Ideas@TheCentre brings you ammunition for conversations around the table. 3 short articles from CIS researchers emailed every Friday on the issues of the week.
‘Bracket creep’ occurs when the thresholds in a graduated tax scale remain fixed despite inflation and growth in real income, resulting in taxpayers paying a greater share of their income in tax. It is the ultimate stealth tax.
Even with low inflation and real wage growth bracket creep can be very costly to taxpayers and bountiful for government revenue. The latest CIS TARGET30 research report released this week (Exposing the stealth tax: the bracket creep rip-off), estimates that cumulative bracket creep since the last change in personal income tax (in 2012-13) will be taking an incremental 2.3 per cent of income from taxpayers on average by 2018-19, and producing an extra $16.7 billion in annual revenue.
Historically the pattern has been for governments to allow bracket creep to continue unchecked for a long run of years and then announce discretionary tax cuts. Today’s circumstances are different. The proceeds of bracket creep have been spent. Far from having a surplus to draw down, the government is running persistent deficits, as highlighted yet again by this week’s budget update (MYEFO).
That is why we are hearing about tax reform that will be, at best, revenue-neutral, with income tax cuts to be paid for by a GST increase. Such a change in the tax mix towards greater ‘efficiency’ appeals to many economists, but sounds like a raw deal to everyday taxpayers.
Not only that, but at least one state premier (Mike Baird) has a plan for the states to receive and spend the proceeds of ten years’ bracket creep after the above-mentioned tax cuts. Should such a plan come to fruition, the end-result would be a much higher tax burden for Australians in 2030. It amounts to saying to taxpayers, you can have income tax cuts soon, but only if you accept a 15% GST, and then the income tax cuts will be taken back (and then some) by 2030 through bracket creep.
In Exposing the stealth tax Michael Potter and I propose to eradicate bracket creep once and for all by automatically indexing thresholds to a measure of income growth or fixing them at particular proportions of average wages.
The research report Exposing the stealth tax: the bracket creep rip-off, by Robert Carling and Michael Potter, was released on Monday, 14 December 2015.
The Centre for Independent Studies announces its second year of nanny state awards, The Nannies. Highlighting the year’s worst examples of imposing regulations or promoting campaigns designed to prevent people exercising the right to think for themselves.
“The Nannies highlight attempts by government to stick its nose into private choices,” CIS research fellow Simon Cowan said in announcing the awards.
Winner: The Greens, for initiating a Senate inquiry into the role children’s toys and entertainment play in creating gender stereotypes and contributing towards domestic violence.
“Everyone is concerned about domestic and family violence, but this senate inquiry seems to be more of an attempt to tell parents how to raise their kids,” Mr Cowan said. “Having a Senate inquiry into toys is absurd.”
2nd Place: NSW Office of Liquor, Gaming & Racing for deeming the bar name ‘Spooning Goats’ offensive.
“As far as I am aware it’s not a crime to actually spoon a goat so why is the name more distasteful than the smell?” Mr Cowan asked.
3rd Place (equal): Victoria’s Port Phillip Council for wanting to ban junk food in its park; and the Therapeutic Goods Administration (TGA) for urging that codeine become a prescription-only medicine.
“The council wanting to ban junk food in its park suggests their attitude is that you are only allowed to have fun in pre-approved ways,” Mr Cowan said. “And you also clearly can’t be trusted to take medicine like simple pain-killers responsibly. Given the cost rises in our health system, is it really a good idea to force people to go to the doctor and get a prescription for codeine?”
A sobering sweep through (American) history showing the failures of so much of what government does, and in failure it seeks to do more. Government over-reach is endemic in the advanced democracies such as Australia. Schuck has suggestions as to how things might be remedied, but that may just be the notion of hope over experience.
Why not re-read Hayek’s classic, a continuing reminder of his warning 70 years ago and of what Schuck clearly describes? Hayek dedicated the book to ‘The socialists of all parties’. Not much it seems has changed.
A fascinating look at how mental health “epidemics” can be more cultural than medical.
Fascinating outsider analysis of the perplexing paradox of the Nordic countries that are simultaneously home to the happiest, silliest, and most sinister people on Earth.
In this 1967 classic masterpiece, the Nobel-laureate author takes us to the multi-generational story of the Buendia family, where fantasy and reality intertwine in a fascinating narrative. The book is a guaranteed good read.
Not a new release and not light-hearted summer reading, but a gripping, disturbing and eloquent essay on entrenched poverty and correlated negative behaviours. “Written in prose that transcends journalism and achieves the quality of literature.” Dr Dalrymple — a British psychiatrist, writer and former prison doctor — will visit Australia as the CIS’s next Scholar-in-Residence in April.
A gritty, insider expose on the events that led to first term Liberal prime minster Tony Abbott being replaced by Malcolm Turnbull. This book divides opinion!
Every weekend tens of thousands of Australian men take to suburban sporting fields chasing a fleeting glimpse of their lost youth and promise, this hilarious book captures that world perfectly and asks why do they (we) do it?
Fascinating insight into the origins of the Yiddish language and how ‘kvetching’ is the Jewish people’s way of understanding the world.
Deeply moving novel based on a true story of an Icelandic woman sentenced to death for murdering two men. Kent’s prose is as crisp and stark as an Icelandic winter.
Not for the faint of heart. Balko’s digestible, journalistic style combined with a research edge learned from his time at the Cato Institute makes this an excellent, if at times chilling, read.
A frontier tale set on the banks of the Hawkesbury, Grenville draws on her own family’s story to illuminate one of the darker corners of Australian history.
Covers the disappearance of Samantha Knight, one of Australia’s great criminal mysteries. An intriguing, engaging and revealing read.
A new biography of Richard Nixon which presents a remarkable portrait of the complex and confounding figure who became the 37th President of the United States.
First published in 1952 this superb account of the 2nd World War opened my eyes to the intricacies of diplomatic activities, the grand personalities and the panorama of the events. I went on a gripping ride that appeared as though it could have gone in any direction. Not for the faint hearted in terms of the length but worth every minute.
Engrossing memoir offers fascinating insights into the younger Abbott, Turnbull, Rudd, Carr and many other key figures during Sheridan’s university years and early career as a union organiser and journalist.
A searing dissection of the misguided ideology and inaction that has sentenced to thousands of children to lives without stable homes – and many of them to neglect, abuse or horrific deaths.
A definitive account of the Rudd/Gillard years by Australia’s pre-eminent political columnist and historian. Accurately explains how so much promise was squandered, and persuasively argues that the quality of Australia’s political class has worsened.
A clear and insightful addition to Australia’s economic history, charting the confusing and contradictory views of Australians and (particularly) politicians about foreign investment, giving the worst offenders plenty of opportunity to incriminate themselves.
An alarming account of US withdrawal from world leadership under the Presidency of Barak Obama. Explains why the Obama administration’s dream of international cooperation as the key to global peace and security is a dangerous dream, and asks whether American policymakers have the will to recover the strategic initiative and shape global affairs as decisively as US leadership did to defeat the twin totalitarian threats of Nazism and Communism in the 20th century.