Bring on the gender inequality!
Monday, 17 June 2019
By Bernd Struben
Fancy a tax cut?
Not so fast.
First, consider how much you earn.
Is it over $90,000?
If so, good on you for earning a decent salary. You’ve probably worked hard and invested wisely to get where you are. And you’ve paid more than the average Aussie to the taxman each year.
So it’s probably safe to say you’d be happy to keep a little more of your hard earned money for yourself. Except, of course, that this would make you a bigoted sexist.
This news comes courtesy of The Australian Institute.
We’ll get back to that in just a tick.
First, a quick recap of the government’s plans to cut income tax for all Australians.
You’re likely aware the government hopes to deliver tax relief in three stages. But they want the entire package passed in one deal. And that hasn’t happened yet.
Stage one, if it passes, will be retroactive. Meaning it will be backdated for the 2018/2019 fiscal year. This stage benefits low and middle-income earners, putting up to $1,080 back into their pockets.
Stage two — meant to go into effect in 2022 — increases the 19% tax bracket to $45,000, up from the current $41,000. It also extends the 32.5% rate from the current $90,000 to $120,000.
The final stage is meant to start in 2024. Stage three would get rid of the 37% tax bracket and apply a flat 30% tax on all income from $45,000–$200,000. For every dollar you earn beyond that, the government will still take 45 cents.
Now I don’t know about you. But this sounds like a pretty fair plan to me.
Sure, it’s not perfect. And yes, it will dent government revenues. But a lot of that tax loss may be offset by consumers with after tax incomes of a thousand…or thousands…of dollars more to spend and invest as they see fit. Don’t forget that consumption makes up some 57% of Australia’s GDP.
So I’ll hold up my hand and say bring on the tax cuts. Not just stage one. But stages two and three as well. And it’s never too early to start planning for stage four…
But wait. What was that about being a bigoted sexist?
From the AAP newswire:
‘The progressive public policy think tank [The Australia Institute] says the first part of the tax plan – which is supposed to help taxpayers for the financial year about to end but is yet to be legislated – would almost equally benefit men and women.
‘But the later stages, which offer the biggest benefits to top earners, would give men $2 worth of tax cuts to every $1 women get.
‘“As the tax cuts progress through the three stages, women get a smaller and smaller share,” Australia Institute senior economist Matt Grudnoff said on Monday.
‘“The final stages of these tax cuts will further entrench gender inequality.”’
There you have it.
The politics of dissent is alive and well in Australia. And you’ve got to hand it to The Australian Institute. In one report they manage to neatly synch the divisive issues of rich versus poor with the acrimonious subject of gender inequality.
But let’s flip The Australian Institute’s reasoning on its head.
First, if men are set to receive $2 in tax relief for every $1 women receive, it tells you men, on average, are paying a heck of a lot more in taxes than women. Taxes that support critical infrastructure, hospitals, national defence, schools, and day care funding…to name a few.
Where are the headlines touting these men for the heavy lifting they’re doing for all of Australia?
Denying wealthier people — and they’re certainly not all men — tax cuts will do about as much to address gender inequality in the long term as work place quotas.
Second, it’s not just wealthy men that will benefit. It’s their families. That very much includes their wives. I can’t imagine too many women losing sleep over the ‘entrenching of gender inequality’ when their husband’s ATO refund comes back $3,500 higher than expected.
The same, of course, goes for men whose wives earn big bucks.
Which is why, on reading The Australian Institute’s rationale, I’ll proudly proclaim, bring on the gender inequality!
It would be great to hear some of our readers’ thoughts on the pending tax cuts. Send your missives to email@example.com. If we get some good replies, I’ll publish them here later this week.
Now to the markets…
Over the weekend, the Dow Jones Industrial Average closed down 17.16 points, or 0.07%.
The S&P 500 closed down 4.66 points, or 0.16%.
In Europe the Euro Stoxx 50 index finished down 11.31 points, or 0.33%. Meanwhile, the FTSE 100 lost 0.31%, and Germany’s DAX closed down 72.65 points, or 0.60%.
In Asian markets Japan’s Nikkei 225 is up 27.40 points, or 0.13%. China’s CSI 300 is down 0.22%.
In Australia, the S&P/ASX 200 is down 12.50 points, or 0.19%.
On the commodities markets, West Texas Intermediate crude oil is US$52.69 per barrel. Brent crude is US$62.27 per barrel.
