Who supports the Green's initiative to abolish university fees? (3 Viewers)

[moll.]

Ugh. And I said that I didn't want to get into anymore long-winded, pointless arguments about topics irrelevant to the OP anymore.

 

[Cianyx]

Obvious attempt at buying out their only voters

 

[davidbarnes]

The Greens are not that bad. They'll be in government (on their own or as the majority party in a coalition) within out life times. Times are changing people.

 

[moll.]

The Greens are not that bad. They'll be in government (on their own or as the majority party in a coalition) within out life times. Times are changing people.

Yeah, the populace is beginning to feel more suicidal on election day.

 

[Arcorn]

Obvious attempt at buying out their only voters

Arts students?

 

[cosmo kramer]

Abbey, what do you know about income and university degrees in Australia? Which degrees are the most financially lucrative on average? Which are the least?

 

[abbeyroad]

In that sense, yes it's true. In fact, the same could be said for any two types of tax, no matter how different their form. That's kind of the point of taxation.



There still remains a distinct difference between tax on revenue and tax on profit. A tax on revenue is exactly the same as a tax upon prices or upon quantity. If revenue(R) = price(P) x quantity(Q) then for a tax on revenue:
$tax(T) = tax rate(r) x R
= r x PQ
This is exactly the same as a tax on prices (T = rP x Q). Thus firms would respond to this by increasing prices by close to r%, the same as with a tax upon prices.
However, a tax upon profits is:
T = r(R - costs (C))
= r(PQ - C)
= rPQ - rC
They could, theoretically, raise their prices by r% and pass on the tax costs, but the problem is that if they're already profit maximising by cost minimising and revenue maximising (which they should be, or at least be close to doing so) then they would also decrease (R - C) - their profit - because higher prices would mean less quantity sold. This isn't the case with a tax on revenue or price, because a fall in gross revenue would also normally be accompanied by a fall in the untaxed costs, which together may leave the company with a higher net profit than if they hadn't passed on the tax.
As an example, we can have a company with a revenue of 100, costs of 75 (therefore with a gross profit of 25) and a universal tax rate of 20%. Under a revenue tax scheme, they'd pay 20 in tax with a net profit of 5. But if they reduced their revenue by 30 through increasing their price, their costs might go down by 25. Their gross profit would now be 20, but they would only pay 14 in tax and have a net profit of 6. Overall, better off by raising their price.
If it were a tax upon profits, however, in the first scenario the company would pay 5 in tax, with a net profit of 20. In the second scenario they would pay 4 tax and have 16 left over. They would be worse off.
True, it isn't possible under all scenarios that a company would be able to increase their net profit in a revenue tax scheme by decreasing their sales. However, the people at the head of these companies aren't idiots, nor are most of their subordinates. The majority of companies would be able to find an equilibrium point that is to their advantage by raising their prices.
Yes, it does also rely on there not being an inelastic demand; however perfect inelasticity doesn't exist, so if their revenue is already maximised then a rise in prices will always decrease revenue.
It deserves noting that a tax on profits can never force a company with a gross profit to then make a loss after tax, except in the case of a difference between taxable profit and accounting profit or a ridiculous tax rate of over 100%.



Agreed. Not sure whether this was directed at me though. If it was, then you've misinterpreted what I orginally said.

I don't even know why we're doing this. Your argument is purely academic - it is based on the assumption that the product in question is perfectly elastic ie a small change in price would result in a large change in quantity demanded. Such is not the case in reality, where the demand for most goods is relatively inelastic up to a point. Most people will not stop drinking coke because of a small price increase of $0.20, however, if the price was raised by $2, then a sharp drop in demand can reasonably be expected. A price increase will not have a major impact on consumption so long as is it less than the average opportunity cost of substitution. For instance, if the average opportunity cost of substituting pepsi for coke were valued more than the cost of $0.20, then a $0.20 price hike will not affect demand too greatly, since the average disutility of not drinking coke is greater than the disutility of $0.20. Normally, a soft drinks producing firm that is at a market price equilibrium can't increase the price without losing sales to the competition, however, a tax on the entire beverage sector, whether it's on revenue or on profit, affects every single firm, now everyone wants to pass some some of the tax to the consumers, yes in the short term there will be disruptions, there will be loss in sales as the market readjust, but as long as they don't pass on the entire tax and as long as the price increase is less than the opportunity cost of substitution people will continue to buy soft drinks. Look, how much has the price of oil increased in the past 8 years? Have people stop driving? I would say that the drop in demand would be no more than ~5%. Why? Because the opportunity cost of not driving and the opportunity cost of switching to alternative fuels are both higher than the increase in price. Have we seen a big drop in demand as your model would have predicted? No, there hasn't been a big drop in demand, on the contrary, demand from China remains strong. This is why I sometimes think mathematical economics and simple undergraduate models are such junk, you just cannot accurately predicate human behavior without a complex model that takes uncertainty, bounded rationality and cognitive biases into account.

