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  • » Bullion Baron: Who's to Blame for Australia's Expensive Property?

#26 2015-07-26 10:24:15

mmm....shiney!
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

SilverDJ wrote:
mmm....shiney! wrote:

Apart from the fact that tax on savings is an abomination.

Bingo.

You lost me.


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

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#27 2015-07-26 10:28:30

mmm....shiney!
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

So what you are saying is that there is actually nothing wrong with tax advantages associated with leveraged property, you just have a problem that we are taxed on our savings?

Last edited by mmm....shiney! (2015-07-26 10:28:47)


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

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#28 2015-07-26 10:33:20

SilverDJ
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

mmm....shiney! wrote:

So what you are saying is that there is actually nothing wrong with tax advantages associated with leveraged property, you just have a problem that we are taxed on our savings?

I have a problem with both, read my previous post.
I'm trying to point out when you compare them side-by-side it highlights the ridiculousness of both situations.

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#29 2015-07-26 10:39:09

mmm....shiney!
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

SilverDJ wrote:
mmm....shiney! wrote:

So what you are saying is that there is actually nothing wrong with tax advantages associated with leveraged property, you just have a problem that we are taxed on our savings?

I have a problem with both, read my previous post.
I'm trying to point out when you compare them side-by-side it highlights the ridiculousness of both situations.


That's why I am confused. You have a problem on the one hand with individuals minimising tax (using leveraged property), then you have a problem on the other with governments maximising tax (taxing savings).


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

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#30 2015-07-26 17:21:18

Bullion Baron
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

mmm....shiney! wrote:

I must have missed the bit where you justified capturing tax in the first place. lol

So basically you are arguing from a point of wanting anarchy (no government)?

All your posts in this thread can be ignored if so, completely irrelevant to the frame of discussion.

Even your first comment attempts to twist what I said "So you are opposed to any government policy that helps reduce the taxation burden". All I said is that the problem is with government policy, I didn't specify which of them should change. It could very well be that increasing UGBs, pulling back grants/incentives and dropping support for banks would be enough to bring about improved affordability (through lower prices), but you have to be real about what policy changes the government might actually make.

mmm....shiney! wrote:

Your line of thought:

I want less central planning because it hasn't worked.
But if that can't be achieved I want central planning that can work.
Hmmmm, but didn't I say in the first place it hasn't worked?

BB then throws himself under a fast moving logical express bound for "Circular Reasoningsville"wink

I didn't say it hasn't worked. Maybe if you started reading what I actually write, instead of inserting what you think I am trying to say?

Do I think government could improve housing affordability through central planning (policy changes)? Yes.

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#31 2015-07-26 17:35:41

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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

mmm....shiney! wrote:
SilverPete wrote:
mmm....shiney! wrote:

So you are opposed to any government policy that helps reduce the taxation burden and improve the long term financial position of those using property as an investment vehicle?

Why should property get favourable taxation and policy treatment?What if the government decided to artificially limit food supply (as they do land) to ensure food investors, both local and foreign, had a favourable investment vehicle?

I'm not talking about favourable treatment, I'm talking about protecting wealth. If you view CGT discounts or the ability to negatively gear as "favourable treatment", then you are operating from a position where the collective is entitled to profit firstly, and whatever is remaining after the collective have taken "their" share is then passed to the individual who has initially engaged in the market activity.

I'm saying that it is distortionary for the government to interfere in one particular market through policy the chokes supply and encourages demand.


Catus amat piscem, sed non vult tingere plantas

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#32 2015-07-26 17:41:12

SpacePete
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

Sure, the government could just change housing policy, but that's like someone saying we could stop war if everyone was just nicer to each other.  The problems run much deeper and everyone just argues around the issues rather than having a meaningful and effective debate.


Catus amat piscem, sed non vult tingere plantas

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#33 2015-07-26 18:45:42

mmm....shiney!
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

SilverPete wrote:
mmm....shiney! wrote:
SilverPete wrote:

Why should property get favourable taxation and policy treatment?What if the government decided to artificially limit food supply (as they do land) to ensure food investors, both local and foreign, had a favourable investment vehicle?

