Super rich tax is coming for you
The government and Opposition have been justifying their superannuation policies by claiming their targets are "only" the top 1 or 4 per cent. However, we are all in their sights.
Just four years ago, all superannuation contributions and earnings, regardless of a person's income, were taxed at a flat 15 per cent with earnings in retirement tax free - the law assuring us that once we reached retirement age the hand of government would be removed from our pockets.
However, many legions have now crossed this Rubicon. In 2012 the Gillard government raised the contributions tax for people earning more than $300,000 a year from 15 to 30 per cent, and earlier this year Labor promised to reduce this threshold further to $250,000.
The Budget confirmed that the $250,000 threshold is now bipartisan. The more taxpayers can be captured by the 30 per cent rate the better for government revenue.
How long before the $180,000 threshold is tested again and why stop there? After all, the private health insurance rebate cuts out at $140,000?
Labor and the government now retirement balances of $1.5 million and $1.6 million respectively are enough and will tax income from assets over these amounts at 15 per cent.
Just think about this for a minute. For the first time, the income of people in retirement over a certain threshold will be taxed.
Last week's Budget also reduced to $25,000 a year the amount of pre-tax money you can put into your superannuation account and introduced a new $500,000 lifetime cap on post-tax money retrospectively backdated to 2007.
How does this help a female high-flyer who spent years out of the workforce but in the second half of her career will have to pay 30 per cent tax on her super contributions and limits on what she can transfer into her accumulation account?
How does it help a man who, having paid off his HECS debt and the mortgage and put the kids through school and university, then loses over half of his superannuation in a divorce with only 10 to 15 years to catch up?
It is nonsensical to assert that increasing taxes on so-called higher incomes makes the system more "equitable".
Taking an extra dollar out of one person's account in tax does not mean one else's savings. It just goes into the government's pocket.
And it is clear that, as governments struggle to find the money to pay for their promises, superannuation tax thresholds continue to come down.
Every tax increase reduces retirement balances and sends a message to everyone that their investments may be safer elsewhere.
Superannuation is private money and does not exist to provide a pool of funds to pay for government spending.
This now bipartisan approach to superannuation policy, which seeks to mandate an "appropriate" amount of money an individual can enjoy in retirement while extracting maximum tax, will permanently damage trust and confidence in the superannuation system.