Charlie Munger is amongst the wisest men living today. His analysis of the “Standard Causes Of Human Misjudgement” highlights the utmost importance of the correct incentives in a system for achieving the correct outcomes.
Australia’s tax incentives are failing our population. As Tony Abbott prepares the nation to increase the tax rates due to a hole in the budget, he continues to encourage the asinine incentives of offering a tax deduction to lose money.
If I seek to lose money on an asset, I will reduce my personal income tax. Let me repeat that. If I actively look to lose money on something completely unrelated to my income, I get a tax deduction.
The government subsidises negative gearing to the tune of $7.8 billion dollars per annum and they want us to pay an increased tax to cover the loss making landlords.
I am very happy to pay higher tax rates than other countries. Australia is a wonderful place to live and due to its size, it is inevitable that higher tax rates are required to fund the lower population density to cover roads etc.
I vehemently oppose higher taxes which fund loss making irrational investors, which does nothing for the nation other than drive up property prices.
Higher property prices are a tax on Australians. They force us to pay more to simply have a roof over our head, which requires higher incomes just to sustain a basic lifestyle. This requires us to have higher wages to survive and intern makes us less competitive within the global economy.
With the correct tax incentives, the government can reduce wasted money in the system and increase the wealth of all Australians. Unfortunately the short term thinking of our politicians leads to long term wastage of funds and higher living expenses for all Australians.
I suspect this latest tax hike will encourage more Australians to look at moving overseas to less expensive and less punitive tax environments.