I'm not talking about favourable treatment, I'm talking about protecting wealth. If you view CGT discounts or the ability to negatively gear as "favourable treatment", then you are operating from a position where the collective is entitled to profit firstly, and whatever is remaining after the collective have taken "their" share is then passed to the individual who has initially engaged in the market activity.

I'm saying that it is distortionary for the government to interfere in one particular market through policy the chokes supply and encourages demand.

Of course it is distortionary, I'm not saying it isn't. What I'm saying is that any practice that helps to protect the wealth of an individual is a positive, in this case it is CGT discounts and the ability to offset losses in real estate against an individual's income.

The problem with BB's line of logic is that he acknowledges that central planning is not working by highlighting policy flaws, yet insists that central planning can work. Central planning can't work because the planners are not blessed with perfect knowledge - they turtle up, like all people.

Last edited by mmm....shiney! (2015-07-26 18:48:02)


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

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#34 2015-07-26 18:51:11

SpacePete
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

mmm....shiney! wrote:
SilverPete wrote:
mmm....shiney! wrote:

I'm not talking about favourable treatment, I'm talking about protecting wealth. If you view CGT discounts or the ability to negatively gear as "favourable treatment", then you are operating from a position where the collective is entitled to profit firstly, and whatever is remaining after the collective have taken "their" share is then passed to the individual who has initially engaged in the market activity.

I'm saying that it is distortionary for the government to interfere in one particular market through policy the chokes supply and encourages demand.

Of course it is distortionary, I'm not saying it isn't. What I'm saying is that any practice that helps to protect the wealth of an individual is a positive, in this case it is CGT discounts and the ability to offset losses in real estate against an individual's income.

Advocating that wealth can be gained and protected unconditionally is an argument from entitlement.  And I'm sure you'd argue against the entitlement mentality.


Catus amat piscem, sed non vult tingere plantas

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#35 2015-07-26 18:52:51

mmm....shiney!
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

SilverPete wrote:
mmm....shiney! wrote:
SilverPete wrote:

I'm saying that it is distortionary for the government to interfere in one particular market through policy the chokes supply and encourages demand.

Of course it is distortionary, I'm not saying it isn't. What I'm saying is that any practice that helps to protect the wealth of an individual is a positive, in this case it is CGT discounts and the ability to offset losses in real estate against an individual's income.

Advocating that wealth can be gained and protected unconditionally is an argument from entitlement.  And I'm sure you'd argue against the entitlement mentality.

You've lost me.


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

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#36 2015-07-26 18:58:36

SpacePete
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

mmm....shiney! wrote:
SilverPete wrote:
mmm....shiney! wrote:

Of course it is distortionary, I'm not saying it isn't. What I'm saying is that any practice that helps to protect the wealth of an individual is a positive, in this case it is CGT discounts and the ability to offset losses in real estate against an individual's income.

Advocating that wealth can be gained and protected unconditionally is an argument from entitlement.  And I'm sure you'd argue against the entitlement mentality.

You've lost me.

This should help:

Entitlement mentality
An entitlement mentality is a state of mind in which an individual comes to believe that privileges are instead rights, and that they are to be expected as a matter of course. An entitlement mentality is frequently characterized by the following viewpoints or beliefs:

* A lack of appreciation for the sacrifices of others. Those with an entitlement mentality often criticize the military -- failing to acknowledge that it is that selfsame military, and the sacrifices of the countless servicemen who have died in the service of their country, which ensures that they are free to make such criticisms.

* Lack of personal responsibility. Just as those with an entitlement mentality typically expect others to solve their problems, they also refuse to accept that the problems are of their own making. Thus, those with an entitlement mentality are frequently unable or unwilling to acknowledge fault or error; this typically leads to denial.

* An inability to accept that actions carry consequences. This can be seen in public schools (see public school values), where grade inflation and social promotion have resulted in students who expect that they will be promoted to the next grade regardless of their level of effort.

*  Arrogantly assuming that privilege reflects on the merits of the individual in question. For example, someone who is fortunate enough to be born extremely intelligent might arrogantly assume that that intelligence is an achievement on his part.

...


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#37 2015-07-26 19:00:43

mmm....shiney!
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

It does.

