Labor hypocricy on franking credits exposed

Originally posted by yogihc: ↑

Hi boomeronrations
I was writing at the time of your post but would like to respond to some points. My superannuation has been taxed at 15% going in as well as 15% during accumulation phase and even 30% at times. The concessional rate is an incentive to build your balance otherwise it is pointless and hence the whole proposition of compulsory superannuation is defeated.

The purpose of super was that there not be much left at the "end".The problem here is how do you know when your "end" is? In fact the purpose of compulsory super was to remove the burden of funding retirements with the public purse in the future and preferably not to run out before you get to the "end" which these days is into your eighties and in another decade or so it will probably be in your nineties.

In my view the way tax on super has been managed is a complete mess leading to this latest policy which makes it worse.
The rot started when Costello made all super in pension phase tax free without limits. That was just plain stupid and unaffordable into the future.
What should have been introduced was an indexed income threshold (say $50,000) after which you continued to pay tax on fund earnings.  Not satisfied that they had done enough damage to the system, our Prime Minister (as Treasurer) then set a capital limit of 1.6 million (instead of an income limit).

If super was taxed at marginal rates with an indexed tax free threshold (say $50,000 as suggested above) then there would be no need to set contribution limits because as your fund income rose it would approach the highest marginal tax rates and therefore be self limiting on capital contributions. Hence the people with 70 million in super would be paying an awful lot in tax after passing a $50,000 income limit thereby satisfying the need for fair treatment with tax concessions. It would link the tax paid to your income such that when fund returns are 10% you will pay some tax but when they are 2.5% you won't. That seems fair to me.

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Hi Yogi,
There are many ways to skin this cat.
I like the system that was in place for the 55 to 60 year olds retirees , probably now only for 58 or 59 year olds , with taxation at marginal rate, no tax on your own money coming out, and a rebate for money that attracted a concessional rate on contribution and earnings.

Achieves pretty much what you have proposed, a decent tax free threshold, but if you have lots, your tax rate goes up.
I do like the cap, a return to an RBL , and it certainly doesn't do any harm to the lower end.
Put the 2 together , essentially returning to the pre Howard 2007 situation.

As far as the "end" is concerned, has to be a number put on that, a system with taxation support aimed at making sure the odd person that lives north of 90 isn't inconvenienced, not sensible in my view.
And in effect the system recognises that, with the drawdown percentages which relate to age and projected average longevity.

On a totally different note, I struggle to find a good justification for the differential between the preservation age and the aged pension age.
Easy for me to say now of course, as I've had my nose in the super trough since age 55, and would be just about eligible for an aged pension.
It is not as if people retiring at 60 on super, save the government much in the way of centrelink payments.

                  cheers