Yesterday, the Opposition Leader revealed a new policy to abolish the ability for individuals to claim cash refunds on excess imputation credits that had not been applied to offset tax liabilities.
Mr Shorten said the abolition of the benefit would result in an additional $5.6 billion to the federal budget bottom line and reduce “unfair revenue leakage” that disadvantages voters in lower income brackets.
I believe the exact opposite would occur.
By denying the lower income tax rate taxpayer a chance for a refund of the imputation credits, Mr Shorten is actually denying a low income person the tax credit whilst still taking more tax off the higher income taxpayer.
In other words, Imputation tax credits on dividends actually redistribute wealth to lower income investors and take wealth off higher income investors.
Mr Shorten's proposal (and Industry Super Fund's David Whitely's enthusiastic support for it) is a cynical political calculation. They're essentially betting that their constituents will be so distracted with the usual class warfare sound bites that they'll forget to do the maths. I sincerely hope, for all Australians, that they don't get away with it.