Australians are being slowly strangled by taxation, and governments seem determined to tighten the noose. The process is not always dramatic. There is no single confiscatory tax that suddenly reduces everyone to poverty. Instead, there is an accumulating burden of income taxes, land taxes, council rates, consumption taxes, duties, levies and regulatory charges, each defended as necessary, reasonable and relatively modest. Taken together, however, they form an increasingly oppressive system in which governments claim an ever-larger share of the fruits of productive activity. The taxpayer is not necessarily knocked down by one great blow, but worn down by a thousand smaller ones. Killing us softly, not with a song, but with taxes.
In a penetrating article entitled "Stuffed," published in The Spectator Australia on 7 November 2026, Emeritus Professor of Finance Peter Swan argues that governments are approaching a dangerous point at which taxation begins destroying the wealth upon which their revenues ultimately depend. Swan recalls the famous observation attributed to Jean-Baptiste Colbert, finance minister to Louis XIV, that successful taxation involves extracting the greatest possible quantity of feathers from the goose while provoking the least possible protest. The underlying assumption, however, was that the goose must remain alive. A dead goose produces no more feathers.
Modern governments seem increasingly inclined to forget this elementary principle. They regard accumulated private wealth as a reservoir of untapped public revenue, apparently overlooking the fact that such wealth frequently consists of productive assets, businesses, farms, investments and property. These assets are not necessarily piles of cash waiting to be appropriated. They represent capital that generates employment, production, investment and future income. Taxing that capital can have consequences quite different from taxing the income it produces.
Swan makes the crucial distinction between income taxes and wealth taxes. Income taxation takes a proportion of earnings, whereas wealth taxation imposes a charge upon the value of assets regardless of whether those assets have generated any income. Suppose an investment portfolio earns a real annual return of 4 per cent. An annual wealth tax of 2 per cent consumes half that return before ordinary income taxes are considered. A wealth tax of 4 per cent absorbs the entire real return, while a 5 per cent levy exceeds it. The owner may have to sell assets simply to satisfy the tax collector.
Of course, this calculation is an illustration rather than a universal rule. Actual returns fluctuate, and the consequences depend upon the tax base, exemptions, other liabilities and the distinction between nominal and real returns. Nevertheless, Swan's central point is sound. A tax on the stock of wealth can become especially burdensome when the income generated by that wealth is low or nonexistent.
The international examples are instructive. California's proposed billionaire wealth tax, discussed by Swan, would impose a one-off levy of 5 per cent upon qualifying fortunes. Its supporters argue that extremely wealthy individuals can afford to contribute more to public services, particularly healthcare. Yet there is a serious economic question about taxing fortunes largely held in shares of companies founded and controlled by their owners. Such wealth is not equivalent to liquid cash. A substantial tax obligation can require asset sales, borrowing or changes in ownership arrangements, with consequences extending beyond the individual taxpayer.
Sweden offers another cautionary example. In 1976, the celebrated children's author Astrid Lindgren discovered that the interaction of taxes and social charges could produce a marginal burden exceeding 100 per cent. She responded with her satirical tale Pomperipossa in Monismania, exposing the absurdity of a system under which earning additional income could leave a person financially worse off. Sweden eventually abolished its annual wealth tax in 2007, following years of debate about capital flight, investment and the economic consequences of the levy.
Australia has not adopted a general annual tax upon all private wealth, but aspects of the same philosophy are evident in state taxation, particularly land tax. Victoria provides a striking example. Its general land tax threshold has been reduced to $50,000 in taxable land value, excluding exempt property such as the principal place of residence. The state's top general land tax rate reaches 2.65 per cent, while an additional absentee-owner surcharge can bring the combined marginal rate to 6.65 per cent.
These are marginal rates applying within a structured system, not flat percentages imposed upon the entire value of every property. Nevertheless, the burden upon certain property owners can be considerable, especially when rental returns are modest and expenses are high. Land tax is payable whether the property generates a profit or a loss. Interest payments, repairs, insurance, council rates and maintenance obligations do not disappear merely because the government has decided that the underlying land represents taxable wealth.
The government may imagine that it is simply extracting money from wealthy property investors. The economic consequences, however, do not necessarily stop with the person receiving the tax assessment. Investors can respond by reducing investment, selling properties or directing future capital elsewhere. Where these responses diminish the supply of rental accommodation, tenants may ultimately face higher rents or fewer housing choices.
It would be too simple to claim that every dollar of land tax is automatically passed on to tenants. Economic incidence depends upon market conditions, supply responses and the ability of owners to adjust rents. Indeed, economists have long argued that a carefully designed tax on unimproved land value can be relatively efficient because the quantity of land is fixed. But the real-world consequences of Australia's complicated property-tax arrangements must be assessed in conjunction with planning restrictions, housing shortages, construction costs and the wider tax burden. Governments cannot assume that ever-increasing charges on rental investment will have no consequences for housing supply.
The broader problem is the cumulative effect of taxation upon the productive economy. An Australian may pay income tax upon wages, GST upon consumption, fuel excise when driving, stamp duty when purchasing property, council rates for local services and numerous other government-imposed charges. Businesses face payroll tax where applicable, company tax, regulatory compliance costs and a variety of state and local obligations. These are not all taxes on the same income in a strict accounting sense, but they form part of the total cost of earning, investing, employing and consuming.
