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Tax: what Labor won’t do

Ye shall know them by their fruits. And when it comes to tax reform from Labor,  the fruit is bitter. 

Let’s look first at what Labor won’t do. It won’t attack business tax avoidance. Despite a super profits tax on miners Labor won’ really tax big business.

There are no proposals to make the 40 percent of large companies which currently pay no income tax to pay some.

And it is doing nothing to make those who do pay income tax do so at the headline company tax rate of 30%. For example the finance industry pays on average only 20% company tax as a percentage of its profits. 

Rudd Labor won’t extend its super profits tax on miners to other industries. Yet many of them, like the banks, make super profits too.

Labor is now arguing that the miners don’t own the resources of the country; we all do. 

Well actually that isn’t true.  It is the labour of ordinary working men and women that makes the profits for the BHPs and RioTintos of the world.  The wealth we workers create belongs to us as workers.

The tax system recognises and reinforces the expropriation of that wealth from workers by bosses.  So it is based on the theft of our wealth.

However given that the capitalist system and the way it works seems natural to most people, a super profits tax is  a step forward for bourgeois tax policy. 

But if it is good enough for miners, why not for other industries too?  After all their profits and super profits come from our labour too.

One answer might be, as we have seen today, the sorts of arguments the mining industry is putting: the tax will kill the goose laying the golden egg, unemployment will go up, mining investment will head offshore and the other lies that business sprout when its profits are slightly curtailed.

It’s all bullshit.  Mining capital is on a good thing and they will pass future minor tax increases on to China and India. Or god forbid, squeeze their own ‘super’ profits.

And if it is true that the big miners won’t invest, workers could mobilise to take over the mines or force the Government to nationalise them under workers’ control.

But there is much more tax wise Labor won’t do.  It won’t consider a bequest duty (or inheritance tax).  The sons and daughters of Murdoch and Packer can breathe easy.

It won’t  increase the tax free threshold to $25,000 (and before some criticise me for this, let me add it is not beyond the wit of tax design to phase out the benefits of such an increase as income increases.)

It won’t touch the current capital gains 50% tax reduction concession, which favours those on the highest marginal rate of 45% on incomes over $180,000, and those who hold their wealth in the form of capital (which just happens to be those, you guessed it, on the highest marginal tax rates).

It won’t touch negative gearing, another rort which favours those on the highest marginal tax rates. Again a tapered reduction of the benefit as income and wealth increase is not beyond the wit of tax designers.

It won’t tax the rich on their homes despite the fact that according to the Australian Council of Social Services the rich get four times the benefits of the family home capital gains tax exemption. Again tax designers could taper the benefit to cut out to ensure the rich don’t benefit of all.

It won’t bring pre-1985 assets into the capital gains tax net. It won’t rationalise the current small business capital gains tax concessions.

In a nutshell, Labor won’t tax the rich and the bosses (other than gently plucking the golden down of mining.)

Even the so-called benefit of increasing the superannuation guarantee over the next decade from nine percent to 12 percent will, depending on the level of class struggle, be paid for out of workers’ wage increases if the past is any guide.   In other words this change substitutes workers’ current consumption for future consumption.

The best way to address future retirement incomes for workers is to increase workers real wages now.  That is something Rudd Labor is not prepared to do, in effect  arguing against the pathetic ACTU low paid claim of $27 currently before the Fair Pay Commission.

As for the great moral challenge of our time, there is little in the report and nothing in the Government’s response about using the tax system to change the polluters behaviour and use the funds raised to pay for benefits for the working class. Nothing.

This Government lacks bourgeois vision.  So it would be silly in the extreme to expect it to have a radical pro-working class tax policy that attacks those who live off our labour. That in the end can only come about through a mobilisation of workers which eventually destroys the wage slave system.

In the interim, taxing the rich and their businesses must be the policy of the left.



Pingback from Tweets that mention En Passant » Tax: what Labor won’t do —
Time May 3, 2010 at 10:10 pm

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Comment from Shane H
Time May 3, 2010 at 10:26 pm

I like the part about lack of bourgeois vision but does that mean the Henry review is the touchstone for that. The reports I have read suggest that basically Rudd has picked out 1 or 2 aspects but done very little (in bourgeois terms) to improve things.

I think I’d argue that a 40% tax on superprofits is great but doesn’t go far enough (rather than saying its not a really a tax on big business).

Also the ‘wealth we create belongs to us’ but we didn’t create the coal. It seems to me that there is an oppotunity to ask the question about who owns the coal. As I understand it legally its owned by the state (as a representative of the ‘community’) which is why Rio pays royalties to the state for the right to dig up “our” coal. Of course Rio gets it all back in other forms but it raises the question of public ownership of the commons (as opposed to the commonsense view that the mining companies ‘own’ the coal).

Comment from John
Time May 3, 2010 at 10:53 pm

Shane, I thought I did argue for a super tax on all companies, not just the miners.
Henry at least had some bourgeois vision. That may not make it a touchstone but it is an improvement from the bourgeoisie’s point of view over what Rudd Labor has proposed so far.

We own the coal; we make the profits. two sides of the same coin, aren’t they?

Comment from Marco
Time May 4, 2010 at 12:45 pm

“Henry at least had some bourgeois vision”

The thing with the bourgeoisie and its pollies is not that they are greedy and self-serving or dishonest, but how incredibly incompetent and stupid they are.

They are like the kid who can’t wait until the cake is done, opens the oven, takes the tray and gets its fingers burnt. As a result the kid drops the tray and the boiling mix spills all over its body. Bottom line: no cake and third-degree burns (with any luck).

Believe me: I’ve seen this happen. No politician, businessman or pundit sees it coming: “It can’t possibly happen here, ever; here it’s too freaking nice for that”.

And the cretins go to bed every bloody night comforted by that happy thought (and by the money they extort from the rest of us)… until the very day it happens. And trust me on this: it’s no pretty sight. I’d rather not see it again (and I am aware this may sound strange, coming from a self-described socialist).

You know who’s killing the golden-eggs goose? Those imbeciles.

Comment from Marco
Time May 4, 2010 at 8:02 pm

I don’t agree with all this article says, but it’s not too far off the mark in what concerns housing prices

PM dumps chance to fix housing.
by Julian Disney, 04/05/2010

Instead, the RBA keeps rising interest rates.

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