On company tax rates
Peter Matters writes: Re. “The economic case for a company tax cut is collapsing“(yesterday). I suspect the discussion about reducing or not reducing company tax is a diversionary election trick. Tony might have taken the company tax reduction proposal to a pre-election budget. One might reproach Malcolm of arrogance, but not of stupidity. Instead, the odds are the budget might contain a bagful of pork barrelling to bribe the electorate. Apart from its inherent dishonesty, such a move might turn out to be even more damaging to Australia than company tax reduction. Furthermore, if that sort of brain washing were to ensure the government another term, the 2017 budget would make Tony’s 2014 budget look like a work of kindness.
Rex Bevan writes: If you measure the company tax rate by what rate of pre-tax corporate profits the government collects, then it is already down to 20%. By all means have a company tax rate of 25%, but only if dividend imputation is got rid of first. Dividend imputation is just another way of describing upper class welfare!
On Safe Schools
Mark Petrolo writes: Re. “Safe Schools is not important and the left needs to shut up about it” (March 24). At first I thought I hated Safe Schools, but I’ve come to realise it’s more the left’s haste to defend it that infuriates me. It’s as if being a religious fanatic or bowing down to Safe Schools no questions asked are the only two options people seem to have. And the less people know about Safe Schools is the greater their conviction.
Nobody seems to care that the need for Safe Schools implies that teachers aren’t being given the tools to deal with LGBTIQ issues in the first place. For some reason when it pertains to LGBTIQ students the left refuse to believe there isn’t a magical state-funded rainbow-powered cure to bullying. Safe Schools is no different to that crappy cautionary anti-drug/alcohol play they made you watch in high school. Even before making wild claims about saving lives, just the name Safe Schools bothers me. The implication being that schools aren’t safe without it is so arrogant. Maybe if Gonski’s plan was called the Real Schools program the left might have made a fraction of the fuss to support it.
Rant over. Thanks as always Helen for being the one voice that doesn’t make me want to kill myself. Even if I’m the only LGBTIQ person whose life is saved by this article it will have been worth it.
Rex,
I don’t think that dividend imputation is ‘upper class welfare’. Regardless of income, the franking credit per share is equal for each Australian taxpayer (there’s no benefit to foreign shareholders). It also provides an incentive for companies to pay dividends and to also pay company tax – in order to have enough franking credits so that their dividends are 100% franked.
“Safe Schools is no different to that crappy cautionary anti-drug/alcohol play they made you watch in high school.”
The entire letter comes across as a bit of a crank (Upset with calling it Safe Schools because it suggests a hint of arrogance? Really? Let’s add a r and call it Safer Schools, problem solved), but what’s the merit in criticising any anti drug/alcohol precautionary class/play? Because (you suppose) they don’t work?
It seems the same (flawed) thinking of people who said “We spent millions of dollars solving the Y2K problem and then nothing bloody happened anyway”.
Wayne Robinson, if you stop to think about it, the amounts of cash benefits individual taxpayers receive are highly skewed in favour of the wealthier taxpayers.
Norman,
You really need to improve your reading skills. I wrote that the franking credit per share is exactly the same regardless of the taxpayer’s income (and marginal tax rate paid). A taxpayer pays tax on the dividend plus the franking credit (which will be more in a high taxable income person than in a low taxable income person). And each person gets a deduction for the franking credit (representing the company tax paid) which is exactly the same regardless of the person’s level of income.
It’s probably true that wealthier people own more shares than poorer people and therefore gain more franking credits than poorer people, but that’s not what I wrote. The fact remains – people on high taxable incomes will pay a higher proportion of tax on dividends than low taxable income individuals. Taxation will still remain progressive.
Dividend imputation does reduce the tax paid on dividends, but it’s the same (per share) regardless of income.
To give a rough hypothetical example, suppose there’s two people who receive a $100 dividend with a $50 franking credit. One is on a 50% marginal tax rate, the other is on 20%. Without dividend imputation, the tax paid by the two is $50 and $20 respectively. With dividend imputation the tax paid is $25 ($75 – tax on $150 at 50% – minus $50) and -$20 ($30 – tax on $150 at 20% – minus $50) which reduces the tax from other sources. Each taxpayer gets the same $50 benefit.
Wayne Robinson, you’d do better advised to try to understand the way the benefits of dividend imputation work in the real world, where it’s skewed dramatically in favour of wealthier individuals.
Even my most mediocre students had no difficulty grasping that concept so you should be able to do so as well. Hopefully you won’t respond with another non sequitur.