Tax cuts and Budget surplus - the Australian way

[Case]

Originally posted by trev
Unlike USA there are also no deductions from our wages such as a social security tax, all superannuation payments are made directly by employers at a rate of 9% of wages excluding overtime payments, so for a reasonable comparison your social security tax should be added to your tax rate.

Er, not exactly. You have to pay at least 5% of your wages into a superannuation account. Any money you owe to the government (ie, HECS, income support over-payments, etc) is also deducted from your wages before you see it.

[Dracon II]

Not to mention the medicare levy.

[JohnT]

Originally posted by Oerdin


Nice rhyme, but, the problem is Howard balanced the Australian budget instead of running up massive deficits. That is the major accomplishment and it is highly unReagan of him.

The other half of Reaganomics, cuts in government spending, was soundly rejected by the other party. Any objective study of the budget wars of 1981-83 shows this, Oerdin.

Didja ever hear the phrase "Dead in the water?" It was the common refrain of Tip O'Neill in 1981, and he did his damndest to make sure that was the case.

Not that the Reagan administration wasn't to blame for not sticking to their guns. It's been a few years since I read this, but you might want to check out David Stockmans memoirs of that period, showing the frustration he had with the administration not fighting the Democrats as hard as he thought they should have. He was totally aware that the compromised forged between the Congressional Democrats and the Reagan Administration would result in massive budget deficits, but people on both sides of the aisle ignored him, causing him to resign in frustration in... 1983, IIRC.

[chequita guevara]

Originally posted by JohnT
Oh, I know. But still, the idea of a Communist wanting to move to a country that's lowering their marginal tax rates is just too rich.

Actually, my thinking was moving to a country that's doing so well economically that they can cut their tax rates without going in to a deficit. That means lots of jobs.

[Skanky Burns]

Medicare levy is 1.5% of your taxable income, an additional 1% if you earn over (I think) $80,000 and don't have private health insurance.

HECS doesn't start coming out until you are earning at least $30,000 so does not even come close to affecting me. Of course, the first bracket is a whopping 4% of your income, so payments becomes significant from that point on.

The top tax brackets from 1 July 2006 are 70,000 and 125,000. Interestingly, tax revenue as a portion of the GDP is projected to rise slightly compared to previous years, even after the tax cuts take effect.

[Skanky Burns]

These rule-changes are fun, just like the rule changes in forum games. Only instead of giving us advantages in a game, they just give us more money.

[DanS]

but then America's tax rates would be much higher too if they ran a budget surplus of 1% of GDP

As a matter of mathematics, you are correct. As a normative matter, a surplus of 1% of GDP is worse than a deficit of 1% of GDP inasmuch as it leads to higher spending as a percentage of the economy. The spending is the most important thing to control.

[Dinner]

Originally posted by JohnT
The other half of Reaganomics, cuts in government spending, was soundly rejected by the other party. Any objective study of the budget wars of 1981-83 shows this, Oerdin.

Cuts in spending?!

Sorry, but that is pure fantasy! Reagan NEVER ONCE submited a balanced budget nor cut spending over all. Everyone of his budgets was bigger then the last one even after he cut taxes on the rich. Howard hasn't cut spending either but instead took the Clinton approach of holding new spending to the rate of inflation.

Howard is nothing like Reagan because 1) he's balanced the budget and 2) He's controlled spending. Reagan couldn't do either much less cut spending.

[JohnT]

Originally posted by Oerdin


Cuts in spending?!

Sorry, but that is pure fantasy! Reagan NEVER ONCE submited a balanced budget nor cut spending over all.

That is not at all true, Oerdin. The fact is that he tried to cut government spending, but didn't get it done because of Democratic opposition. Again, read Stockman's memoirs, or if you can't believe a Republican because he's a Republican ( ) then read Tip O'Neills biography, especially the passages where he crows how he blocked Reagans "draconian" cuts in governmental spending back in '81.

"Fantasy" is assuming that people did what you want them to do as so to match the mental image you have of them.

[chequita guevara]

He may have tried to cut spending, but he never tried to cut the deficit over all. The masive increase in arms spending more than outweighed his attempts to cut social spending.

[DanS]

Come on guys. This is a thread about Australia.

[Kidlicious]

dp

[JohnT]

Here's a link to the Stockman book. Trust me guys, there's enough blame on both sides of the aisle on the deficit issue.

[Kidlicious]

Why would you guys argue about that anyway the budget was eventually balanced with no real problems? The following recession was caused by a credit crunch.

[chequita guevara]

Originally posted by JohnT
Here's a link to the Stockman book. Trust me guys, there's enough blame on both sides of the aisle on the deficit issue.

Did he write that while he was in prison?