Barefoot Investor Scott Pape has launched an extraordinary spray at Australians outraged over Labor's latest budget, dismissing many viral fears as exaggerated or incorrect.
Pape's Response to Angry Email
Pape was responding to an angry email from Brian, who blasted Labor as 'incompetent bastards' and accused the government of a 'giant tax grab' targeting high-income earners, investors, and small business owners. Brian warned Australia's 'smartest young people' could flee overseas to lower-tax countries such as New Zealand and Dubai.
'I am just so sick of these incompetent bastards. This budget is just another giant Labor tax grab,' Brian wrote. 'People in the top 10% of income earners pay more than half the taxes. Half! Now Albo wants to be a 47% silent partner in every small business in the country.'
But Pape said many fears circulating online were exaggerated or simply incorrect.
Capital Gains Tax Myth Debunked
Addressing young Australians worried about changes to capital gains tax, Pape said the greater risk was not paying slightly more tax, but suffering a market crash that wipes out a house deposit altogether. 'Plenty of young people have written to me in a panic about the changes to capital gains tax. Many were planning to use their share portfolio as a house deposit. My view? The CGT change is not their biggest problem.'
He pointed to a hypothetical scenario where a $50,000 investment grows to $72,000 over five years, resulting in roughly $900 in additional tax under the new rules. 'The real problem is the share market dropping 40 per cent and their $72,000 deposit becoming $43,000. Then it takes a decade to recover, while rents keep rising and they're still at their parents' place eating their Cheerios. That's why my rule has never changed: do not save for a house deposit in the share market.'
Small Business 'Silent Partner' Claim Incorrect
Pape also dismissed viral claims Labor would effectively become a 'silent partner' in small businesses through higher tax rates. 'Brian's "47 per cent silent partner" line was funny on social media the first 700 times. Now it's just annoying. And it's wrong.' He said the existing small business capital gains tax concession regime already allows many owners to reduce or eliminate capital gains tax when selling a business.
'The real risk is using the tax rate as a reason not to back yourself. Building something from nothing, employing people, serving your community. It's a hard life. It's also one of the most rewarding things a person can do. Don't let a meme talk you out of it.'
Trust Taxation Defended
Pape also argued that trusts should be taxed, despite previously potentially benefiting from the same arrangements himself. 'Okay, so this one stings - you see, my kids have been nothing but a spectacular financial loss since the day they arrived. I was counting down the days until they turned eighteen, when I could finally start distributing trust income to them and claw something back. And then the bloody government snapped that door shut just as my eldest was getting close to useful. Yet it actually makes sense. The system lets wealthy families with good accountants pay less tax than nurses and tradies. That doesn't pass the pub test.'
Broader Perspective on Tax and Outrage
Despite acknowledging Australia now carries its highest tax burden since World War II, Pape said the country remained one of the wealthiest and safest places in the world. 'What really worries me isn't the tax take. It's that our outrage meter seems to be stuck at eleven. It feels like we're drifting towards America, where everything is viewed through a political lens and everyone is absolutely furious all the time.'
'If we get angry enough we might just end up with Pauline as our PM, and the greatest economic insight she's ever had was asking - "Why can't we just print more money?" - seriously, look it up. Life is good, Brian, especially when you log off.'
