Four Hundred Thousand Dollars and the Noise Around It

There’s a particular kind of media week where the volume of the coverage is inversely proportional to how much the average person is actually affected. This was one of those weeks.

Labor’s proposal to increase tax on the top one per cent. Specifically, about $400,000 more over a lifetime for those earners. The coverage has been wall to wall. The op-eds have been breathless. You’d think they’d announced a forced organ harvest program.

Four hundred thousand dollars over a lifetime sounds like a lot. Spread it across a forty-year working life and it’s ten grand a year. For someone in the top one per cent. I’m not saying that’s nothing. I’m saying the volume of the reaction doesn’t quite fit the size of the thing.

Someone in those online discussions this week made a point that stuck with me. They volunteer handing out food to people who are homeless. The line, they said, has grown from a couple hundred people to over a thousand in six months. Families living in cars. And meanwhile, the dominant public conversation is about whether wealthy Australians are being treated fairly.

Both things can be true at once. You can think a tax policy is badly designed and notice that the outrage thermometer is badly calibrated. I hold both of those views and I’m not sure how to resolve them cleanly, so I won’t pretend I can.

The CGT changes are genuinely complicated. The argument that they might push investment offshore, or discourage productive risk-taking, or quietly extend to people who are just modestly comfortable rather than genuinely wealthy: those are real arguments worth having. The Grattan Institute numbers floating around suggest the top one per cent by age bracket starts at net worths between $3 and $11 million depending on your age. That’s not your average ETF investor nervously watching their superannuation.

What frustrates me is the conflation. The genuine structural concerns about capital gains reform get buried under a pile of people performing outrage on behalf of people who will, by any reasonable measure, be fine. There’s a comment somewhere in the pile this week about the “yacht industry.” It was a joke. It also sort of wasn’t.

The argument that these changes hurt people under thirty is worth taking seriously, though. If you’re trying to save a deposit using ETFs because you’ve been priced out of property and you want some way to build wealth, a change that increases your eventual CGT liability is not nothing. That’s a real tension in the policy. Making property relatively more tax-advantaged compared to shares, in an environment where property is already the primary driver of intergenerational wealth transfer, feels like it’s pulling in the wrong direction. I genuinely don’t know if the policy designers have a good answer to that, and I’d like to hear one.

What I keep coming back to is the ratio of noise to signal. The people with the loudest megaphones, to borrow a phrase someone used this week, are the people most affected. That’s not surprising. It’s also not a reason to treat their arguments as inherently wrong. But it is a reason to hold them up to the light carefully, rather than accepting the framing wholesale.

The food line growing from two hundred to a thousand people in six months. That’s the number I can’t shake. The tax debate will grind on through estimates committees and opinion pages and whatever Clarkson gif someone posts next. But that number is sitting there, not going anywhere.