Negative Gearing. For or against? - Politics Forum.org | PoFo

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#14537288
Put it this way, how many businesses provide financial incentives to be bad investment managers?

Because thats exactly what negative gearing is - encourages investors to run their business at a loss because the taxpayer will reward you for that. Its completely insane.

All the economic theory arguments in favour of it have been thrown out the window. If you watched Q&A this week you would have seen that Grattan Institute guy completely wipe the floor on Hockey's lame-arse defense of NG.

The Grattan Institute - we really should be hearing more from them - they really are a breath of fresh air on this stale politico-economic landscape or ours.
#14538486
GandalfTheGrey wrote:how many businesses provide financial incentives to be bad investment managers?


The Labor party is pretty good at it

GandalfTheGrey wrote:Because thats exactly what negative gearing is - encourages investors to run their business at a loss because the taxpayer will reward you for that. Its completely insane.


Yes, but what businesses cannot claim their operating expenses against their revenues? Maybe remove the provision that enables wage and salary earners to reduce their taxable income from property investment losses on non-new investment properties?

Hockey's idea to use super contributions / balances to assist funding owner occupied property had plenty of merit IMO. Shared equity between the super fund and the owner. After all, the property boom is just mainly being fuelled by retirees doing pretty much the same thing.

Another factor in abolishing NG is the effect it has on existing securities. I'd imagine squiilions of deposit dollars in banks are secured by residential mortgages. Abolish NG and there could be a run on the financial system as property values plummet with demand. You could easily have a domestic GFC that smashes the economy way more than any revenue gain benefits it from abolishing NG.

GandalfTheGrey wrote:The Grattan Institute - we really should be hearing more from them - they really are a breath of fresh air on this stale politico-economic landscape or ours


Maybe they should run for parliament if they want to influence public policy. It's damned easy to spruik principles when you don't have to square up with the ballot box.
#14555229
GandalfTheGrey wrote:Put it this way, how many businesses provide financial incentives to be bad investment managers?

Because thats exactly what negative gearing is - encourages investors to run their business at a loss because the taxpayer will reward you for that. Its completely insane.

All the economic theory arguments in favour of it have been thrown out the window. If you watched Q&A this week you would have seen that Grattan Institute guy completely wipe the floor on Hockey's lame-arse defense of NG.

The Grattan Institute - we really should be hearing more from them - they really are a breath of fresh air on this stale politico-economic landscape or ours.



Agree with this word for word, and yes - maybe the The Grattan Institute should find a way to assert some direct influence.
#14555251
Opposed. It should be the treated the same way as the other major types of tax losses: deferred until profitable.

GandalfTheGrey wrote:Put it this way, how many businesses provide financial incentives to be bad investment managers?

Because thats exactly what negative gearing is - encourages investors to run their business at a loss because the taxpayer will reward you for that. Its completely insane.

I wouldn't say it encourages investors to run their business at a loss, but it softens the blow. A loss is still a loss, and even if you get a tax benefit from the loss, the net result is still in the red.

GandalfTheGrey wrote:All the economic theory arguments in favour of it have been thrown out the window. If you watched Q&A this week you would have seen that Grattan Institute guy completely wipe the floor on Hockey's lame-arse defense of NG.

The Grattan Institute - we really should be hearing more from them - they really are a breath of fresh air on this stale politico-economic landscape or ours.

As much as I despise Q&A, I might have actually liked to see this.

Swagman wrote:Hockey's idea to use super contributions / balances to assist funding owner occupied property had plenty of merit IMO. Shared equity between the super fund and the owner. After all, the property boom is just mainly being fuelled by retirees doing pretty much the same thing.

I dislike this. Super is meant to fund your living expenses in retirement. If it goes to your property, where is the money going to come from when you actually do need to retire. People should look into their own savings, or consider moving away from the city centre if they want to own their own home (which is not really necessary anyway).

Swagman wrote:Another factor in abolishing NG is the effect it has on existing securities. I'd imagine squiilions of deposit dollars in banks are secured by residential mortgages. Abolish NG and there could be a run on the financial system as property values plummet with demand. You could easily have a domestic GFC that smashes the economy way more than any revenue gain benefits it from abolishing NG.

I'm not convinced people are going to panic if negative gearing is abolished. Losses would almost definitely be deferred, like business losses or capital losses. So they would still be usable, just not today.

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