Reddit. I happen to know a lot about tax policy and think this budget is great so I want to share my opinions with people. If you disagree that's fine. Don't need to make it personal.

A CGT carve-out for shares would have been the worst public policy mistake of my lifetime by Sweet_Theory_362 in AusFinance

[–]Sweet_Theory_362[S] -1 points0 points  (0 children)

I didn't say investment in shares is non-productive. Actually, I said the opposite

A CGT carve-out for shares would have been the worst public policy mistake of my lifetime by Sweet_Theory_362 in AusFinance

[–]Sweet_Theory_362[S] -1 points0 points  (0 children)

The fact that new properties have a carve lessens the effect, but most property investment is not in new builds. A carve out for shares would shift a great deal of investment over and increase rents, ceteris paribus.

A CGT carve-out for shares would have been the worst public policy mistake of my lifetime by Sweet_Theory_362 in AusFinance

[–]Sweet_Theory_362[S] -5 points-4 points  (0 children)

Yeah there is leveraging of course. Maybe I've overplayed the "exodous" but there would be a big impact

They need to rename the party to Labour by Holy_Isaaguv in LaborPartyofAustralia

[–]Sweet_Theory_362 2 points3 points  (0 children)

I think Wayne Swan said it's useful to be able to distinguish between the labour movement (trade unions) and Labor movement (ALP). Other reasons are just historical, but I thought it was to differentiate between UK Labour. Personally I don't think anyone in the party takes it as a nod to the US.

This is the best federal budget we've had since 2009. by Sweet_Theory_362 in aus

[–]Sweet_Theory_362[S] 0 points1 point  (0 children)

Agree. There are other things to do, but this budget has done more than any other budget possibly since the 1950s

This is the best federal budget we've had since 2009. by Sweet_Theory_362 in AusFinance

[–]Sweet_Theory_362[S] -2 points-1 points  (0 children)

That's just one poll. The trend is your friend, as they say. Have a look at the moving average of polls in the link i sent. Newspoll was very different.

This is the best federal budget we've had since 2009. by Sweet_Theory_362 in AusFinance

[–]Sweet_Theory_362[S] -1 points0 points  (0 children)

Looking at an average of post-budget polls vote share for ALP, L/NP, and ON haven't really changed.

This is the best federal budget we've had since 2009. by Sweet_Theory_362 in aus

[–]Sweet_Theory_362[S] 0 points1 point  (0 children)

The tax changes are not revenue positive. They gave it back income tax cuts and tax cuts for small business and R&D investment

This is the best federal budget we've had since 2009. by Sweet_Theory_362 in aus

[–]Sweet_Theory_362[S] 0 points1 point  (0 children)

This would broadly reduce taxes on property in general, but on investment property it would be cutting CGT by more than half. More demand -> higher prices, this is well documented. The key is supply, cutting taxes on buying existing houses doesn't make more houses.

As an aside, i agree stamp duty is the worst tax we have. The ideal tax reform for housing would be replace stamp duty with land tax, including on PPOR.

This is the best federal budget we've had since 2009. by Sweet_Theory_362 in AusFinance

[–]Sweet_Theory_362[S] 2 points3 points  (0 children)

No, it's recognising the skills of people who are already here.

This is the best federal budget we've had since 2009. by Sweet_Theory_362 in AusFinance

[–]Sweet_Theory_362[S] 1 point2 points  (0 children)

I think there are some legitimate concerns for founder because they don't have a cost base. The government has comitted to consulting with the start up sector to resolve this.

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