We need the option to tax households
Not enough attention is being paid to the attack on family trusts in this budget.
I understand what it's pointing at. There is a legit concern about small business owners using trusts to access tax treatment that wage earners can't touch. That's fair. But family trust income splitting was also one of the last remaining tools for households that want to manage their finances as a unit rather than as two separate taxpayers, and the budget has gone after that without offering anything in its place.
Australia taxes individuals, not households. There is no choice available in this. If I earn good money and my partner stays home for a year or two to raise our children, I get taxed at the top of my individual bracket while she pays nothing, and the government treats that as two separate financial situations. We share a mortgage, share bills, share everything. But in the eyes of the ATO, we are strangers who happen to live together.
France doesn't do this. Germany doesn't. The United States doesn't. In those countries, married couples can elect to be taxed as a household, with income effectively split between spouses. A surgeon earning $400,000 and a stay at home parent are treated as a family unit earning $200,000 each. That is not some radical idea. It is the standard approach in most major Western economies. Australia is one of the stricter holdouts, and family trusts were a private workaround for exactly this problem.
Instead of closing that workaround, the more honest policy response would have been to make household taxation available to everyone. Let married couples elect to split their income. Let the nurse and the tradie and the small business owner all access the same treatment. That would have been reform worth having.
What we've got instead is a tax grab that takes the tool away from people who used it for legitimate household budgeting, without addressing the underlying unfairness that made those people reach for it in the first place.
I also have a hard time believing the revenue raised will go toward anything that actually helps the next generation. It'll go toward submarines or whatever nonsense. We're not building a better country for our kids. We're just paying more.
The government keeps telling us the birth rate is too low and we need more immigration to compensate. But immigration drives up housing prices, which means both parents need to work to afford a mortgage, which means fewer people have children, which means the birth rate stays low, which means we need more immigration. Round and round it goes.
Meanwhile a mother who actually wants to spend the first couple of years at home with her baby, rather than handing a newborn to a daycare at six weeks old, is now being told that's a luxury only the wealthy can afford. The tax system punishes her for not working. We are meant to work to live not live to work. Some of us want to spend our precious lives with our kids, not fund politicians pet vanity projects. Tax the gas companies - not families plz.