{"id":8567,"date":"2012-11-21T12:44:57","date_gmt":"2012-11-21T02:44:57","guid":{"rendered":"http:\/\/blogs.unsw.edu.au\/knowledgetoday\/?p=8567"},"modified":"2012-11-21T12:44:58","modified_gmt":"2012-11-21T02:44:58","slug":"cgt","status":"publish","type":"post","link":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/blog\/2012\/11\/cgt\/","title":{"rendered":"Discount capital gains taxes should be new target"},"content":{"rendered":"<p><strong><a rel=\"attachment wp-att-945\" href=\"http:\/\/blogs.unsw.edu.au\/knowledgetoday\/blog\/2012\/02\/tax-losses\/dale-boccabella-4\/\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/blogs.unsw.edu.au\/knowledgetoday\/files\/2012\/02\/dale-boccabella.jpg\" alt=\"\" width=\"69\" height=\"66\" \/><\/a><\/strong><\/p>\n<p><strong>Dale Boccabella<\/strong><\/p>\n<p>A major anomaly in the capital gains taxation should be the target of a federal government seeking to increase tax revenue. Discount capital gains tax for individuals is very odd.<\/p>\n<p>A wage earner on income above $37,000 will face a tax rate of 34% on income above that amount. When the income reaches $80,000, every extra dollar is taxed at 38.5%. Yet, the most that is payable on a discount capital gain is 23.25%.<\/p>\n<p>Discount capital gains for an individual means that a person only gets taxed on half of the capital gain they make &#8211; only $5,000 of a $10,000 gain would be taxed. The effect is that a person on the top marginal rate of tax (earning income over $180,000) would only pay a rate of 23.25% on a capital gain (50% of the top marginal rate of tax of 46.5%). A person on the tax rate one down from the top marginal rate (income above $80,000 but below $180,000) would only pay a rate of 19.25% on a capital gain (50% of the 38.5% marginal rate band).<\/p>\n<p>Why do we have such anomalies or differential treatment in the tax law? After all, isn\u2019t a buck a buck, and therefore they should all be taxed in a similar way? Yes, a buck is a buck in terms of economic well being, and for accounting purposes, but for tax purposes, not every buck is quite the same.<\/p>\n<p>This begs the question why?<\/p>\n<p>Governments and the Henry Tax Review have come to accept that different taxes may have different effects on taxpayer behaviour, and that as far as possible, tax measures that have a damaging effect on investment and economic growth should be avoided.<\/p>\n<p>Anomalies can therefore arise from this desire to avoid the damaging aspects of a tax measure. Badly designed taxes can have the effect of changing the behavior of taxpayers to the detriment of the economy.<\/p>\n<p>But, fairness is at the top of many peoples\u2019 wishlist when it comes to the design of a tax, and fairness is all about contributions to the public revenue. The \u2018Warren Buffett\u2019 type anomaly &#8211; whereby the billionaire Warren Buffett faced a lower tax rate on his income than the rate faced by his secretary &#8211; should be seen in the light of this tension between minimising damaging taxes and fairness.<\/p>\n<p><em><a href=\"http:\/\/www.asb.unsw.edu.au\/schools\/Pages\/DaleBoccabella.aspx\">Dale Boccabella <\/a>is an Associate Professor of Taxation Law at the Australian School of Business.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Dale Boccabella A major anomaly in the capital gains taxation should be the target of a federal government seeking to increase tax revenue. Discount capital gains tax for individuals is very odd. A wage earner on income above $37,000 will face a tax rate of 34% on income above that amount. When the income reaches [&hellip;]<\/p>\n","protected":false},"author":336,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-8567","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/posts\/8567","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/users\/336"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/comments?post=8567"}],"version-history":[{"count":3,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/posts\/8567\/revisions"}],"predecessor-version":[{"id":8570,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/posts\/8567\/revisions\/8570"}],"wp:attachment":[{"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/media?parent=8567"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/categories?post=8567"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/tags?post=8567"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}