For ordinary households, the distinction between a tax, a levy and a compulsory government charge may be less important than the amount remaining in the family budget. Governments can announce relief in one area while increasing burdens elsewhere. A reduction in one tax may be offset by higher rates, insurance costs influenced by government charges, or the indirect costs of regulations. The citizen experiences the combined financial pressure rather than the political presentation of each individual measure.
Inflation makes the situation worse. When wages rise merely to compensate for higher prices, workers can find themselves paying more income tax because Australia's tax thresholds are not automatically indexed. This phenomenon, commonly called bracket creep, allows governments to increase their effective tax take without explicitly announcing a higher tax rate. A nominal wage increase may look impressive on paper while delivering little or no improvement in purchasing power.
The result is a particularly insidious form of fiscal extraction. Governments benefit from inflation through rising nominal tax receipts, while households struggle with the erosion of their real incomes. Political leaders then congratulate themselves upon providing tax relief by adjusting thresholds that inflation has already rendered less generous.
There is also the matter of government spending. Taxation cannot be considered independently of the expenditure it finances. Every dollar extracted from households and businesses must ultimately be justified by the public purposes it serves. Essential infrastructure, law enforcement, defence, courts and genuinely necessary services require funding. A civilised society cannot function without public revenue. But acknowledging this necessity does not mean accepting that every new program, administrative expansion or bureaucratic initiative represents a legitimate claim upon the productive population.
Australia's political class too often approaches fiscal difficulties from the revenue side. When expenditure commitments exceed available resources, the temptation is to discover new taxable activities, broaden existing tax bases or invent additional levies. Far less enthusiasm is displayed for examining whether government functions have become unnecessarily expensive, duplicated or ineffective.
The problem becomes especially serious when public administration expands faster than the private productive economy upon which it depends. Government employment and expenditure are not inherently unproductive; effective public services can contribute substantially to prosperity. But the financing of public activity ultimately requires a sufficiently strong economy capable of generating the necessary resources. A government cannot indefinitely expand its claims upon private production without considering the effects upon investment, enterprise and incentives.
There is a deeper moral question here. Taxation is backed by the coercive power of the state. Citizens do not ordinarily possess the option of declining to finance programs they consider wasteful or objectionable. This coercive character places a particular obligation upon governments to demonstrate restraint, accountability and respect for the economic independence of those who fund them.
Yet contemporary political rhetoric frequently treats private wealth as though its existence were itself evidence of a public entitlement to appropriate it. The successful business owner, investor or property holder is portrayed as possessing resources that government may legitimately redistribute whenever political circumstances make doing so attractive. Little consideration is given to the years of work, saving, risk-taking and delayed consumption through which assets may have been accumulated.
Nor is the issue confined to billionaires. Once governments establish the principle that accumulated assets constitute a convenient revenue source, political pressure can develop to extend taxation to progressively broader categories of ownership. The wealthy may be the initial targets, but middle-income households and small investors have good reason to scrutinise the underlying philosophy.
This does not mean that every tax upon wealth is unjustified, or that accumulated fortunes should be immune from taxation. The relevant questions concern proportionality, economic consequences, fairness and the purposes for which revenue is raised. A taxation system that discourages productive investment, imposes excessive compliance costs or forces asset sales during periods of low income may ultimately undermine the prosperity it is supposed to support.
Australia's problem is therefore not simply the existence of high taxes. It is the increasingly casual assumption that the state has first claim upon the nation's productive resources and that citizens must arrange their lives around whatever remains. Such an attitude reverses the proper relationship between government and society. The economy does not exist merely to finance an expanding political and administrative apparatus. Government exists to protect and serve the community whose productive efforts sustain it.
There is a point at which excessive taxation becomes economically self-defeating. Higher rates do not always produce proportionately higher revenue because individuals and businesses change their behaviour. Investment can be postponed, enterprises can contract, capital can move and economic activity can shift into less heavily taxed forms. The precise point at which these effects dominate varies across taxes and circumstances, but the underlying principle is undeniable. Tax policy must account for human responses rather than treating the economy as an inexhaustible source of revenue.
Swan's goose metaphor captures this danger with considerable force. The modern state depends upon the continued productivity of those it taxes. Yet governments can become so absorbed in the immediate political advantages of additional revenue that they neglect the longer-term consequences of weakening the incentives and capital formation upon which future prosperity depends.
Australia needs a serious reconsideration of the proper limits of taxation and government expenditure. That should begin with greater transparency about the cumulative burden imposed by federal, state and local authorities, rigorous scrutiny of spending, and a commitment to avoid taxes that punish productive capital merely because it is politically convenient to do so.
Otherwise, the future is depressingly easy to imagine. Governments will continue announcing new spending commitments, devising additional revenue measures and assuring Australians that each individual impost is modest and reasonable. Meanwhile, households will find themselves working harder to preserve the living standards they once took for granted.
The process may be gradual, bureaucratic and almost invisible when considered one tax at a time. But its cumulative effects can be devastating. The goose will continue to lose its feathers, the taxpayer will continue to hiss, and the political class will continue to insist that a little more plucking is both necessary and fair.
Until, eventually, there is very little left to pluck.
https://www.spectator.com.au/2026/11/stuffed/