Ho hum, like so many articles, this misses the point. The tax changes are to address a real problem that will have a significant long term affect on our economy and how much tax will be needed in the future (or how far our society will degrade if we don’t fix the problem). The question we should be asking about the proposed changes is, will they be enough (a bit like RBA rates decision) or will more need to be done. We need more younger people owning homes, paying taxes and getting off the welfare system for as long as possible in their living years. Having people owning their homes helps and the return to society of people owning their homes is far greater than anything we’ll get from property investors. Property investors are a drain on society in so many ways and the reason is, people need somewhere to live, if they don’t own it then someone has to pay for it and at some point that will be the tax payer. No home owners don’t need shares etc etc so we need to encourage investors to invest in things that aren’t basic requirements that the tax payer will have to provide if private investors corner the market.

The next thing to remember is, young people entering the market should not be forced or incentivized to buy new homes. Think of it like cars, you start with something secondhand you can afford that you don’t pay a premium for and use your own time and skill to keep going/improve. Building lots of new homes only works if you’re freeing up older cheaper homes for the younger generation to get a start in.

Back to the budget debate, Pauline Hanson, has done a wonderful job showing up how pathetic most politic commentators are who focus on the childish broken promises mantra. By proposing a negative gearing limit of two houses per person she has validated the need for some form of tax reform and that a problem exists. A realization that people are more interested in fixing the problem than the childish antics of people calling out broken promises. If Pauline leaves politics she’ll be able to get a job as a politic commentator because there isn’t much competition.

The question is, is two houses per person enough to free up enough houses for the younger oner occupier generation? That question should consider the change by itself, without trust changes, so people will still face cashed up recipients of trust with more money (due to paying less tax) and backed by the tax payer. The fundamental thing Pauline is missing, in terms of aspirations is, why doesn’t every Australian have exactly the same access to tax minimization schemes no matter how they get their money? There is a Robin Hood effect is play. Labor’s approach has been to take lucrative schemes away from the rich as opposed to giving the same access to the poor. Taking away the so called aspirations of the rich (driven by an unfair advantage paying tax) to provide aspirations for the poor. There is an interesting debate to be had about just giving the same access to everyone and how that effects budget bottom line. It is also interesting to note how many chickens there are running around because the sky is falling as their whole life is only viable if they have an unfair access to tax minimization. It’s like someone cheating at cards claiming the game is ruined and they’ve lost their inspiration because you stopped them cheating.

The same question can also be asked of Labor’s plan, is it enough to fix the problem or do we need even more change? That is what we need to focus on and it would help if we had some decent political commentators. This isn’t just a tax grab where the next party can reverse it by reducing government spending. This is about fixing a significant structural problem in the fairness of our tax system which is impacting the aspirations of younger people that will compound as they get older. Start thinking about what the next changes will need to be if these changes aren’t enough. If your scared of losing grandfathering perhaps you need to think about how to make these changes work.

(As an aside the Liberal Party has set itself up and the party for the rich that no self respecting wage earner should vote for. Interesting strategy).

People talk about taking away the aspiration of the young to get wealthy. Well, the first step is to own your own home. While there is a problem with that step, all other wealth discussions are somewhat minor. If I can get into home ownership easier and faster and pay it off faster, you can tax my share gains at 100%.