You've confused the right to protect property with an entitlement mentality.

Last edited by mmm....shiney! (2015-07-26 19:02:01)


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

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#38 2015-07-26 19:10:18

SpacePete
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

mmm....shiney! wrote:

It does.

You've confused the right to protect property with an entitlement mentality.

No, you've confused a right with entitlement.  Unconditional protection of wealth without merit is entitlement and nothing more.


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#39 2015-07-26 19:13:03

Bullion Baron
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

mmm....shiney! wrote:

What I'm saying is that any practice that helps to protect the wealth of an individual is a positive, in this case it is CGT discounts and the ability to offset losses in real estate against an individual's income.

Instead of focussing on these two policies, which are only briefly touched on in my article, how about addressing these questions (directly, rather than waffling on about something you think I am implying):

Do you think property prices in Australia are expensive?
Do you think government policy has a large enough impact on prices to be considered a core reason they are so?
What (if any) government policies do you think would be best changed &/or REMOVED to address the problem?

Who knows, we might actually find some common ground smile

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#40 2015-07-26 19:15:09

mmm....shiney!
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

SilverPete wrote:
mmm....shiney! wrote:

It does.

You've confused the right to protect property with an entitlement mentality.

No, you've confused a right with entitlement.  Unconditional protection of wealth without merit is entitlement and nothing more.

Give me an example of what you consider "unconditional protection of wealth without merit" to be.


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

Online

#41 2015-07-26 19:21:55

mmm....shiney!
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

Bullion Baron wrote:
mmm....shiney! wrote:

What I'm saying is that any practice that helps to protect the wealth of an individual is a positive, in this case it is CGT discounts and the ability to offset losses in real estate against an individual's income.

Instead of focussing on these two policies, which are only briefly touched on in my article, how about addressing these questions (directly, rather than waffling on about something you think I am implying):

Do you think property prices in Australia are expensive?
Do you think government policy has a large enough impact on prices to be considered a core reason they are so?
What (if any) government policies do you think would be best changed &/or REMOVED to address the problem?

Who knows, we might actually find some common ground smile

Yes.

Yes.

The same policies you addressed in your article with the exception of the treatment of CGT and negative gearing.


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

Online

#42 2015-07-26 19:25:02

SpacePete
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

mmm....shiney! wrote:
SilverPete wrote:
mmm....shiney! wrote:

It does.

You've confused the right to protect property with an entitlement mentality.

No, you've confused a right with entitlement.  Unconditional protection of wealth without merit is entitlement and nothing more.

Give me an example of what you consider "unconditional protection of wealth without merit" to be.

Wealth gained through unilateral harm to others.


Catus amat piscem, sed non vult tingere plantas

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#43 2015-07-26 19:29:23

mmm....shiney!
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

SilverPete wrote:
mmm....shiney! wrote:
SilverPete wrote:

No, you've confused a right with entitlement.  Unconditional protection of wealth without merit is entitlement and nothing more.

Give me an example of what you consider "unconditional protection of wealth without merit" to be.

Wealth gained through unilateral harm to others.

I wanted an example not another term or label.


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

Online

#44 2015-07-26 19:33:55

SpacePete
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

mmm....shiney! wrote:
SilverPete wrote:
mmm....shiney! wrote:

Give me an example of what you consider "unconditional protection of wealth without merit" to be.

Wealth gained through unilateral harm to others.

I wanted an example not another term or label.

You really can't see how harming others for your own financial benefit is wrong and therefore not deserving of protection? Even a child could think of examples.

If you are so completely lacking in such understanding then no example will ever be good enough.


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#45 2015-07-26 19:38:11

Bullion Baron
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

mmm....shiney! wrote:

Yes.

Yes.

The same policies you addressed in your article with the exception of the treatment of CGT and negative gearing.

Rolling back all government policy that relates to housing & banking (in one fell swoop) would probably crash the market, destroy our financial system and result in an unemployment rate so high that housing affordability would be the last thing on our minds lol

Not politically feasible.

So my thinking is that government would need to address the risk that expensive houses pose first, before giving up their influence on the market.

