The Victorian Socialists candidate for Scullin, Cameron Rowe, has promised to raise the minimum wage to $30 an hour if he is elected to federal parliament.

Rowe plans to fund his promise by introducing a tax policy that specifically targets high income earners and individuals owning multi-million dollar worth of assets.

Under his plan, those earning over $300,000 would pay a 90 per cent income tax and those with assets over $10 million would be subject to a 50 per cent wealth tax.

Professor Miranda Stewart is a tax law specialist and director of Tax Group, which focuses on tax education and research at the University of Melbourne.

She said such a wealth tax policy might be “constitutionally valid but is politically unfeasible.”

The challenge of wealth redistribution

Taxing rich people’s assets would create “complexity” because wealthy people usually store their assets in companies, she said.

“Most rich people hold their assets in separate entities, such as companies or trusts, through shares in companies, so the law would have to be designed to capture separately owned and controlled wealth.”

Rowe said that the purpose of his policy was to redistribute wealth equally among the “working-class arch” within the electorate of Scullin in Melbourne’s outer northern suburbs.

“We want things to be publicly-run and we don’t want profit to interfere with the priorities of social services,” he said.

Daniel Halliday, an associate professor in political philosophy at the University of Melbourne, said there was a great difference between advocating for social change, with respect to reallocation of wealth in society, and implementing a tax policy that would directly tackle wealth inequality.

A fairer tax system

“It is one thing to defend the view that justice requires substantial redistribution of wealth and reduction of inequality, but quite another thing to identify tax policies that can bring this about, particularly without morally undesirable side-effects,” Halliday said.

He offered the example of “unrealised” wealth: that is, wealth not in the form of cash. “If we were to tax the value of, say, a privately owned home at 50 per cent, it’s not as if the Australian Taxation Office (ATO) can carve off 50 per cent of the home itself. Instead, the owners will probably have to sell the entire home to ‘realise’ its value”.

While this might be unfair to the home owner, he said there were wealth tax designs that could potentially solve this problem.

Rowe said that his proposed policy would also help prevent the rich from evading tax.

“If you’re a working-class person, you can’t avoid paying tax, but if you’re rich, you can and we want to close those loopholes and have a much fairer system for everybody,” he said.

Ann O’Connell is a member of the Australian Tax Office Public Rulings Panel, and of the advisory panel to the Board of Taxation, a non-statutory consulting group offering the government advice on tax law issues by presenting a business perspective.

She said that even if the federal government does enact this policy in the future, people could still hide their wealth and evade paying taxes.

“You can always put assets in the name of companies so that it’s difficult to identify who really owns them,” she said.

O’Connell also said that while monitoring and taxing assets held outside Australia was a challenging task, “that doesn’t mean it shouldn’t be thought about by policy makers.”

Professor Stewart said that one way to tackle this problem would be for the ATO to work with overseas governments and “collect taxes on assets hidden aboard.

“That is a difficult, though not impossible task,” Stewart said.

Lifting wages for workers

Rowe said the taxation system was becoming “more and more regressive” even though people who earn higher wages currently paid more tax, and that the Victorian Socialists would adopt a progressive approach.

A regressive tax is when the tax rate paid decreases as one’s income increases.

Rowe said that his party had a clear strategy to increase wages to $30 an hour, using the proposed tax reforms to fund it, unlike the Australian Labor Party which didn’t detail how it would fulfill the same promise.

“You can say wages should go up. Yeah, these are nice words, but how’s it going to happen?” he said, referencing Opposition Leader Anthony Albanese’s pledge to increase wages for aged care workers.

Rowe said that he didn’t see getting elected as “the end.” Regardless of the election results, he would continue to advocate for social change.

“It’s not just about having a particular person in parliament, it’s about being a platform or a loudspeaker for the people struggling outside,” he said.