It all sounds interesting but let’s not forget that it doesn’t actually address the problem of intergenerational inequality. This inequality comes from many things including unfair access to the tax system. Having a government going into more debt by giving everybody some money doesn’t fix an unfair tax system. It arguably makes it worse because at some point some government will need to get it back and who do you think will pay?

It also doesn’t address the problem of property investors being able to, backed by the tax payer, outbid first home owner occupiers in the current environment. When a property investor outbids a owner occupier that potential owner occupier is still needs a home so will still need to be paying some property investor. We have reached the point where housing is so expensive that owner occupiers struggle to afford building a new house even if they could find the land. Changing immigration isn’t going to change that and, if more housing was possibly a solution, then lowering immigration is going to lower the rate new houses are being built, if we have immigration targeted at construction skills.

If we really want to understand the problem then here is an approach.

The tax system is unfair because some people can access certain tax minimization schemes while others cannot.

So, lets make a change so that anyone receiving an income can do that through a company structure allowing them to redistribute through a discretionary trust if so desired. Not taking anything away from people who can already do this at this point. Now calculate how much this would cost the budget. Let’s say $300 billion dollars for arguments sake. Think of this amount as how much people using this form of tax minimization are being subsidized by those who cannot. A measure of how unfair the tax system is. This is like the $22 billion hit the coalition is proposing but in this case it is actually making the tax system fairer.

However, you could argue we may not be able to afford that as a country, like the $22 billion, so we need to make some changes to offset that but can now do it in a fairer way. Firstly, not everyone can take advantage of income splitting to minimize tax so they get to chose to be a company or individual. For anyone utilizing the company structure we raise tax rate to recoup the required amount. For people employed as individuals we can lower the tax rates so they aren’t disadvantaged compared to people being able to split their income. Now we have a much fairer tax system. Everyone can chose the structure that suits them to minimize tax.

Obviously, if we increase some the tax rates to claw back the $300 billion (or whatever it is) the people currently unfairly taking advantage current tax minimization schemes it will complain because their tax rates will be higher. (Remember, unfairly because not everybody earning an income has access to them). However, now that will be more challenging as they’ll have to justify why everyone else should be subsidizing them and why everyone doesn’t deserve access to the same tax breaks they have.

For the sales pitch, this wont be about broken promises or new taxes or government money grabs. This will be about making tax minimization schemes available to all and any tax rate changes are purely to bring back want the government gets to net zero. The government doesn’t gain or lose. The people having unfair access to tax minimization will lose and its a question of whether those, who have been subsidizing them and stand to gain, are prepared to back whoever puts forward the proposal.

As some homework, work out why this will advantage the younger potential owner occupiers trying to get into the market. It will. Yes, I know, I started with housing and went into tax and left it to the reader. However, the problem with housing is our tax system and you start to fix that and housing will start to recover.