As I said earlier, I don't think the CGT discount is particularly fair. I'd rather see a return to inflation indexation and then a higher tax free threshold or lowered rates of tax on income (which filters through to capital gains anyway).

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#46 2015-07-26 19:41:43

mmm....shiney!
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

SilverPete wrote:

You really can't see how harming others for your own financial benefit is wrong and therefore not deserving of protection? Even a child could think of examples.

If you are so completely lacking in such understanding then no example will ever be good enough.

Well if a child could provide an example, it should be even easier for you to. I didn't ask for an example of "how harming others for your own financial benefit is wrong", I asked for an example of what "unconditional protection of wealth without merit" is. In particular, I'm trying to understand what that has to do with housing. I've got my suspicions about what you are referring to, but I want them confirmed before I go on.


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

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#47 2015-07-26 19:46:37

mmm....shiney!
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

Bullion Baron wrote:

As I said earlier, I don't think the CGT discount is particularly fair. I'd rather see a return to inflation indexation and then a higher tax free threshold or lowered rates of tax on income (which filters through to capital gains anyway).

The CGT discount is fair because it is available to all.

I'm not sure about inflation indexation, as inflation is a product of central planners, so indexing incomes to inflation is just a band aid, happy with the lowered rates on income tax. But as you pointed out, above, if you adopted as policy what I believe, then it would probably destroy our financial market. So we are left with a "damned if we do damned if we don't" play. Eventually something has to give and I would argue that a measured response now of removing all centrally planning though damaging in the short term would be more beneficial in the long term. It's the less bitter pill.


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

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#48 2015-07-26 19:51:35

Bullion Baron
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

mmm....shiney! wrote:
Bullion Baron wrote:

As I said earlier, I don't think the CGT discount is particularly fair. I'd rather see a return to inflation indexation and then a higher tax free threshold or lowered rates of tax on income (which filters through to capital gains anyway).

The CGT discount is fair because it is available to all.

Using that logic you could argue that not having the discount is fair, because it's not available to all neutral

As you said earlier: "Individuals engage in economic activity to meet their needs, every activity is related."

So why should capital gains on assets have a discounted tax advantage over other economic activity that brings a return such as interest on savings or income from other sources?

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#49 2015-07-26 20:00:41

mmm....shiney!
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

Bullion Baron wrote:
mmm....shiney! wrote:
Bullion Baron wrote:

As I said earlier, I don't think the CGT discount is particularly fair. I'd rather see a return to inflation indexation and then a higher tax free threshold or lowered rates of tax on income (which filters through to capital gains anyway).

The CGT discount is fair because it is available to all.

Using that logic you could argue that not having the discount is fair, because it's not available to all neutral

I can't argue with that from a logical perspective, but I would oppose scrapping it from a property rights perspective.

Bullion Baron wrote:

As you said earlier: "Individuals engage in economic activity to meet their needs, every activity is related."

So why should capital gains on assets have a discounted tax advantage over other economic activity that brings a return such as interest on savings or income from other sources?

Just concentrating on CGT, the effect of inflation alone can drive up the price of assets - so to tax someone because their asset has appreciated as a result of inflation is punishing that person for something that is not their own doing.


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

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#50 2015-07-26 20:20:00

Bullion Baron
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Re: Bullion Baron: Who's to Blame for Australia's Expensive Property?

mmm....shiney! wrote:

Just concentrating on CGT, the effect of inflation alone can drive up the price of assets - so to tax someone because their asset has appreciated as a result of inflation is punishing that person for something that is not their own doing.

I think this subject alone could almost do with it's own thread if not discussed here in the past.

Agree that inflation should be accounted for when calculating tax, but don't think the 50% discount is a fair method.

I am targeting a single city here (so results would differ in other areas)... but take someone buying a Sydney property. They bought it just over 12 months ago for $850,000, sell it for $977,500 (15% increase). Inflation over that time is only 2.5%, so they would have received a tax break on $21,250 using a fair method, but with the 50% discount they receive break on $63,750. Not every example will look exactly the same and am sure some would argue official inflation isn't a true representation, but I don't see such a lenient tax break as fair & reasonable when there is no such break for regular income or interest on savings.

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