TARGETING THE RICH: Wealthy In Labor's Sights

The government has taken the unusual step of confirming it’s going to overhaul the nation’s retirement system before the release of the Federal Budget. And if you’re pulling in more than $300,000 per year, it’s not looking good.

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Ex Reserve Bank board member Warwick McKibbin has weighed in today while Bill Shorten has tried to hose down fears of extreme cuts to tax concessions for the wealthy.

Here’s what you need to know:

McKibbin has written a searingcolumn in News Limited newspapers describing Julia Gillard’s government and its policy on superannuation “dangerous.”

From the article:

The government has continued to follow the very strange set of policies coming out of Latin America. If you target higher-income earners directly they will simply leave the country, taking many jobs with them. The UK under Margaret Thatcher also discovered that overtaxing leads to a brain drain.

Whatever the definition of “fabulously wealthy”, these people have made money because they have taken risks, they’ve been entrepreneurial and they’ve enhanced Australia’s prosperity.

They are also the most mobile: they could just leave and erode the entire tax base.

The Federal Government has tried to douse the idea that its superannuation policy is a tax grab to fund black holes in its budget, taking the unusual step of confirming it’s planning an overhaul of the superannuation system before the release of the budget in May.

Minister for financial services Bill Shorten said “the budget is not driving our superannuation reforms,” the Fin reported.

Instead, he said the Government wants to make sure it can fund the Gonski school funding plan and the National Disability Insurance Scheme.

It’s understood the Government is planning to hit the 1-2% of high income earners with a tax crackdown that would redistribute wealth.

While they policy isn’t out, sources told the AFR that they would likely be no where near as politically damaging as speculated.

Still smarting from his sacking, former arts minister-turned back-bencher Simon Crean has reportedly threatened to fight any plans by his own government to tax earnings on superannuation accounts:

The Australian reported this wee the Labor backbencher had called on his government to explicitly rule out changes that would retrospectively tax earnings generated by super accounts.

He said that this would be “tantamount to taxing people’s retirement surpluses to fund our surplus” but he wouldn’t comment on whether he was prepared to cross the floor on the issue if necessary.

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