14 February 2019

Too many defences of Labor’s franking credits policy (such as this otherwise solid one from Emma Dawson and Tim Lyons) concede the greedy shareholders’ claim that “double taxation” is unjust. Jim Stanford explains why that’s rubbish: “Progressives shold reject the whole idea. Companies benefit from public spending (on infrastructure, training, innovation, property rights etc) and so should pay a direct share. Then company owners should also pay a fair share toward the public goods which benefit them as individuals. … This ‘principle of no double taxation’ never applies to workers: they pay income tax, then GST on the after-tax income, then other taxes, fees, tolls, etc. after that. As long as the ultimate incidence is fair, that’s not a problem. Govts collect many taxes from many sources. Tax preferences for capital income (which is concentrated at the top) in all forms (franking, cap[ital] gains, dividends, neg[ative] gearing) have been a key cause of growing inequality since the 80s. Lower tax rates on high incomes were another. This year Aussies have a chance to push back.”