What good are tax cuts if all they do is fuel inflation, put pressure on interest rates & create more?

This government constantly equates tax cuts and delivery of welfare through the tax system with good tax reform, much to the constant despair of tax policy and economic experts and tax practitioners in Australia. Since they've been in power our tax legislation has increased from less than 3,000 to nearly 15,000 pages and the ever expanding volume of tax rulings, explanatory memorandums and case law is phenomenal. Who can do their own tax return anymore?

The government has to stop meddling with the tax system, changing it every year and using it to buy votes from targeted segments of the population. It's very bad economic management and further erodes our tax system of simplicity, equity and neutrality (i.e. where the tax system doesn't influence decision making). Changes to the tax system also increase administrative costs for government and taxpayers so they should be for good sensible reasons, not for political manipulation.

Reduced government spending is going to be the obvious results of tax cuts - and these tax cuts won't be delivered for a long time while they "save up" anyhow - which most Australians realise: Give with one hand - take with another.

The Libs are NOT good economic managers - they have grossly misled Australians and have been very fortunate so far. This desperate grab for votes is so very transparent and insulting.

I was thinking the same thing this morning when Baldy and Mr Smirk were crowing about the tax cuts. Ross Greenwood is no (Pardon the pun) Johnny come lately when it comes to finance. He mirrored exactly what you have said. It sure would buy a lot of hospital beds . If Kev Rudd goes along with fixing the hospitals and better education, It will be a real killer punch landed on Howard. I knew Baldy would pull something like this.

I'm an American so I really don't know anything about Australian politics so I'll just give a simple economic answer.

Inflation and unemployment are inversely related. That is, decreasing unemployment is accompanied by inflation.

Tax cuts are intended to create jobs. As more people become employed, unemployment decreases, but demand for goods and services increases as does the amount of money entering markets. This results in inflation. Increased economic activity boosts money lending, allowing lenders to increase interest rates.

Basically, the inflation and higher interest rates are the trade off for lowering unemployment.

Exactly!

What good are they, the last 2 tax cuts have helped push our undelying inflation figure higher and consequntly our interest rates higher.

We need to maintain careful tax control, maybe keep tax at its current premim and subsidise living by having the government fund public hospitals and schools a little better. Unfortunately the Howard government has been supporting the growth in private health and educaion casuing consumers to outlay tonnes of money for these comodities therefore increasing displaying our spend levels to the RBA which cause them to increase rates to curb this public expenditure. It's a vicious circle. we need federally funded lifestyle by using our taxes wisely rather than throwing money back at us to use at our own dscretion, which is sometimes irresponsible.

Edit: are these Americans stupid or what?

the courting is oblique and by no skill automatic. Inflation consequences from economic coverage. more suitable economic stimulus is considered mandatory to keep up boom at the same time as extreme tax expenses avert the monetary gadget from growing to be evidently via reinvestment of its personal income. it really is between the the reason why the speed of economic boom contained in the Fifties and Sixties become unsustainable - it become boosted by technique of economic coverage because tax coverage become hampering boom. and because of this all of it washed up on the sea coast contained in the 1970s interior this style of stagflation. contained in the overdue Nineteen Nineties the Fed all started inflating the money provide completely unnecessarily - in basic terms because it would want to. The monetary gadget would have sustained boom contained in the extreme 2s, low 3s and asset value boom might want to were safer with out free money. yet because something of the international become growing to be too, a effect of free commerce, usual banks were increasing their money provide and procuring more suitable overseas overseas money echange reserves such as Treasurys. An growing old US inhabitants and rising overseas middle classes also represented higher call for for Treasurys. the federal authorities chosen to easily borrow on the low expenses and raise spending really than take great thing concerning the surplus with the aid of diminish borrowing expenses and pay down debt. apart from the Fed idea "deflation" turned right into a real problem at the same time as genuine expenses fell because of latest efficiencies also generated via free commerce, and through technologies (such issues as internet and CAD/CAM), so the Fed inflated the money provide - back, it would want to, with out on the spot CPI strengthen, because genuine expenses were falling). finally the Fed overinflated even pondering those aspects, and created asset bubbles that it then popped at the same time as it raised expenses from '04 to '07.

When taxes are cut, and then government provided services decrease even more than the value of the tax cut, it is not a tax cut, it is a tax increase. In market terms, if you cut price, but then decrease the commodity or service by an even greater amount, then you are really increasing the price.

The tax cuts conservatives tout, are really sneaky ways of increasing taxes. Under GW, taxes were cut almost exclusively for the rich, who got huge tax cuts compared to the tiny tax cuts for the middle class, and then GW increased the prices of government services like passports and park fees, and cut government services. The net result is a tax increase for the middle class.

Wake up and smell the coffee.

Right wing Americans do love to state what they wanted to happen as if it did.

Total tax recieipts in the US fell sharply in real terms after both the Reagan and Bush tax cuts.

I am not qualified to speak to Australian politics and economics, but the snake oil being sold by your first answerer needs correcting.

Refer to pp 25-26 of attached document.

Tax cuts only benefit the high income earners, they always have and they always will !

tax cuts under bush sr. have failed dont listen to that crap. as a matter of fact bush sr. raised taxes. bush jr is a complete failure and our economy is hurting because of this father - son failure. stem cell research might have found a cure for incompetence but bush veto that also. he dont like healthy kids he veto that too. I'm an econ major graduated with high honors. I disputed reagon/bush and bushtard policies with proof.

If your cause and effect scenario were correct, you would have a point. But it is not true, as experience in the US has repeatedly shown: on two occasions, capital gains tax cuts caused an increase in the total of capital gains taxes collected, and general tax cuts in the Reagan and Bush administrations resulted in prosperity that increased wealth by trillions of dollars -- and increased tax collections to boot.