Proponents of structural tax reform argue that the current economic system has become fundamentally unfair, particularly for younger Australians. By shifting the tax burden away from working-age income and addressing inequities in capital gains, the government could provide much-needed relief to those struggling to enter the housing market. Supporters suggest that the current 50% capital gains tax discount, which has been in place since 1999, creates an imbalance that favors asset holders over wage earners, thereby exacerbating wealth inequality.
Advocates for this approach, including voices like Bill Kelty, emphasize that tax reform is not merely about redistribution but about signaling that the government is on the side of the next generation. By potentially paring back capital gains deductions and lowering top marginal income tax rates, the government could incentivize productivity while reducing the incentive for tax avoidance. This strategy is viewed as a necessary step to modernize the tax base and ensure that the economic burden is shared more equitably across the population.
Furthermore, supporters argue that such reforms could help restore trust in the political process. When young people feel that the economic system is rigged against them, it erodes social cohesion and long-term economic confidence. By taking decisive action to fix these 'cruel' tax structures, the government could demonstrate a commitment to long-term prosperity. This perspective holds that inaction is a choice that effectively maintains the status quo at the expense of future growth and social stability.
Ultimately, those backing this view believe that a bold, Keating-like vision is required to break the current cycle of mediocrity. They argue that the political risk of pursuing reform is outweighed by the economic necessity of creating a more dynamic and inclusive economy. By aligning tax policy with modern economic realities, Australia can better position itself to overcome the current productivity slump and improve living standards for all citizens.