Reader, you know your editor is like a dog with a bone. Once we start on a subject it tends to consume us for several days, almost without break.
Our property mumblings are a perfect example. We take a massive bite and just can’t let go. Eventually one of us gets bored and so we move on to the next thing.
As for property, we’ll come back to it at some point. We’re just waiting for something big and juicy to turn up before we do.
Yesterday we spent most of the day researching for the next issue of Australian Small Cap Investigator. There are two stocks we’ve got on the radar, and unless something turns up which we don’t like then we plan tipping both of them.
According to our assistant publisher, Joanne Ha, this month’s edition should be completed and mailed out to subscribers by tomorrow…
But according to your editor, it will be completed and mailed out next week.
We’re not normally game enough to argue with our Taekwondo-kicking assistant publisher, but now that we occupy separate rooms in our office on Fitzroy Street there’s less chance of us receiving a kick to the head if we’re late! [Closes office door]
So, if you subscribe to Australian Small Cap Investigator, stay tuned, and you should get your September issue by early next week.
Anyway, our point is, yesterday while taking a break from poring over presentations, balance sheets and income statements we couldn’t help but pay a visit to the Tax Review website.
I know, I know… we’ve got a fab office in Fitzroy Street, just a two minute stroll from the beach, and I’m looking at submissions to the tax review.
Well, before we get stuck in to the September issue of Australian Small Cap Investigator again today we decided to have another look at the website. If you haven’t looked yet you can do so by clicking here.
As you can imagine, it’s not exactly a barrel of laughs, but it does – in our opinion – make for a number of interesting reads…
And a few worrying ones too.
In a moment we’ll take a look at one of the submissions. But based on all the ones we’ve looked at they have a striking similarity.
That is the belief they’ve discovered the ‘magic bullet’ for tax and pension reform.
Look, there’s nothing wrong with looking for the perfect solution to something, we try to do that all the time. There is one difference though. We favour getting rid of regulations, taxation and compulsion and letting free enterprise and dare we say it, the individual make their own choices.
Who am I to say I know how to do anything better than someone else? I reckon I’m pretty good at picking small cap stocks, but I don’t force you take out a subscription to Australian Small Cap Investigator.
If you want to, then great, welcome aboard. If you don’t, then no hard feelings.
Yet the coercive sector (government) forces you to pay a subscription to their services through taxation. Even if you don’t want to use it, or can get a better service elsewhere.
Take education for example. Whether you like it or not, a portion of your taxes go towards paying for government schools. Even if you don’t have kids. But even if you do have kids and you choose to send them to private school, then you’re still paying for the government schools.
How does that make sense? Imagine being forced to pay for Australian Small Cap Investigator even though you didn’t want it. Would that be fair?
It would be great for us of course, but it wouldn’t be good for you.
But, the submissions to Dr. Henry’s expert panel all seem to want to make decisions for everyone else.
Several times we’ve seen promising statements in the submissions which support abolishing a tax rate, only for our hopes to be dashed by the suggestion of an alternative tax rate which is just as bad – or worse.
Above I mentioned this was all very ‘worrying,’ well, it’s sad too. Because the idea that individuals should be controlled and manipulated by government and special interest groups has filtered down to the youngsters as well.
That’s right, it’s not just the nutters in Canberra that think they know best.
Take these excerpts from a submission by tertiary student Michelle But:
“As a tertiary student and a member of the public, I am honored [sic] to contribute my submission based on the topic of “Retirement Income System” to the Review Panel, which is led by Dr Ken Henry, Secretary to the Treasury. I welcome and look forward to future improvements on the Retirement Income System made by the Australian Government.”
“Honored” – your editor is speechless. Perhaps we should now all bow when Emperor Henry enters a room!
Michelle’s submission continues:
“Australia’s retirement income system plays a pivotal role on financial security and retirement welfare. Currently, not every retired Australian in receipt of Centrelink Age Pension can afford to have the lifestyle they want, not every working Australian qualifies for the 9% compulsory employer superannuation and not every Australian has sufficient voluntary savings at retirement. If, however, the Government acts NOW through the implementation of specific changes to the superannuation rules, then ‘YES, WE CAN’ alleviate these issues in the future.”
Those are Michelle’s bolds and caps, not ours.
Of course, Michelle has a solution, which is, “increasing compulsory employer SG contribution from 9% to 15% by 2012.”
The funds management industry couldn’t have put it better themselves.
But young Michelle goes one step further. She has an idea that not even the fund managers or the unions have dare come up with. But we’re sure they’ll jump all over it when they see it:
“Australians can voluntarily contribute their before-tax income into superannuation through the super salary sacrifice scheme (taxed at 15%). However, the Government needs to enforce gradual compulsory superannuation savings at 15%.”
