Australia’s tax debate often frames reform as a struggle between younger and older generations. But the real divide lies between wage earners and those who derive growing advantage from assets, wealth and capital income.

Allegra Spender deserves some credit for reopening the tax debate. In a timid political culture where both major parties have too often treated reform as radioactive, it matters that someone is willing to question the capital gains tax discount, negative gearing-style deductions and the broader bias against wages.

Her 2024 Tax Green Paper argued that the system taxes labour too heavily relative to investment income, and her latest 2026 package proposes cutting the capital gains tax discount from 50 to 30 per cent, limiting deductions on non-labour income to non-labour income, and using the proceeds to fund lower income tax rates in a budget-neutral package.

But the paper’s deeper logic is still wrong. It is wrong in diagnosis, wrong in politics, and too conservative in remedy.

Its core error is to frame the tax problem primarily as a matter of intergenerational equity. Spender’s own material repeatedly presents tax........

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