Thursday, October 18, 2007

A case for much larger tax cuts?

Kenneth Davidson says in The Age this morning that the tax cuts offered by John Howard only compensate for bracket creep – indexed to inflation the cuts deliver nothing to tax-payers. If that is so then the Labor Party and all the other critics of the cuts should endorse the tax cuts now. Otherwise they are effectively agreeing to real tax increases.

Hands up pollies for those in favour of real tax increases over the next three years.

The sensible implication of Davidson’s critique is that, if anything, the cuts should be deeper.


Slim said...

"If that is so.." Harry, you know it is indeed the case.

The critics of the tax cuts are less concerned with the amount of money involved, rather with how it could better spent - public infrastructure such as health and dental services, education, alternative energy R&D, upgrading ports etc. That kind of economic development, not just coupon-clipping cheap exports.

Mark U said...

If the tax cuts are only returning bracket creep, then if Labor return anything less than $34 billion, they are increasing the overall tax burden. The issue then is whether the electorate are prepared to give up some of the $34 billion tax cut for more spending on services.

Anonymous said...

This must be the one time Ken has ever got anyting right as he's worse than a broken clock becasue at least a busted clock is right twice a day.

He's right. The tax cuts ought to be indexed to be honest.

This proves a couple of things.

1. the libs are being dishonest in the amount of money they are returning to the tax payer.

2. Rudd is being more dishonest when comes in with his package.

3. Rudd and the rest of the gang don't know how to figure out what inexing means.

hc said...

Not indexing has been used as a device to make politicians look generous. If Davidson is right I definitely support the cuts.

Slim, With current expenditure programs which are enormous the government is making consistent huge surpluses. It should give the money back.

whyisitso said...

Oh come on, Harry. You're supposed to be the economist, not Kenneth Davidson. Just tells us whether the cuts proposed are less than, greater than or equal to indexation and by how much!

hc said...

whyisitso, No a study is cited by Davidson. I have seen no-one contradict it. I cannot check every empirical claim in economics. You might check this one - there is no economics just arithmetic.