I don't think the Murray report demonstrates whether negative gearing is net negative at all . The only way to know for sure is to get rid of it and then it will be proved one way or another . It's part of a much bigger picture .
Unfortunately we can't predict human nature . Who really knows if a significant amout of people would buy these days if they could ? Why didn't all these people buy houses years ago when they were half the price ? Gen Y's ( the future of the country ) are much more mobile than anyone before them and they are all about life experiences . They may prefer to keep renting .
I can only guess that negative gearing of property was initially allowed in order to incentivise investors and obviously help take the burden of government to provide housing . Now it appears that there are more and more people investing in property . Maybe the Murray report should look at who those investors are and why they are choosing property . Could it be that those people are concerned about less and less government support in retirement and they are trying to do something about it ? Is the money that is going to saved from their pensions etc factored in to the cost to the community ? There are many questions...
Take away negative gearing if you like but you better reform the whole tax system at the same time . Fair taxation is much bigger than just negative gearing .
Btw . Do you have any stats on how many of these ' greedy investors ' are speculators vs long term investors ? Mostly long term investors are negatively geared for a short period and are then positively geared for the rest of the investment period which could be many years . That means that those investors would actually be paying more tax than anyone else .