That puts both crude benchmarks up a bit over US$1.50 per barrel since I last wrote to you on Thursday. Regular readers will know I’ve been bearish on crude for more than a year. But in this case, I’d expected oil to be trading far higher.
You’ve probably heard about the attack on two oil tackers in the Gulf of Oman. It’s a critical oil trading route, and the US is blaming Iran for the attacks. Iran denies responsibility. And both sides appear to want to avoid any escalation.
But you’d think the attack alongside even the hint of war in the Gulf would be enough to send oil sharply higher. So what gives?
First, doubts remain over whether OPEC+ can manage to extend the current production cuts into the second half of the year. Their next meeting date, intended for June, now looks to be pushed out into July.
Second, even if OPEC succeeds in limiting their members’ production, there’s little they can do to stem the ever increasing flood of oil coming out of the US. And as Bloomberg reports, it’s not just US drillers driving a surge in output:
‘[T]he International Energy Agency forecast global supplies will expand far more than demand next year, putting further pressure on Organization of Petroleum Exporting Countries. Even though growth in oil demand will expand to 1.4 million barrels a day in 2020, it will be eclipsed by a 2.3 million barrel-a-day surge in output, as the ongoing boom in U.S. shale is augmented by new fields in Brazil, Norway and Canada, according to the IEA.’
Of course, if a hot war does erupt in the Gulf, all bets are off. Let’s hope calmer heads prevail!
Turning to gold, the yellow metal is trading for US$1,338.71 (AU$1,946.08) per troy ounce. Silver is US$14.83 (AU$21.56) per troy ounce.
The strong US dollar gold price coupled with a sliding Aussie dollar puts gold back at record prices in Aussie dollar terms.
Our head of research, Greg Canavan tells me gold actually hit a new record on Friday, when it reached an intra-day high of AU$1,981. AU$2,000 per ounce could be the next record to fall. That would be great news for Australian gold miners, whose expenses are mainly paid in Aussie dollars.
Over at Gold & Commodities Stock Trader, analyst Harje Ronngard is keeping a close eye on the price action. And he’s been setting his subscribers up for what could be record run of profits for a select few well-positioned local gold miners and producers. You can find out more here.
In the world of cryptocurrencies, one bitcoin is worth US$9,151.12. That’s up 12.5% since this time last Thursday. (More on bitcoin below…)
The Aussie dollar is worth 68.79 US cents.
Signs of 2017…
I wasn’t planning on writing about bitcoin today.
Then I saw the price action.
Not just over the past week, which is impressive enough. But even since I checked crypto prices over breakfast this morning.
Back then — all of three hours ago — one bitcoin was worth US$8,987.12. Now — with my stomach reminding me it’s almost lunchtime — that same digital token is worth US$9,151.12.
These kinds of daily, indeed hourly, gains bring me back to 2017. When I’d quote the bitcoin price in the morning back then, it would often be hundreds of dollars higher by the time Port Phillip Insider hit your inbox in the afternoon.
Below you can see bitcoin’s price chart (in US dollars) for the past week:
Click to enlarge
That’s a gain of 24.3% in just seven days.
Now when you hear about gains like this, it’s important not to lose sight of the fact that bitcoin is notoriously volatile. Meaning it could lose 25% just as quickly…or even quicker.
But there are some encouraging signs emerging for the crypto bulls. Among them, CoinMetrics notes there are now once more over a million daily active bitcoin addresses in use. These are defined as ‘the number of unique “from” or “to” addresses used per day’.
CoinDesk further tells us this is the first time since 27 November 2017 that the million mark has been breached. And they note:
‘When Bitcoin first broke 1 million active addresses (Nov 27, 2017), 1 BTC was $9,352 and the median tx fee was $3.23.
‘Yesterday 1 BTC was $8,230 and the median tx fee was $1.33.’
A ‘tx’ fee, if you’re not familiar, simply stands for transaction fee. As you can see, transaction fees have come down substantially. And bitcoin’s price is within a few hundred dollars of it 27 November 2017 level.
Could the next month see bitcoin return to its December 2017 highs near US$20,000?
Is now an opportune time to buy?
That’s a bit trickier.
For that advice, I recommend you follow along with our crypto experts, Sam Volkering and Ryan Dinse over at Secret Crypto Network.
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