The current franking credit system is unfair because if you pay tax then you get the dividend only (as you should). However, if you don't pay tax then you not only get the dividend but you also get freebie money courtesy of other taxpayers. So non-taxpaying shareholders receive more money than taxpaying shareholders
.
The imputation system was designed originally to prevent double taxation. That is the tax paid on company profits is the company tax rate - no more, no less. So if the company pays the full rate (fully franked) then if the dividend you receive is taxed again as part of your total taxable income then you get a tax credit to pay that 'second time' tax back. Thus you receive the full dividend as you should. If you have no taxable income and thus pay no tax then there's no reason you should get the tax credit. You already have the full dividend in your pocket.
The imputation system wasn't designed to gift freebie money to a few who think they are entitled "because we worked hard and paid tax all our lives" at the expense of the many who also work(ed) hard and paid tax all their lives. You are
not self-funded if you're receiving this welfare
. You should never have got this freebie money in the first place. Just another one of Howard's vote-buying middle-class welfare payments during the 00s credit and mining boom that the nation can no longer afford.
Being self-funded means you live off your own income AND investment assets which you sell when you need more cash. Of course, some adult kids of those receiving freebie money wouldn't like it taken away because if mummy and daddy have to eat into their investment assets then they also eat into these "kids"' inheritance
. There's always self-interest in play with these things
.
Anyway, as experts and others here have mentioned. The current franking credit system is unsustainable. At $6 billion p.a. and rising, this is ripping off the majority of hard working taxpayers who have to make up the ever increasing shortfall.
Even if it remained at $6 billion, it would pay IN FULL for:
- a rail link to Tullamarine in one year.
- the N/E link in 2.5 years.
- Metro rail tunnel in 2 years.
- Even the whole suburban rail loop right around Melbourne could be paid for in just 8 years.
Don't whinge about road congestion in our cities and use migrants as scapegoats when the goverment is wasting billions and billions in tax dollars pandering to a few self-entitled freeloaders (4%).
Having said this, this illustrates where Labor failed tactically and thus politically. Shorten focused his election strategy on health and education. Noble and important but it stood out compared to Dan Andrews' state campaign which focused heavily on infrastructure as well as the other two.
Federal ALP hardly mentioned infrastructure nor came up with a similar program to Andrews that had a local focus. They could have used it to attack and offset the government's scare campaign as infrastructure appeals to across the political and geographical spectrum. They could have argued you can have freebie gifts for the small few and more of the ever growing congestion under this chaotic LNP government or remove the gifts that don't affect 96% of population and choose Labor's 'big build' for real action on congestion that benefits the majority. It worked in Victoria especially against the anti-skyrail LNP trolls that would pretend to be protesting locals in our area
. If you want to make changes and take something away even if it was wrong in the first place then you have to offer something in return that appeals even more. It's what made Hawke 'consensus' style work. The Federal ALP was poor at this at this election and it cost them.
ps. Looking at the swings per seat, the franking credit & other tax changes Labor took to the election had little affect on the election result as affluent seats affected by these changes if Labor had won swung to Labor. It was more low income, low education and more strongly religious seats, that see "change" or "transition" of any form as a dirty word and something to fear, whose preferences swung to the LNP. When/If I get more time I'll post in depth why and it's not what either side of the politics thinks nor has addressed IMO. Hence, the primary vote of both major parties falling.
