En Passant

Our beloved Treasurer Wayne Swann was out of the blocks quicker than Usain Bolt to deny there would be a capital gains tax (CGT) on the homes of the rich.

Now I have to declare an interest here.  I have been arguing for just such a tax in academic publications since 1990.

Indeed in my submission to the Henry Tax Review I argued again for it.

Here is part of what I wrote in that submission, called Real Tax Reform: A Love Letter to Ken Henry:

I’d also suggest abolishing the CGT exemption on houses worth more than a set figure, such a figure being determined by the value the rich have in their houses (for example over $1 million.)

I am sure Treasury could easily do the modelling (and probably already has).

I am a reasonable man and would accept the limit be increased to $2 million.

This won’t hit ordinary workers. Housing sales in Australia of more than $2 million represent just 2 percent of all sales. 

The estimated revenue from taxing the rich on their houses would only be in the order of $125 million. This is not much.

While we are talking about the CGT, we should also abolish the 50% reduction in capital gains tax for holding an asset for more than 12 months.

These present arrangements benefit the holders of capital, overwhelmingly the rich. 

They also reflect the antiquated idea that capital is in some way separate from income in terms of taxation, a nonsensical distinction developed to benefit the feudal landed gentry and seized on by the bourgeoisie for their own further enrichment.

A CGT on the houses of the rich is a poor man’s wealth tax.

It is time to abolish Jo Bjelke-Petersen’s final legacy and impose a full blown wealth tax, or at least its cousin, a gift and inheritance tax.

As I wrote in my submission to the Henry Review:

Inheritance taxes on estates worth more than say $2m in aggregate would partly replace the $30  billion or so of GST revenue lost as a consequence [of its repeal on equity grounds], as would a restructured income tax system.

Labor of course can’t even stomach a tax on that two percent of Australian society whose homes are worth more than $2 million, let alone a real wealth or inheritance tax.

This is because Labor is trapped in the logic of capital and the capital accumulation process. It fears a tax on the rich will interfere with the smooth running of the capital accumulation process.

A wealth tax would also upset their political masters and might impact ever so slightly on the rate of profit.

But there is more. Why not tax the big polluters and prevent them and energy retailers from passing on price increases to working class consumers?

Soak the rich till their pips squeak.

Labor won’t tax the rich because it believes in the primacy of profit and the lie of the trickle down theory – what’s good for the rich is good for the rest of us.