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Discussion: Stop Taxing Interest Earned
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Posted Anonymously |
Stop Taxing Interest Earned
Mar 5 2008, 12:56 AM EST
The government shouldn't have it both ways: they tax you on interest earned, but you don't get a deduction for interest paid on your mortgage. We should get one or the other if they are to be consistent. Another user suggested deductions for interest on mortgage repayments, which I would support as a second option, but I think it's better to simply not tax interest earned (this would reward saving, rather than debt)
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Posted Anonymously |
1. RE: Stop Taxing Interest Earned
Mar 7 2008, 8:24 PM EST
good idea. should encourage savings too.
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Posted Anonymously |
2. RE: Stop Taxing Interest Earned
Mar 10 2008, 1:03 AM EDT
For a given slab of revenue a less regressive approach would be to abolish the tax on bank profits (ie no tax on interest earned by the banks). This would lower interest rates costs for all customers not just those on high taxable income. Of course such a proposal would not be politically popular.
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trgh |
3. RE: Stop Taxing Interest Earned
Mar 10 2008, 8:52 PM EDT
"For a given slab of revenue a less regressive approach would be to abolish the tax on bank profits (ie no tax on interest earned by the banks). This would lower interest rates costs for all customers not just those on high taxable income. Of course such a proposal would not be politically popular. "The banks have a great reputation for passing on additional costs to consumers, but not so much for passing on savings! 1 out of 3 found this valuable. Do you? |
dra_red |
4. RE: Stop Taxing Interest Earned
Mar 19 2008, 4:02 AM EDT
A person is mad to have money in a savings account. After accounting for taxation and inflation, interest earned on savings barely keeps its value. What discouragement to not save!! At first glance this proposition seems like a smart move imo. Cheers, Dale 2 out of 4 found this valuable. Do you? |
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trgh |
5. RE: Stop Taxing Interest Earned
Mar 19 2008, 7:38 PM EDT
Actually dra_red, it doesn't barely keep its value - it loses it.Taxation plus inflation is far in excess of the pittance of interest you gain - its a net loss. 2 out of 4 found this valuable. Do you? |
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Posted Anonymously |
6. RE: Stop Taxing Interest Earned
Mar 19 2008, 8:03 PM EDT
hey trgh, I found the same thing when I did the calculations a few years ago but I thought it thought it might of changed with increases in the return rates of savings accounts. It sux but then, I also think we should be very careful when meddling with market regulation as tax does. Cheers, Dale 2 out of 4 found this valuable. Do you? |
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Posted Anonymously |
7. RE: Stop Taxing Interest Earned
Apr 22 2008, 12:06 AM EDT
The problem is that it would end up being a tax cut that disproportionately favours the wealthy as they would have much more savings. If the Government is going to cut taxes it should do so in a way that benefits everyone equally eg cutting the income tax rate.
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Posted Anonymously |
8. RE: Stop Taxing Interest Earned
Apr 22 2008, 7:21 AM EDT
I think the wealthy are going to make sure they benefit from any tax reform that occurs, that is why they are wealthy. Cheers, Dale Do you find this valuable? |
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trgh |
9. RE: Stop Taxing Interest Earned
Apr 22 2008, 9:09 PM EDT
The initial suggestion of relieving mortgage payments by deduction of interest paid, assumes that the government are symathetic of private ownership.They are not - they are Socialist and Collectivist in this regard (and turn a blind eye to the extortionate practices of the banks and the RBA). The final comment (by our friend Dale) is accurate, but should not be presumed to mean that the wealthy are so only because, and at the expense, of the poor. That, in itself, is more to do with the falacious, yet overwhelmingly common assumption that money is a finite and scarce commodity - which hence, is distributed and aquired by competition. This assumption is also held by Dale. But yes Dale, the wealthy and powerful will do almost anything to hang on to their position. Do you find this valuable? |
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Posted Anonymously |
10. RE: Stop Taxing Interest Earned
Apr 23 2008, 8:16 AM EDT
trgh, I don't think the government has hidden agendas in this regard. Their main priority is to win the next election. However, to win an election they must maintain the status quo with regards to the economy and this often means pandering the wealthy. When you talk about money I am not sure if you are referring to the currency we use, which obviously can be printed on demand, or the wealth that the money represents. If it is the later I disagree with your assertion. Money represents the goods and services that people produce, it has a limit. We can increase our production of those goods in many ways which will result in better standards of living but it is still within human capacity. Cheers, Dale Do you find this valuable? |
