Why oh why # 358: Gottcha framing of a news story

The Australian reports breathlessly that Lindsay Tanner can’t guarantee that no working families will be worse off, nor that interest rates won’t rise in the future. Nor can Malcolm Turnbull, or Kevin Rudd or anyone else. Or to put it more fully, they can’t but if they did they’d be lying or stupid. So where’s the story?

I guess in raising the luxury car tax no one can guarantee that there will be fewer accidents on the road, or more accidents on the road.

Can we do any better than this?

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adrian
13 years ago

LOL.
They probably can’t and as I am sure your question is rhetorical, I will answer it with an anecdote.
On a Michaelef episode before the election.
Michaelef: “& tomorrow in the Australian…”
Up flashes on the screen, under Australian’s masthead: HOWARD IS SUN KING
Michaelef: “same ol’ stuff as usual”

C.L.
C.L.
13 years ago

Howard and Costello were asked the dreaded ‘can you guarantee’ questions every five minutes. Suddenly they’re a problem when a Brutopian Labor government led by a multi-millionaire starts trashing the welfare state.

FDB
FDB
13 years ago

CL – perhaps one difference is that Howard and Costello, when asked (or whenever anyone would listen) would mendaciously assert that in fact nobody would be worse off (c.f. under Workchoices), or spout unfalsifiable guff like “interest rates will always be higher under a Labor government”.

Good on you Lindsay for admitting your lack of a magic crystal ball and not playing this dumb game.

jc
jc
13 years ago

I guess in raising the luxury car tax no one can guarantee that there will be fewer accidents on the road, or more accidents on the road.

Can we do any better than this?

We can, by not having a government stoke up the brush fires of envy in the population through a useless luxury car tax increase that only raises the protection tariff to support GM and Ford’s miserable attempt at producing luxury cars.

NPOV
NPOV
13 years ago

JC, I have to ask – surely it’s better to have high taxes on luxury goods than on, say, incomes and company profits? As it is, the price of luxury goods is often based as much on the need for them to be perceived as “elite” or “prestige” as anything (there’s no way it costs twice as much to manufacture a high-spec Holden Statesman as an Astra), so adding to their price is unlikely to dampen demand particularly.
Luxury car taxes could probably also be justified based on vehicle weight, and the extra wear and tear it causes to roads, although “luxury” is arguably a poor proxy. And FWIW, we drive BMW 5 series, so I can assure you it’s not “envy”.

jc
jc
13 years ago

Nic:
The domestic job’s get hit with little tax in comparison. They were obviously going for the imported cars. A statesman Caprice costs about $68,000as I just looked it up.

N:
Keep stretching yourself with your arguments and we will be able to drive cars over you across the harbor.:-)

What purpose does the tax serve other than basic envy. Last time I looked the Feds were running a pretty large surplus. Are they suddenly short of cash?

I know Swan is making it sound as though we’re in an economic depression as serious as the 30’s. But is it worse than that? :-)

jc
jc
13 years ago

JC, I have to ask – surely its better to have high taxes on luxury goods than on, say, incomes and company profits?

You sure you wanna argue that? We are running a pretty hefty surplus, aren’t we?

jc
jc
13 years ago

Seriously Nic,

Your meme that politicians couldn’t possibly be motivated by envy is as tired as the sin itself. Whether you ignore the comment is of no great importance to me as it is neither here or there. Seeing you didn’t ignore it perhaps you could give it a shot and explain what the motivating factor was that made this self described “conservative economic” government find it needed to raise taxes on luxury cars. Was it the huge deficit they were left with, the deep recession we’re in?

You have a reference to Mill’s support of taxes on luxury goods?

James Farrell
James Farrell
13 years ago

Mill’s Principles, Book V, Chapter 6, Section 2.

Nabakov
Nabakov
13 years ago

Well, I don’t see anything wrong with frivolous and conspicuous consumption per se. That’s the whole point of a free society – having the freedom and luxury to do what you want if you can afford it. If I was as rich as Paul Allen or Larry Ellison, I’d certainly commission a better looking superyacht than either of ’em.

But having said that, if we all agree that taxes are a necessary price for civilisation, then I’d rather see more taxes on luxury goods than on necessities, incomes or profits.

As for pollies being motivated by envy, I can assure everyone that from my own very comprehensive dealings with the breed that while they are often driven by many vices, not least of which include pride, wrath and gluttony, envy is not at all prominent. They think people envy them.

And an effective and influential pollie in any developed or developing country has no problems whatsoever in having a luxury car at their beck and call. Even after they leave office.

Anyway, the luxury car tax is a symbolic and popular move that’ll also add a few bucks to the treasury coffers (for spending on roads?). Which is more than you can say of most symbolic gestures by Governments of all stripes.

jc
jc
13 years ago

Nic:

You’ve asked me for links before so I guess I should apologize for the impudently asking you for a link. Next time I’ll keep it in mind and remember to send you off to Google and blindly search through a couple of hundred pages.

Like Smith, Mill hated the vanity of frivolous and conspicuous consumption by the wealthy.

Perhaps they had a point when they looked around and saw the landed gentry living off the sweat of others from the land they worked. Anyone would get pissed. Not many left these days though. Smith and Mill didnt seemto think that of the commercial class.

Fortunately you have deeper insights which indicate that the motive was envy. I never knew.

You’re too kind as always. Seeing you rejected my assertion I would like to see your reasons for raising a tax when the coffers are overflowing.

Perhaps like Smith and Mill you think the wealthy are vain and frivolous too? Is that it?
.

Just like all those politicians into whose souls you can look.

I cant see any other motivation during a time of fiscal pregnancy.

Can you please let us know what proportion of the politicians on the other side seek to lower the top marginal rate out of greed, or introduced work for the dole (which I support) from punitive motives.