Got that?! Based on this proposal – if we’ve got it right – 30% of your salary would go towards superannuation. Take off tax, levies, surcharges, etc… and you’ll be left with about $5 in your pay packet by the end of each week.
Look, we had to read that part of the submission again to make sure we read it correctly. We’re almost tempted to give her the benefit of the doubt. Can she really be arguing for a 30% superannuation contribution?
Look, this is an extreme proposal that Lenin would be proud of. We’re not sure that even Comrade Rudd would go that far. But maybe he would.
In fact, long term we’ll probably find Michelle’s proposal to be not far from the mark.
But it’s not just Michelle, look at any one of the submissions on Dr. Henry’s website. They all have similar proposals. And that is pleading with the government to rob you blind.
Every single submission we’ve read advocates taking money from your pocket and giving it to someone else.
Somewhere in the mind of these people they believe that you’re incapable of looking after yourself and your own money. As Michelle puts it, “to avoid squandering.”
What a cheek. Here’s some breaking news. If someone wants to squander their money let them do it. If they know there is no government bail out them odds are they won’t squander the money to begin with.
If they still go ahead and blow it all, well, tough luck. Arguing that your earnings should be taken by force just on the off chance you may make some bad decisions is ludicrous.
Besides, there’s no guarantee you’ll ever see that money again anyway. By the time the government has frittered it away, and fund managers have taken their slice, and inflation has munched at another portion, the New Age Pension won’t be worth waiting for.
In fact, the more government gets involved and the less control you have over your money, the greater the chance is that you never will get your hands on it.
The problem as we see it, is the entirely false belief that people’s behaviour can be controlled. It can’t. Many people can’t control themselves from doing irrational or compulsive things, let alone other people.
But that’s not a bad thing. It’s good, and it should be encouraged.
The problem is, centralists and government-lovers believe they can control every aspect of people’s lives and the economy as a whole. They can’t, it’s impossible.
People make all sorts of decisions on a daily basis. Some of them aren’t rational, and some of them aren’t logical. But that’s just the way it is.
The sad thing is when you have some individuals pleading with control freaks in government to steal more money away from other individuals. And it’s always done in the belief that a centralised government bureaucracy knows how to do things better than an individual.
But the evidence is firmly against this. Everywhere, without exception, where government is involved, things are a mess and the individual is disadvantaged:
Health care, education, roads, public transport, telecommunications, legal system, etc…
There’s not one thing the government does better than could be done by the private sector. Not one single thing.
The fact is – yes, fact – that no-one can manipulate anything without it having unforeseen consequences elsewhere. More money being stolen from individuals to go into superannuation and government coffers means less money remaining with the individual.
What’s the consequence of that?
You guessed it, a greater reliance by the individual on the government. Which means?
You guessed it, an increase in services to be provided by the government, which means higher taxes, and even less money remaining with the individual.
And most important of all. If the government controls the supply of money to the public then they have almost unlimited power over them.
As I mentioned above, I encourage you to take a look at the submissions to the Tax Review website. You may not like what you read but you should know what other people are planning to do with your money.
Other Stuff on the Markets
The S&P/ASX200 slipped 0.29% yesterday, while overnight on Wall Street the Dow Jones Industrial Average added 51 points. In Europe the FTSE100 gained 0.16% and the CAC40 added 0.30%.
The price of gold in Australian dollars is trading at $1,160.54, while in US Dollars it is trading at $1,015.35. And the price of silver in Aussie dollars is $19.62 and in US Dollars it is $17.17.
The Aussie dollar gained versus the US dollar and Japanese Yen, trading at USD$0.8734, and JPY79.63.
Crude oil closed overnight at USD$71.63.
For the biggest movers on the market yesterday click here…
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cb – some mischievous cynicism from your side!
Surely you can see that they only carpetbombed communists and others who threatened world peace … ;p
Well, beside the obligatory masses of innocent people, yes, there were some communists, fascists, and other ‘aliens,’ as Americans are won’t to call them, lol. The point I was trying to make is that, regardless of the justification, the industrial capacity of Europe and large sections of Asia were wiped out, while the US’s war industry was quickly transformed and was able to take full advantage of the immense demand the necessary rebuilding generated.