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trgh |
11. RE: Stop Taxing Interest Earned
Apr 23 2008, 10:43 AM EDT
"Money represents the goods and services that people produce, it has a limit."Read my statements carefully - for that is how I wrote them. Money IS SUPPOSED TO represent the goods and services that people produce - yes it has a limit, but not in the sense of a scarce commodity, or a finite physical resource. Currency accounts for about 5% of the money in circulation. The other 95% exists in the form of loans and ledgers (accounting money if you like). Whether the amount of money in circulation represents the value of the goods and services ACCURATELY is the critical question. If there is too much money, then the value of it decreases (and I need more of it to get the same stuff) - the economists predict this to be inflationary. I say "predict" because, other than a few questionable occurrences in recent European history, it is an unsubstantiated hypothesis. If there is too little of it, it becomes "scarce" in itself ! It is suposed to be somebody's job to issue and regulate the money in the country so that it ACCURATELY represents the amount and value of the goods and services available. So, in that sense it is a measure. Remember also, that nothing moves without money (it is THE distribution method). However, what we find today, is a continuous chronic shortage of money. WHY ARE WE SHORT? Because of INACCURACY - either due to ignorance or malice (you be the judge). A new phrase has become "fashionable" in the language of economists. I had never heard the phrase before this year. It initially made me laugh, but then, on a more sober note, I feel pity that we have been so easily seduced into believing such a ridiculous and falacious notion: The phrase is variably termed "the expense of obtaining credit", or "the price of money". I could hardly believe what I was hearing! Is it true that the world's top economists don't even understand the true nature of money? The only alternative to this is even more unthinkable. Do you find this valuable? |
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trgh |
12. RE: Stop Taxing Interest Earned
Apr 23 2008, 11:01 AM EDT
Addendum...If money is scarce, it is because someone has made it so. Consider loans ... We borrow $100,000 and including interest we pay back $110,000. Where did the extra $10,000 come from? Not the banks, but from other sources in the same economy. The only way for everybody to pay up it to borrow more. No wonder we are short and the banks own the earth. Do you find this valuable? |
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trgh |
13. RE: Stop Taxing Interest Earned
Apr 23 2008, 5:50 PM EDT
Addendum 2 ...Consider also the fact that the cost of labour is not the only cost which contributes to the eventual prices of goods, and yet it is the only source of our purchasing power. Thus in aggregate terms, we Australian consumers cannot afford to buy all the goods and services Australia produces. Since there is this refusal to treat money as it is intended - a measure and mechanism for distribution - but is treated as another finite commodity ONLY available through labour, then we are in the position as is common with the developed world, of suffering a continual lack of funds to make ends meet, with our major recourse being to borrow from the banks. Do you find this valuable? |
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Posted Anonymously |
14. RE: Stop Taxing Interest Earned
Apr 25 2008, 1:54 AM EDT
Trgh, Why are we short of money? I didn't know we were short of money, where does this assumption come from? I know that a lot of people want more money because they want more things, probably because more things are available. Taking my own situation as an example, I want more money, I want more things, but if I definitely get paid to cover my basics and then some. I think this situation is the same for most people in Australia. I am not sure what your issue is with statements that refer to the cost of credit. I think maybe you have only noticed it recently because of the debt crisis that has risen recently. What is your objection to the term? Lenders will loan money based on the assumption they will get a reward for doing so. They alter the return so it is balanced with the risk they incur. Cheers, Dale Do you find this valuable? |
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dra_red |
15. RE: Stop Taxing Interest Earned
Apr 25 2008, 2:08 AM EDT
Trgh, RE: Where did the 10,000 come from...I don't see this as an issue either. The money comes from the production of goods and services paid by the person who took out the loan. The return produced by the loan is essentially a charge for getting the money before he/she earns it. The person who takes out the loan has made a choice to pay some extra money so they can buy the things they want. This is not necessarily due to a shortage of money in the system. The person receives a certain amount of goods and until he/she has produced the equivelent via their own labour they don't have the money to pay for those goods. If more money was injected into the system then the system will just readjust to the same balance as before the injection of money but for this to occur inflation will increase. The banks are not doing anything that you could not do yourself. You are free to lend money to someone and charge a fee for doing so. There is nothing corrupt with this service that they provide. You would find this out if you started to lend money to people and you ended up with non-payers. cheers, Dale Do you find this valuable? |
