Case for a classical liberal political party

Humphreys, J. (2007), “Taking Classical Liberalism to the People“, Policy, 23:1 (August 2007), Centre for Independent Studies, Sydney, pp40-43.

Classical liberals have been disappointed by the performance of the Liberal Party, and are likely to remain disappointed my any major party. While a minor party may not win government, they have several benefits from having an explicitly classical liberal political party such as the Liberal Democrats:

  1. Better advocacy and reaching more people
  2. Changing the parameters of political debate
  3. Being copied by the majors
  4. Votes and preferences

Taxploitation chapter

Chapter in Saunders, P. (ed) (2006), Taxploitation: The Case for Income Tax Reform, CIS Readings 11, Centre for Independent Studies, Sydney.

Australia’s increasingly irrational income tax system is riddled with distortions and disincentive effects. “There are so many special allowances, exemptions, credits, offsets and write-offs that tax law has become almost indecipherable, and gross amounts of money and time get spent trying to reduce liability to tax.  Most really-high earners are paying a lower rate of tax than workers earning little more than average income. Retirement savings are viciously taxed, and because tax brackets are not indexed to inflation, the total tax-take increases year by year without anybody even realizing it,” says Peter Saunders.

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Reform 30/30 Negative Income Tax

Humphreys, J. (2005), Reform 30/30: Rebuilding Australia’s Tax and Welfare Systems, CIS Policy Monograph 70, Centre for Independent Studies, Sydney.

While the announcement of tax simplification by the Government is a step in the right direction, it does not go far enough. A new paper offers a blueprint for where tax and welfare reform should be heading. In this paper titled Reform30/30: Rebuilding Australia’s Tax and Welfare Systems, John Humphreys outlines a radical vision of how the tax and welfare systems could be refashioned to ensure that nobody loses more than 30 cents of any extra dollar they earn.

Humphreys proposes a single (flat) income tax rate of 30% (the Medicare levy would be scrapped).   The tax free threshold (TFT) would be increased to $30,000 per person, so nobody would pay the 30% tax until they earned above this amount. Those earning below $30,000 would receive top-ups in the form of a Negative Income Tax (NIT), which would be paid at a rate of 30% (i.e. every dollar of income short of $30,000 would attract a top-up of 30 cents).  The NIT would replace all existing welfare payments and tax expenditures.

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