Is Taxing Super Balances Over 3 Million Really Fair?

The Australian Labor Party is planning to impose an additional tax on individuals with superannuation balances exceeding 3 million dollars. As expected, the usual populist narrative is to tax the so-called rich. The crowd cheers, the headlines roll in, and the message sounds simple — tax the bloody rich. But is it that simple?

Let us be honest. The whole point of superannuation is to provide forced savings, so that everyone, regardless of income, can have a comfortable retirement. Now, I do not have 3 million in my super balance. Not even close. I will not even have one million when I retire. But I am glad that some Australians have actually planned for their future, followed the existing laws, and built a super balance that works for them. They did not steal. They did not cheat. They simply used the system — the same system available to everyone — to prepare for their retirement.

So, why should they be punished?

The most worrying part is the idea of taxing unrealized gains — something that has not even been sold or turned into income. To make it worse, there is no indexation, meaning that what 3 million means today will be very different from what it means in 10 or 20 years. According to the reports, only around 80,000 people are affected. So, it is easy to make it sound like it targets only the elite.

But here is the reality check. If you are in your early 20s today, and just starting out in your career, earning even the median wage and contributing consistently, chances are you will eventually hit the 3 million super balance. It is basic maths and the power of compound interest over 40 years of work.

So before cheering or attacking others based on ideology or envy, maybe it is time to think this through. Superannuation was never meant to be penalized. It was designed to encourage financial independence. Punishing people for doing the right thing might feel good in the short term, but it sends the wrong message about planning for the future.

Think about it.

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