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Australia's Super-Profits Tax
http://www.futureofcapitalism.com/2010/06/australias-super-profits-tax
Bloomberg News has a column and the Financial Times has an editorial on Australia's attempt to impose a new 40% tax on mining profits. Here is how the Bloomberg column, by William Pesek, frames the issue, in a column headlined "Billionaires Dig In to Kill Good Economic Idea":
Think about this -- any profit level above that of a long-term government bond is deemed unreasonable and qualifies as a "super-profit" subject to a punitive 40% tax rate. It's the government deciding how much profit a company should make, rather than allowing the profit level to be decided by the market of customers for a company's products and for the products of its competitors. The Bloomberg column frames this as an issue of "billionaires" and their "monster profits" but that's a straw man. I have an investment in some Australian mines through an investment in an American publicly traded company, Leucadia National Corporation, and I am (alas) nowhere even close to being a billionaire. Here is how the Financial Times editorial frames it:
Think about this -- the FT view is that ex post facto law is undesirable for practical reasons as opposed to moral ones, as if there's no moral principle involved in having a predictable rule of law of the sort that is enshrined in the Constitutional prohibition on ex post facto law. And higher tax rates are described as a mere "inconvenience" as opposed to a factor that might affect the return on capital so dramatically as to alter the calculus on the wisdom of the initial investment. And remember, this is the FT and Bloomberg -- supposedly sophisticated financial press outlets who target an affluent, educated audience. by Ira Stoll | Jun 18, 2010 at 11:47 am Related Topics: Press, Taxes receive the latest by email: subscribe to the free futureofcapitalism.com mailing list Reader comments on this item
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