Labor’s tax policy hits the middle class, not big business

With the Liberals in disarray, the business establishment is seriously contemplating the prospect of a Labor government. Top business leaders and their media are unlikely to openly campaign for Labor, as they will not want to see too catastrophic a collapse in the vote for the Liberals, the party that has loyally served their interests for decades.

The prospect of a Labor victory is generating hysteria from the usual suspects, including hard right think tank the Institute of Public Affairs, about the terrible threat posed by a “socialist” Shorten government. But the more thoughtful representatives of Australian capitalism understand that previous Labor governments like those of Hawke and Keating did not in the least challenge their wealth and power. Indeed, they pushed through harsh neoliberal measures that led to a massive transfer of wealth from the working class to a small cohort of billionaires.

And the reality is that the current Labor opposition’s economic policies, while containing some supportable progressive elements, are in no sense a full throttle attack on the super rich. Labor’s proposed changes to negative gearing, superannuation, cash refunds of franking credits and an 0.5 percent increase in the Medicare levy for those earning more than $87,000 will primarily target the middle class and some better paid workers.

Middle class investors and wealthy superannuants undoubtedly should have to pay adequate taxes and should not be given handouts that are not available to most workers. However, the main tax avoiders are the multinational companies, which funnel billions of dollars in profits out of the country and the billionaires with their offshore bank accounts in the Bahamas or Cayman Islands. 

The super-rich don’t have the bulk of their wealth tied up in superannuation funds. Nor do they make their money from negatively gearing a house or two. Likewise, the increase in the Medicare levy is peanuts for company executives in receipt of multi-million dollar bonuses.

There is more than enough wealth in Australia to fund a decent health and education system, to build new rail lines and other vital infrastructure for our rapidly growing cities, to end homelessness and to save our environment. But that means taking decisive measures aimed at the likes of Amazon, Apple, Facebook and Google and the top one hundred Australian Forbes rich listers who currently pay little or no tax.

The sort of measures needed include a wealth tax of 5 percent a year, land taxes on properties worth more than $5 million, inheritance taxes on large estates, a tax of 10 percent on all large overseas money transfers, higher income taxes on incomes of more than $200,000 and a much higher company tax rate.

Labor is planning to implement none of these progressive measures. Quite the reverse.

Labor shadow treasurer Chris Bowen, in a blatant attempt to curry favour with the corporate sector, has guaranteed that Labor will not increase the bank tax and would consider corporate tax cuts in the future. “When you get back to a good solid surplus of at least 1 percent of GDP then you can assess other priorities, be it tax relief for individuals or corporations”, he said.

That is on top of the previous handout to big business that Labor has announced – the Australian Investment Guarantee. This is a form of accelerated depreciation, which would allow businesses to immediately write off 20 percent of the value of new investments and consequently sharply decrease their tax payments.

A Shorten government then will do little or nothing to reverse the massive transfer of wealth from workers to the billionaire class that has taken place over the last few decades. While Labor has come up with a few mildly progressive policies, they are in no sense a serious break from the right wing neoliberal consensus that has long dominated politics throughout the Western world.

We need to fight for an alternative that does not pander to the rich and powerful, but rather puts the interests of the mass of workers and the oppressed first – a socialist alternative.