Viral memes targeting the Capital Gains Tax (CGT) reforms in the Budget are flooding social media feeds, despite claims made by businesses in the posts that they oversimplify the debate.
One tax expert slammed the campaign as “ridiculous” and “misleading”.
The posts include images of AI-generated business owners posing with the prime minister, as well as images of Anthony Albanese himself doing everything from cooking pizza to laying concrete to working at a cash register.
The meme format includes executives hailing Albanese as a “silent partner of the 47 percent.”
One retailer posted that the Prime Minister “has never taken inventory and somehow he still has 47 percent of the business with zero risk.”
Attempting to “cause a stir on the Internet”
Startup founder Frank Grief, who helped push social posting from the tech startup world to small businesses, admitted he prioritized attention over accuracy.
Greif, who sold his real estate marketing company Realbase for $180 million in 2022, made several posts, including one that read: “All Australian founders [a] New founder with 47% stake. ”
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The photo, which includes an AI image of Anthony Albanese, hints that the government will impose the highest marginal tax rate and Medicare levy on all business owners as part of sweeping reforms in last week’s federal budget.
In practice, the changes to CGT mean that from 1 July 2027 Australia’s 50 per cent CGT concession will be abolished and capital gains will be taxed at a minimum of 30 per cent after being indexed for inflation.
The changes apply to all assets, including existing real estate and shares, excluding new buildings.
This means that for business owners earning in the highest income brackets, they could be subject to up to 47 percent tax on capital gains from the sale of their business after indexation.
In an interview with ABC News, Frank Grief acknowledged that not everyone was like that and that the online posts were intentionally provocative to draw attention to the budget changes.
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Frank Grief took part in a social media meme campaign claiming that the changes to CGT would see Anthony Albanese become “a new co-founder with a 47 per cent stake”. (ABC News: John Gunn)
“Not all companies are taxed at 47%, that’s correct, but it says up to 47%,” he said.
“I had a choice: Would I do something bold that would set the internet on fire and get enough attention to generate a conversation? At the end of the day, that’s all I’m looking for.
“That’s kind of the truth of social media, unfortunately, the more nuanced you are, the quicker someone will scroll past and be less interested in what you’re saying.”
Mr Greif then attended a roundtable discussion at the weekend with Shadow Chancellor of the Exchequer Tim Wilson, who was vocal in his opposition to the reforms.
The Albanon Government said further consultation with early-stage companies and start-ups was needed “given the unique characteristics of the technology and start-up sector”.
Rich lost some “free kicks”
Michael Hutchens, owner of fintech company Moderno, disagreed with that sentiment, but given the nature of social media, he wasn’t surprised that the claims were spread online.
Michael Hutchens insists the tax changes are not radical. (Provided by: Michael Hutchens)
“The way the world works now is that as soon as anyone starts talking about raising taxes or abolishing entitlements in any way, the very wealthy people who benefit from them immediately start attacking them on social media.”
He argues that for most business owners, the tax changes are not radical.
“Small businesses, most of us literally don’t care about this change.”
Mr Hutchens said:
“So that’s only if you’re trading stocks, raising capital, buying and selling real estate, which most small businesses probably can’t afford.
“We’re talking about rich people losing free kicks.”
At a press conference in Perth, Anthony Albanese thanked business owners for choosing a “flattering” photo of him in the campaign, but made it clear the campaign’s message was wrong.
He said there would be no change to corporation tax rates or normal business operations, as some posts have implied, and that CGT would only be payable if the business was sold for a profit.
Anthony Albanese says the tax system is only moving towards a real gains system. (ABC News)
“Our policy is very clear. When it comes to capital gains tax, all we are doing is returning the system to what it was before 1999,” he said.
“What we’ve seen since these changes were introduced is a huge distortion of housing investment away from other forms of investment because of the changes that have been made. What we’re doing is simply moving into a real returns system.”
He confirmed that businesses will be consulted before any changes are made to startup reforms.
“We haven’t been able to do as much consultation before budget night as we have with tax policy. We’re using this period this week and next to have consultations with start-ups. We’re big supporters of start-ups and venture capital.”
Taxes much more complex than the all-encompassing 47%
UTS Business School associate professor Roman Lanis claimed the social media meme campaign was “rubbish” because it did not mention the marginal tax rates that underpinned Australia’s tax system.
Roman Lanis says Australia’s tax system is structured around marginal tax rates. (Provided by: Roman Lanis)
“There will be different employees with potentially different marginal tax rates, as well as business owners themselves,” Dr. Lanis said.
For example, income between $18,201 and $45,000 is taxed at 16 percent.
The next tax bracket pays a 30 percent tax on every dollar earned between $45,001 and $135,000. Income between $135,001 and $190,000 is taxed at 37 percent.
The top marginal tax rate of 45 percent applies to all income over $190,000. With a 2% Medicare levy, the highest earners could end up paying 47% of their wages.
“I think this proposal is very misleading. [47 per cent]Because it’s much more complicated than that…I can’t say it affects everyone the same way. ”
Dr. Lanis said.
Kristen Sobeck, a research fellow at ANU’s Institute for Tax and Transfer Policy, said it was important to remember that small businesses could take advantage of corporate income tax rates as low as 25%.
Kristen Sobeck says these proposed changes would create a more level playing field. (ABC News: Greg Nelson)
“This is actually quite low compared to labor income,” Dr. Sobek says.
“They will continue to have access to it. The only difference now is that distributions of profits in the form of capital gains to individuals will be taxed at this 30% rate.”
Dr. Sobek said there are still many tax benefits for small businesses, such as immediate asset reductions, but ultimately the changes will level the playing field between business owners and employees.
“Small business owners have been in a pretty good place for many years, and given the lower tax rates, the personal income tax regime, and access to distributional capacity… yes, this type of tax arbitrage exists,” she said.
“Some families who own small businesses have been paying less tax than salaried workers, in some cases for decades. It’s just another way for them to accumulate wealth. That’s all well and good, but we’re just leveling the playing field a little bit.”
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