The Labor Party and Liberal Party are very different these days. One of the differences between the parties can be seen in how they each treat their own supporters when they get into government. The Labor Party rewards the people who voted for them. In contrast, the Liberal Party increases the taxes on the people who voted for them.
The unique mixture of naivety and high-mindedness the Liberals suffer from isn't found in the Labor Party.
In 2014 the Liberals increased taxes on high-income earners in the hope that somehow such self-sacrifice would encourage Labor, the Greens, and the welfare lobby to accept cuts to government spending. The plan didn't work. While the Senate blocked the budget cuts, it gleefully increased the rate of personal income tax for anyone earning more than $180,000 a year.
Treasurer Scott Morrison said he considered raising the GST because of Australia's heavy reliance on personal and company income tax. But only two years ago his predecessor Joe Hockey was putting up income taxes.
Now the Liberal Party looks like it is about to go after its own supporters again. In the wake of the Turnbull government's failure to convince the public that increasing the GST was a good idea (which it wasn't), the Liberals are turning their mind to changing the tax treatment of superannuation, negatively geared property, capital gains, and apparently even company dividends.
Many Liberal Party members wonder aloud why the party they belong to and voted for doesn't spend as much time arguing for industrial relations reform as it does trying to squeeze every last dollar out of taxpayers — taxpayers who already hand over to the government 49 per cent of their income.
Sometimes it's appropriate to be high-minded. A parent coaching a junior football team might deliberately decide to give their daughter less time on the field than her teammates to make the point the coach doesn't play favourites. It's an unfortunate outcome for the daughter, but good for the team.
NOT CHILDREN
But taxpayers aren't children. Very few people earning more than $180,000 a year receive that level of income because they're lucky. It's more likely they've worked hard.
Among all the talk of "fairness" in the tax system, there's seldom discussion of the fact that 50 per cent of all personal income tax is paid by just 10 per cent of taxpayers.
Make no mistake. Any changes the government makes to superannuation or negative gearing is only about getting more money. Any time a so-called "tax concession" is removed taxes go up. The only reason tax concessions on superannuation look so generous is because of the punitive top rate of personal income tax.
Superannuation and property investment are the two main ways the middle class save to provide for their retirement. More than 1.2 million taxpayers negatively gear property.
The median income for taxpayers with a negatively geared property is $60,000 a year. The quickest way to stop people diversifying their lifetime savings and to stop them thinking about how they can care for themselves without relying on a government pension is to threaten to change superannuation and negative gearing.
Changing the rules on superannuation and property investment is not just bad policy, it's bad in practice.
People have made financial decisions with time horizons stretching into the next few decades according to pre-existing tax rules and rates. If tax laws are to operate fairly they need a degree of certainty and predictability.
A Liberal government shouldn't be disturbing long-established principles of tax law simply because it wants additional revenue. During the debate about the renewable energy targets the Liberals bent over backwards to provide investment certainty to the renewable energy lobby. That's not a courtesy the Liberals are extending to self-funded retirees.
There's approximately 2 million Australians whose retirement is entirely or partially self-funded. They've seen the value of their share portfolio shredded and record low interest rates mean they can't rely on the income from their bank deposits.
Now in the midst of all this the Liberal government is contemplating increasing taxes on their superannuation and investment properties.
It looks like Scott Morrison and Malcolm Turnbull are about to embrace some strange policies — and some even stranger politics.
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