So lowering the top marginal rate during a time of fiscal surplus is greedy now is it? Its greedy despite the fact that vast proportion of income taxes is paid by those individuals and the coffers are full. Frankly I see it as the opposite of greed.

Work for the dole schemes were actually punitive for the most part as a large proportion of those individuals were not finding work through no fault of their own because of rigged labor markets: rigged by those working in protected jobs. Rather than punished, as they were, they should have been fully compensated by those benefiting from the rigging.

Do I know the proportion of those pols that thought the unemployed should be punished? I guess the senior guys in the previous cabinet thought like that. And every single individual who also voted for the change is also responsible.

But we digress:
So I take you think raising taxes on luxury cars during a time of surplus is a good thing because wealthy people are indolent and vain.

jc
jc
13 years ago

But having said that, if we all agree that taxes are a necessary price for civilisation, then Id rather see more taxes on luxury goods than on necessities, incomes or profits

Nabs, they don’t need the money. If they did it’s a different kettle of rotten fish.

I’m not disputing the fact that we need to raise taxes as “necessary price of civiliztion” although the size is more than a little concerning, but it’s targeting a tax at a particular population at a time when they are rolling in cash.

If we lay over on our bellies and accept it what sort of signal does it send? And if they themselves are not envious is stoking that fire in the wider population a good thing?

JC
JC
13 years ago

Nic

I didn’t ask you to do anything more than provide a link as I hadn’t seen such a comment coming from Mill. So I don’t know where you’re coming from about the research assistant comment. In any event it was just as I suspected in that these guys had it in of the landed gentry which is a class that no longer exist in any great way.

You say I’m arguing by word association yet you made a direct reference to an earlier writer’s characterization of the rich as frivolous and conspicuous. That’s not word association it’s assuming you agree with someone you quote directly in support of your argument.

NPOV
NPOV
13 years ago

Jc, my point was that increasing luxury taxes allows us to cut other taxes (income taxes etc.), that arguably have a more depressive effect.

Having said that, there is evidence that a 10% luxury tax introduced by Bush senior in 1990 actually had a fairly destructive influence on many luxury good producers (especially boat builders), which put people out of work, and was ultimately scrapped.

You could make a reasonable case that luxury taxes discourage the rich from spending their money, and if the rich don’t spend their money but hoard it instead, then everybody loses (in other words luxury taxes depress the trickle down effect – which is arguably something we should be trying to encourage).

NPOV
NPOV
13 years ago

This is what Mill said by the way:

An exclusion must also be put upon all taxes on the necessaries of life, or on the materials or instruments employed in producing those necessaries. Such taxes are always liable to encroach on what should be left untaxed, the incomes barely sufficient for healthful existence; and on the most favourable supposition, namely, that wages rise to compensate the labourers for the tax, it operates as a peculiar tax on profits, which is at once unjust, and detrimental to national wealth.*53 What remain are taxes on luxuries. And these have some properties which strongly recommend them. In the first place, they can never, by any possibility, touch those whose whole income is expended on necessaries; while they do reach those by whom what is required for necessaries, is expended on indulgences. In the next place, they operate in some cases as an useful, and the only useful, kind of sumptuary law. I disclaim all asceticism, and by no means wish to see discouraged, either by law or opinion, any indulgence (consistent with the means and obligations of the person using it) which is sought from a genuine inclination for, and enjoyment of, the thing itself; but a great portion of the expenses of the higher and middle classes in most countries, and the greatest in this, is not incurred for the sake of the pleasure afforded by the things on which the money is spent, but from regard to opinion, and an idea that certain expenses are expected from them, as an appendage of station; and I cannot but think that expenditure of this sort is a most desirable subject of taxation. If taxation discourages it, some good is done, and if not, no harm; for in so far as taxes are levied on things which are desired and possessed from motives of this description, nobody is the worse for them. When a thing is bought not for its use but for its costliness, cheapness is no recommendation.

No indication that he was primarily concerned about “landed gentry” that I can see. He makes the same comment I did, that if goods are purchased because they are expensive, then little harm is done by making them more so.

JC
JC
13 years ago

Look, N, the guy wrote that at a time when the ” laborer” was living hand to mouth. It was a brutal and short existence. The issue around those times was always about the people that owned the land. It looks like Mill was against consumption taxes too in that excerpt. Also keep in mind that there was no such thing as an income tax ,cap gains tax, company tax, GST, stamp duty… you name it

that if goods are purchased because they are expensive, then little harm is done by making them more so.

Ok so explain the rationale for this tax during a time of record government receipts and expenditures?

Surely a bright dude like Mill would have come to the same conclusion I have in that this tax is capricious and is being used to fulfill an emotional need.

So let me know the economic justification of the tax.

NPOV
NPOV
13 years ago

I agree that much of what Mill wrote was influenced by a society and economy very different from ours, but I’m not sure that changes his basic point – that luxury taxes are more defensible than general consumption taxes.

The economic justification of a luxury tax would be that more depressive taxes (e.g income taxes) can be cut further than would otherwise be possible.

JC
JC
13 years ago

I have no disagreement with your last comment at face value. However the money raised is not being used to lower income taxes. They already had the money for that. You see my point, N?

NPOV
NPOV
13 years ago

Presumably they didn’t have the money for it, once all their election promises were more accurately costed, and better data regarding expected revenue for 2007-2008 was available.

Why else would a government want to increase certain taxes, other than to lower others, or to raise the level of services provided?

JC
JC
13 years ago

N,

they just reported a surplus of 22 bill for past year and are expecting this side to get bigger next year, so your idea that they were short of money is off by a big margin.

NPOV
NPOV
13 years ago

True – it does seem they could have easily cut some additional taxes this year and still wind up with a healthy surplus.