Here’s one that will set the Boomers screeching like banshees: threatening to tax them on the grotesque wealth they did sweet-fa to earn. And bugger me if it hasn’t come from a Teal.
The weight of personal income tax would shift from younger working Australians onto older people taking advantage of property tax breaks such as negative gearing under a plan from independent MP Allegra Spender to end “intergenerational inequity” in the tax system […]
Spender urged an overhaul of the tax system to reward people who work for a wage rather than sink money into property.
She’s not wrong about the generational inequity: the Boomers have scarfed up nearly three times as much as any other generation, including their parents. And they’re not too keen on sharing it around, either.
A woman has taken a bold stand against her globetrotting boomer parents and accused them of frittering away her future inheritance on luxury holidays and living the high life.
“My inheritance is being drunk through a straw in a coconut in the Caribbean,” she exclaims in a rant via the Daily Mail.
As her parents unveiled plans for yet another lavish getaway, this time to a villa in Tuscany with a pool and overlooking olive groves, it finally dawned on her – there would be nothing left to pass down.
It’s at this point that a legion of outraged gaffers and gammers start shaking their flabby arms and soaking their Depends. ‘We worked hard for what we have!’ they howl furiously, spraying their oatmeal across the screen. In fact, it was their parents who did all the hard work: fighting through Depression and a World War, to build an unprecedented era of wealth and peace. “These people were given everything. Everything was handed to them. And they took it all,” as George Carlin so witheringly pointed. All while they sneered at “the forces of old and evil”, in the words of Hunter S Thompson.
More importantly, the foundation of their wealth is in real estate: money they didn’t earn so much as passively accumulate. Houses bought for a pittance in the ’70s and ’80s (and spare us the blatherskite about interest rates: even at the height of interest rates in the ’80s, servicing a mortgage was more than three times cheaper than it is today) have become million-dollar properties today.
The upshot is that young people cannot hope to profit from real estate in the same way the Boomers did. Owning their own home is a distant dream for many, let alone reaping the rewards of investment properties.
At the same time, they’re being taxed up the wazoo to pay for the Boomers’ healthcare and pensions. Of the tax take of a worker today, the largest slice (39 per cent) goes to welfare: 34 per cent of that, again the largest part, goes to aged pensions. The next highest tax take (20 per cent) goes to health, which again (40 per cent) mostly goes to the over-65s.
As our society grows more and more top-heavy with spendthrift retirees, clearly something has to give.
Is Allegra Spender, of all people, onto something?
Spender’s proposal is aimed at allaying growing concerns that the tax system is hurting younger Australians in what former Treasury secretary Ken Henry has labelled an act of “intergenerational bastardry”.
Under her plan, income from work would be taxed separately from income generated by investments.
Under long-standing rules, property investors can offset losses from their holdings against income generated from work. This enables a person to “negatively gear”, whereby the loss from the property holdings sharply reduces or even erases their overall income tax.
Spender’s plan would mean property losses could be used only to offset taxable income on other capital investments or be carried forward to tax paid on capital gains when they are sold.
She said the current tax system acted as an incentive for people to sink money into property, but was a disincentive for someone who wanted to boost their skills or work. Moving to a dual-income system would limit the attractiveness of negative gearing and trusts.
“We’re taxing young people when they aren’t getting high pay, and they’re facing high costs such as buying a home or childcare. It’s actively working against young people,” she told this masthead.
If nothing else, Spender is politically crazy-brave.
Any move on negative gearing would affect many of the residents of Spender’s eastern Sydney electorate of Wentworth, the nation’s wealthiest area.
And it’ll set the Boomers howling like broken-backed dogs.
Pass the popcorn.