This was part of why the US did so well in the decades following the war years, which is not to deny that free enterprise and vibrant capitalism were part and parcel of what made America so great in the first place. Alas, the tremendous advantages of advanced knowledge, technology and industrial capacity have now been largely lost, as these were allowed to be transferred to compentitors in just a couple of decades. And for what? The enrichment of a privileged few to the detriment of the American worker who has no chance of competing with workers on a fraction of what they need to earn to make ends meet. But, hey, we can also look a the bight side: millions and millions around the world have been lifted out of abject poverty, so there is also another, brighter side to this story.
I have been a taxpayer all my working life. I have hated the Tax and Political systems and for what they stand for…greed, manipulation, lies. I have detested huge tax being paid on what I have strived to earn. It is a grossly unfair and burdensome method.
They do not “feel” for you, they are against you.
If you are a worker and you use your money wisely, save, buy investments and pay your debts, then your money should not be taken from you from all levels of tax through what you pay for an item. Consider the taxes imposed on certain items purchased and how many times that article is taxed…and there does not seem to be a stopping point, even when you die.
All people should pay a tax/tithe of 10% of their earnings yearly and not a tit more. This is to be used for health and education. The government should have no involvement with anything that private enterprise can do. No individual items of food, land, money, is to be taxed as you bought it with your money, they should have nothing to gain from it for the rest of your life.
Your savings in your bank should be tax free….a good incentive to encourage savings and another way to stop people having to go on “welfare”…..but the tax system wants you to.
Actually, the old age pension should be automatically an eligible persons right when they turn 65, seeing they have shouldered the heavy tax burden all of their working life. The ones who have not are not eligible….an incentive that they have to get off their butts and work in order to eat , and give up the burdens on our health system- smoking, drinking and drugs.
People should only pay tax if they drink, smoke or gamble…as these “habits”are very unnecessary in our lives. Our responsibility is to look after ourselves and our bodies with correct food and diet.
I know people become poor sometimes through no fault of their own, but the majority smoke, drink, gamble and abuse the opportunity to look after themselves, and therefore our tax system has to help them. In fact if these “bludgers” did not get a handout and had to work to eat, then our need for a tax system would diminish.
Health and education would be free.
Notice the political systems are hardly called a democracy. Sure we have freedom of speech but not freedom of right. Its all been removed….such as “why is it compulsory to vote”?. Why would you want to, knowing that the dropkicks that gets in will always let you down, no matter which party it is. We are very much heading to communism and are in a form of it right now, socialism.
The political systems are all joining up with each other. We are just an offshoot of the EU, but not joined to it. Look at the pandering Mr Rudd has been doing in Europe, the G20…and they all love one another. Why would you vote for systems that are not capable of governing, in fact, it gets wrong and burdensome all the time.
I think we will destroy ourselves.
Just waiting for that to happen and all the money in the world won’t help, except to buy the armaments needed to fight when the crunch comes.
Phew, letting off steam.
Good on you, Jan. Chances are that the majority of the taxes we pay are squandered on fat cat bureaucrats, politicians, and their buddies. On senseless wars overseas, and on mad projects like trying to change the climate, instead of helping the nation to adapt to it. Unbelievable what goes down. But don’t worry. The situation is hopeless, but not that serious. Some consolation could be found in the thought that not even the scoundrels will make it out of this life alive. Pray that there is God and justice on the other side. This is what I call the last hope.
Ms.But should have done some research. I wonder what discipline she studies, maybe political economics, but apparently she has no understanding of the economy at all.
Before you raise the SGC any higher than 9%, you need to think about where the extra money will come from. It’ll either come as a pay rise or a reduction in disposable income.
The first leads to inflation, the second leads to less consumptuion which in turn reduces level of economic activity.
9% is good enough for retirees to survive without support from the aged pension. The govt only needs to expand the coverage NOT the scale.
For those who want to have a high standard of retiree lifestyle, options are open for them to save more into their super. Remember people are different and they want different life styles. Some people are happy to have more money to live life to the full when they are young and eat pickles after they retire. There are also those unfortunate few who don’t live long enough to get their super. Let’s not add more to their misery by taking more money off them while they are alive.
P.S. I’m also a tertiary student.
Sandra
You claim that socialism “goes against human nature. One of the most fundamental characteristics of man is his free spirit”. For “free spirit” try substituting “greed” and you get the real gripe people have with socialism, as you’ve subtly expressed in your posts – “I don’t want to share my money with other people, it’s mine, I should get to keep it all”!
What most people fail to realise is that they are only well-off BECAUSE of society – go live by yourself on a desert island and see how much lifestyle you get.
So, since you are enabled to become wealthy or at least well-off, not only through your hard work but also because of the advantage of living within your society, it’s not too much to ask that you contribute back to the society that gave you so much.
The more people get, the more they want, that’s the sad reality of human nature.
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