Tag Archives: Tax and public expenditure

The thylacine in the headline is the long sought and now extinct, budget surplus. My latest in Inside Story. Share this:Like this:Like Loading...

. Instead, it’s a flight of fancy. That’s the tile of my latest piece in The Conversation. Read there, comment here. Share this:Like this:Like Loading...

I spend quite a bit of time (more than I should) engaged in Twitter debates with advocates of Modern Monetary Theory (MMT). Some are generally sensible, while others are convinced they have learned a deep secret which enables us to have whatever we want without paying for it. Unfortunately, the sensible ones (Meaningful Monetary Theory) don’t do the hard work of correcting the others (Magical Monetary Theory) A couple of tweets referring to the latter group (followed by the usual...

In discussions about Universal Basic Income, lots of people are attracted by the idea of making things as simple as possible. Sadly, that doesn’t work well once you take a closer look. The simplest UBI would pay every Australian an amount equal to the single age pension, which is just above the poverty line. That’s $20000/yr per person or $500 billion for a population of 25 million, about equal to total Federal government expenditure. That would replace about $180 billion in...

Late last year, along with Emma Dawson, John Hewson and Angela Jackson, I took part in a discussion for the ABC’s Big Ideas program, hosted by Paul Barclay. It went to air recently. Here’s a link to the podcast[1] Unfortunately, I don’t have the time/ patience to listen to audio. I also don’t like the sound of my voice on radio – this is true for many people I think. It would be great to have a program that took an audio file and generated text output. A very quick search mostly...

This post is about a point which has come up here and there in the discussion about Universal Basic Income, but which I’ve never worked through properly.   A preliminary observation is that it’s necessary to consider tax and welfare together as an integrated system. What matters most is the effective marginal tax rates (the sum of marginal income tax and benefit reduction rates).  Then, starting with the current Australian tax-welfare system, and considering possible paths...

Mitchell, Wray and Watts Macroeconomics p 323, give a the correct version of the #MMT position on budget aggregates . Taxes create real resource space in which the government can fulfil its socio-economic mandate. Taxes reduce the non-government sector’s purchasing power and hence its ability to command real resources for the government to command with its spending. Take a situation where the national government is spending around 30 per cent of GDP, while its tax revenue is...

I was asked by a journalist about the long-term fiscal effects of the government response to the crisis. Here’s what I said  In simple accounting terms the cost of the intervention so far can mostly be offset simply by cancelling the Stage 3 tax cuts legislated in advance for 2024-25 (this also happened when the Keating Labor government legislated for future tax cuts in the 1990s). These are projected to cost $95 billion over the five years to 2029-30so the saving would easily...

Looking for a different story in the business pages of The Guardian, I happened across a headline stating The men who plundered Europe’: bankers on trial for defrauding €447m. That attracted my attention, but the standfirst, in smaller print, was even more startling Martin Shields and Nick Diable are accused of tax fraud in ‘cum-ex’ scandal worth €60bn that exposes City’s pursuit of profit For those without a calculator handy, that’s about $A100 billion. I think of myself as...

Eryk Bagshaw, recently[1] appointed economics correspondent for Fairfax, is certainly aware of that. In fact, mentions it right near the end of this scare story about the effects of Labor’s rejection of the second-stage of the Morrison government’s legislated tax cuts. But that didn’t stop the Fairfax subeditor running his article under the headline “Average full-time workers to be $1000 a year worse off under Labor” To spell it out, the trick here is that Bagshaw is looking at...