Two Labor frontbenchers have reignited debate over the “Buffett rule”, calling for constructive debate on the proposal, despite the shadow treasurer Chris Bowen’s recent emphatic declaration that the ALP will not adopt the policy.
In a new essay published by Australian Fabians, the Labor MPs Andrew Giles and Terri Butler argue that tax policies are important political choices because “they can show the strength of the relationship between economic and political inequality, and they expose the myth of inevitability about increased inequality – enabling us to demonstrate to frustrated citizens that their political actions can make a difference to their lives”.
They argue the Buffett rule – where wealthy Australians would be forced to pay a minimum rate of tax – has galvanised people because “it is a readily understandable symbol of what’s wrong with the present arrangements”.
The intervention by Giles and Butler is part of an persistent internal push on the Buffett rule, and it follows Bowen declaring early last month in an interview with Guardian Australia that the concept “won’t be part of the policy we take to the next election”.
A number of up-and-coming Labor leftwingers, and the former treasurer Wayne Swan, a prominent rightwinger, are pushing Bowen to engage in serious consideration of the issue in the lead-up to the next election, arguing a Buffett rule would be a muscular policy offering addressing rising inequality.
But Bowen has attempted to head off this push at the pass, arguing that no progressive party has adopted the proposal as policy, and signalling Labor will look to other policy measures dealing with inequality between now and the next federal election.
The Labor leader, Bill Shorten, has also played a dead bat against the push.
Shorten and Bowen have argued that Labor’s changes to negative gearing and capital gains tax are highly progressive and economically efficient, where policies like Buffett are a blunt instrument.
But the new essay for the Australian Fabians from the two junior frontbenchers Giles and Butler – which is a wide-ranging discussion about tax policy and how it can be used to address societal inequality – will reignite Labor’s internal policy debate.
The two MPs say Labor needs to be prepared to reframe the terms of the tax debate to “overwhelm the forces that create inequality”.
They argue a Buffett rule” has rallied progressives because its purpose is readily comprehensible.
“At a time when it is possible for Australian millionaires to claim so many tax concessions – including the cost of managing tax affairs – that they pay no income tax, the Buffett rule’s appeal rests on an appreciation that today’s tax settings are boosting inequality and unfairness, and that something should be done about it,” Giles and Butler say.
They argue a Buffett rule is not the only policy means of ensuring wealthy people pay tax, but they warn “policy-makers should not underestimate its appeal to those who are concerned about inequality and unfairness”.
The two MPs warn that the big winners of globalisation “in too many cases” aren’t paying their taxes, and they point to a powerful sense in the community “that the rules of the economic game have been rigged, against the interests of ordinary people”.
They say a broadranging conversation about tax reform is impossible unless Labor is prepared to “tackle, head on, the interests and ideologies which have dominated tax policy, and the way we talk about tax”.
The two MPs argue that conservatives should not be permitted to “get away with pretending that individuals carry a huge personal tax burden, or that our taxes are too high more generally, compared with other countries”.
“They simply aren’t.
“And nor should we accept that progressivity – high marginal tax rates for those on incomes that are double (or more) average earnings – is a problem.
“Unless and until we can overcome these powerful falsehoods, it will be next to impossible to successfully mount a political campaign to make more effective use of the tax system to challenge inequality – which is what we are determined to do.”