 

[Rothbard]

The Greens are not that bad. They'll be in government (on their own or as the majority party in a coalition) within out life times. Times are changing people.

This is the most retarded thing I've ever heard.

 

[cosmo kramer]

david barnes

 

[moll.]

Pretty sure the Greens are secretly working for Al Qaeda; some of their proposals are just so blatantly toxic, that it defies belief to think they actually have Australia's interests at heart.

 

[abbeyroad]

^The same can be said about every major political party in Australia.

 

[moll.]

^The same can be said about every major political party in Australia.

Nah, at least Labor and the Libs actually have some sizeable portion of Australians in mind to benefit from their policies, even if they normally do fuck over some other portion. The Greens just anal rape everybody.

 

[Rothbard]

The greens are actually Al Qaeda

They're just stalinists with an environmentalist cloak. A cursory examination of their policies proves this.

 

[abbeyroad]

Nah, at least Labor and the Libs actually have some sizeable portion of Australians in mind to benefit from their policies, even if they normally do fuck over some other portion. The Greens just anal rape everybody.

lol true. they do everything in da name of da environment!1!!!1!!!

I think the greens are actually eco-terrorists in disguise.

 

[moll.]

lol true. they do everything in da name of da environment!1!!!1!!!

I think the greens are actually eco-terrorists in disguise.

Well they probably have more than a handful of eco-terrorists amongst their members.

 

[abbeyroad]

I don't doubt that.

 

[cosmo kramer]

they arent stalinlists rothbard

stalin was a hard arse motherfucker who sent people with icepicks after people who criticised him

commie movements usually are composed of two types of people

hardarse pragmatists like stalin who are just stone cold motherfuckers that hate people

= not the greens

and soppy wussy leftist types who think everything is about LOVE AND PEACE AND HUMANITY (frequently unattractive women)

these are the greens

these are the people that stalinists try to get rid of whenever they get into power (because they are useless)

greens fall into category b

the greens are useless obstructive morons and a coalition of the worst possible people

 

[davidbarnes]

The greens policies are mostly good. Economics is clearly their weak point however.

 

[moll.]

The greens policies are mostly good. Economics is clearly their weak point however.

Considering that 95% of their policies involve meddling with the economy or at least spending tax money to meddle with society, there is clearly a paradox between your two statements here.

 

[funkshen]

There is a gaping hole in all the rhetoric and squabbling over a mining superprofits tax. Mining used to be far more beneficial to Australia. Mining operations relied on local communities for servicing and labour, on local manufacturing operations for heavy equipment, fabrication, construction and other trade skills. Things have changed. How many of you have been to a mine recently? Recent changes in technology and improved logistics, as well as surging commodity prices, have prompted concentration of heavy equipment construction, to countries like Germany and Korea who are characterised and indeed praised for their active industrial policy. Fabrication and construction are almost completely relegated to incredibly cheap Chinese operations: pre-fab residential and site office buildings are now the norm, built and assembled in China. This mining boom is increasingly bypassing local labour (this doesn't mean that local employment isn't rising).

But what of the labour that isn't being bypassed? Trade and mining-related employment wages have surged, driving the formation of a "two speed economy". There's no doubt we had a skills shortage before the mining boom took off; the mining boom is only making it worse. The RBA's manipulation of interest rates are increasingly being seen as being forced to halt the surge of the mining and commodities based economy while everyone else (see; small business owners, mortgaged households, even the 4 Pillars to a degree due to cost of funds) suffers. This is almost exactly what happened to the manufacturing sector after the Hawke/Keating economic restructuring. The sequel to the "recession we had to have" is the "boom we had to have". Over a hundred thousand workers suffered long term unemployment after the economic restructuring, and it took a whole lot of effort to rectify (and, lamentably, conceal) this problem. What will be the result of the boom we had to have?

I don't know how much of this I believe, whether it's really as bad as it seems, or whether it will work itself out. It is merely my own thoughts, and those of other Important International Businessmen and forward thinking, gentlemanly scholars. Perhaps we should be more cautious about international investment in resources (although there are a lot of provisions for the local economy in international agreements anyways). Perhaps coal will be a dirty word in 20 years and we need to milk the cow while it's still alive. Can China's insatiable demand for our resources absorb the consequences of a super profits tax? Or, as Hayek says, do we overestimate future means and underestimate future needs?

edit: oh and I don't know about overestimating the mining sector's responsibility for "saving us from the financial crisis". Let's not forget we had a solid and low public debt (thanks Keating, Costello and Howard) and a hit the ground running when the crisis hit. Financial markets exhibited little to no anxiety about the financial position of the Australian economy, of Australian consumers and households, nor of the Australian government. It is for this reason alone that they did not savage us like they have Europe, the US (to a lesser extent) and parts of Asia. Where's the praise for our (thankfully few and strong) domestic banks, our financial regulators, and the admonishment of fickle financial markets?

doubleedit: oh yeah and the greens are horrible, the only purpose they serve is to counter opposing retards (Christian Democrats etc) and make some nominal political pushes