You assume a direct causal relationship between negative gearing and housing prices. You couldn't be more wrong although it may be a low picking fruit to hang your thesis on.
Is negative gearing even a thing now? With interest rates at historical lows and rents increasing you would be hard pressed not being in positively geared territory.
I like the idea of a 50% tax on any inheritance, it would encourage people to live on their capital rather than save it and rely on tax payers to fund their retirement.
If there was a 50% tax on inheritance, like in the USA, everyone of wealth gears their wealth to avoid it. Very few people pay it. You'd move it offshore, sell it to your relatives or do anything before you need to pay it. Just like happens in America.
It may end up costing the tax payer more in the long run than the benefit.
You didn't mention that in the USA inheritance tax applies (at the Federal level) on estates worth more than $10 million.
Personally, I think that we should have inheritance taxes on a progressive scale. Everybody pays something, but those big mining fortunes get heavily taxed. What have Andrew Forrest or Julia Reinhart done that couldn't have been done by a WA mines Department? Sure, they've done a good job of managing to get their projects up but that might be worth $1 million salary. They've been gifted the nation's resources and most of it should be given back
I think a lot of companies would get split up in that situation and shipped offshore. Not only would companies have to be somewhat spit up once between relatives, they they then would have to be split further with a large portion to be given to the government.
Its true most wealthy Americans now hold 80% of their wealth offshore. Even if the house is in LA the company that owns it is registered in the Caymans....
Its a reality though the government needs to find money and eventually people on average salaries will get sick of carrying the burdon.
Select to expand quoteMr Milk said..
You didn't mention that in the USA inheritance tax applies (at the Federal level) on estates worth more than $10 million.
Personally, I think that we should have inheritance taxes on a progressive scale. Everybody pays something, but those big mining fortunes get heavily taxed. What have Andrew Forrest or Julia Reinhart done that couldn't have been done by a WA mines Department? Sure, they've done a good job of managing to get their projects up but that might be worth $1 million salary. They've been gifted the nation's resources and most of it should be given back
I asked the same question of a winemaker/importer/etc. who'd lost a bunch of money on one of Twiggy's previous failed business ventures, and he said it comes down to risk, a government department wouldn't take risks that Twiggy would with other people's money.
Select to expand quoteeppo said..
You assume a direct causal relationship between negative gearing and housing prices. You couldn't be more wrong although it may be a low picking fruit to hang your thesis on.
Oh, I see, you were replying to me...
You bet there is a relationship between negative gearing and house prices. I don't care about your reading a book about land and capital and rent and cycles and such. In the real world, there is a link between negative gearing and house prices. I know. I have bid against other people and I know that i can offset the losses against my income. Therefore I could afford to pay a higher price than owner occupiers.
Its a bit of a silly game though. You lose money for years and then make it up if you are lucky when you sell. It can mean great money for some people, but pushes a lot of people out of the market.
Here in WA I see that the locals are still hoping for the payday of selling their houses for windfall profits that they saw in the boom times. Sadly I think they are up against it as one thing WA has a lot of is land.
You won't read you won't learn. Your wrong. End of story.
ps WA had even more land when the median house price was on par with Sydney at the height of the last boom. But hey whatever theory works for you I guess.
Select to expand quoteeppo said..
You won't read you won't learn. Your wrong. End of story.
ps WA had even more land when the median house price was on par with Sydney at the height of the last boom. But hey whatever theory works for you I guess.
I'd like to hear why a system that reduces your tax by tens of thousands of dollars doesn't mean you can afford to pay more for a property. Don't tell me it takes an entire book to explain?
If the government wanted to reduce house prices they could do it VERY easily. Negative gearing is just the minutiae!
Problem is it would create too many other problems and the most palatable is high house prices...
