Henry Thornton writes:

Treasurer Peter Costello this
morning on the ABC’s AM program denied that he had encouraged defecting Nat,
Julian McGauran, to join the Libs. He also said he disagreed with Senator
McGauran’s view that the Nats had lost their relevance, etc,

There was more. Senator Minchen’s
comments about abolishing the superannuation contributions tax, when read
“carefully” (or was that “very carefully”), fell well short of endorsement of
this radical idea. 50% of people want tax cuts and 50% want increased gummint
spending, and doing either would raise interest rates. The only saving being
done in this country is by the gummint! Is this bloke actually a socialist wolf
in Liberal sheep’s clothing?

There are two arguments either not
put or barely mentioned in this debate. One of the business lobby groups managed
to get into the tax-cutters’ newspaper, The Australian, the view that lower
taxes would encourage enterprise and increase incentives to work, thus raising
the sustainable (non-inflationary) growth rate. No-one knows how strong this
effect would be, but some readings of the economic performance of the
US economy say it might be a big
effect. Worth some systematic testing, Treasurer?

The second argument has no such
technical uncertainties. Our system of taxing income at high rates is a severe
disincentive to private saving, and a great indirect incentive to the nanny
state. Is it any wonder one is forced to question the provenance of the gummint
that has entrenched this system so firmly?

Read the full article at Henry