Economist, writer and former senior political advisor Alison Pennington and ETU National Secretary Michael Wright have penned a piece in the Financial Review calling for wealth to be taxed more than work.
From the article:
“When labour is taxed more than wealth, society is less civilised and not innovative. Diligence and dynamism are devalued and living standards are sacrificed.
Today, there are termites in the woodwork of Australia’s economy. Not only do workers’ pay more tax than wealth holders, but the future of work itself is under threat from automation and artificial intelligence. This makes an over-reliance on taxing earned income both unfair and unwise.
Workers are taxed more – 24 per cent compared with 1.9 per cent for capital gains. That’s $267 billion more in taxes last year alone.
While big employers such as Amazon threaten mass job losses with AI, the tax system exacerbates risks of uncontrolled lay-offs. Companies that hire workers must pay taxes on their wage bills, but automating jobs is completely tax-free.
If the future of work itself is uncertain, why give employers tax bonuses to replace workers with AI? Taxing workers out of a job also erodes the tax base, leaving government with less money to help people adapt to a changing economy.
Employees work all the jobs but earn $100 billion less than capital gains last year. In 2024, the average Sydney home increased by $16,000 more than the average Sydney worker earned all year.
To turn this around, we need to reduce taxes on work and lift taxes on wealth holders. Fewer leaners and more lifters. This means reconsidering discounts to capital, such as the capital gains tax, rebates to inputs, such as with diesel, and ending the treatment of passive income, such as rent and dividends, as though they were the same as wages earned through hard work.”
The system does not support workers, and it’s reached a point where working hard in Australia just doesn’t pay off. We need reform in this area to ensure workers are not bearing the financial brunt unnecessarily and their hard work is rewarded better than amassed wealth is rewarded.
“Should a worker earning a wage working 12 hours on a construction site be taxed less than the income gained by an investment property? Absolutely.” – ETU national Secretary Michael Wright.
Read the full article here