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dra_red |
16. RE: Stop Taxing Interest Earned
Apr 25 2008, 2:19 AM EDT
trgh, re:labour is our only source of purchasing....Firstly, all goods and services can be broken down into terms of labour. Even things that require resources require labour. Obviously not all labour is equal. We see that someone providing labour at a mine can produce significantly more value than someone doing the same job at a factory. Once again you mention that we have a shortage of money but I don't see it. I think the best way to measure if the system is working is to compare the work done by someone else to your own work. If a backyard shed would take a healthy person a year to build then it is fair and reasonable to expect the cost of the shed to be around a years pay. As long as this holds true for the things you purchase then the system is working. Imo, if there is a problem, it is not in a shortage of money, it is in the unmeasured and unregulated way money is injected into the system. It seems to me to be likely that there is too much money in the system if anything. cheers, Dale Do you find this valuable? |
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trgh |
17. RE: Stop Taxing Interest Earned
Apr 25 2008, 9:42 AM EDT
Dale.Please think in aggregate terms! Yes, YOU might have enough to get by, and I am not advocating greed, but what I am aluding to here is that the abundance of this earth, now so easily available to us through the great advances of the "industrial and technological revolution" is being arrested, not by the general citizens of the earth, but by the financial elite & their monetary system. Now, if it were not for this exploitation, there would be no starvation in the third world. Don't you think that if it were possible to feed and shelter the entire world - purely by running things honestly, then you would attempt to do that? And to your last comment re: the way money is injected into the system: Money is only ever injected into the system as a debt, which in effect, means that rather than there being say $10,000 in circulation to distribute $10,000 worth of goods and services, we are only loaned the $10,000 to distribute the goods and then we also have to pay the money back to the bank. In effect - we pay twice (plus interest). You ask what is wrong? Australia have wracked up an international debt of nearly 700 Billion and climbing. America's debt is about 3 Trillion. You don't have to look too far in history to see that most Trade wars (the losers being those who are plunged into debt), develop into Military wars. You may be comfortable with this but I am not. On a personal note: 20 years ago, my new home was worth about 2.5 years of my income as a draftsman. Today my home of similar size, but older (albeit in a marginally better area), is worth nearly 5 years of my income as a senior designer. You say "What is wrong?" Remember Cypher in "The Matrix"? What is wrong with blissful ignorance? Do you find this valuable? |
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dra_red |
18. RE: Stop Taxing Interest Earned
Apr 25 2008, 9:29 PM EDT
trgh, Firstly, I completely agree that the housing market in Australia is screwed. It is a situation that needs to be addressed but continues to be neglected. However, I don't think this can be automatically generalised to our entire economy. I also agree that our current monetary system allows too much flexibility and allows the system to be misused. I don't think there is systematic abuse going on by a few elite individuals as some conspiracy theorists suggest. The laws and regulations are the same for everyone and anyone who wants to make money can do the same things as the investment banker. The poor are poor for a reason and it has more to do with culture than it does with deliberate supression by the wealthy. The same is true of our national debt. No one is forcing us to clock up our trade deficit, we are choosing to do it. I agree this will have negative consequences in the future but this is a failing of our education system more than our monetary system. There are just too many people in Australia who fail to apply common sense when it comes to their finances. trgh, this is an interesting topic and I have more points to add but I have to cruise at present. Cheers, Dale Do you find this valuable? |
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trgh |
19. RE: Stop Taxing Interest Earned
Apr 26 2008, 7:01 PM EDT
Sorry Dale, I'm having trouble ..."too much flexibility"? "don't think there is systematic abuse"? "anyone who wants to make money can do the same things as the investment banker"? I haven't time to start with the second paragraph. I hope, when you add to this, you start with explaining yourself on these matters. Do you find this valuable? |
