Geoff Wilson warns tax changes could “slaughter” young investors

The political heat around wealth and fairness in Australia has just been cranked higher.

Ahead of next week’s Federal Budget, respected commentators are warning the government is preparing to fundamentally reshape the way Australians build wealth.

Among the loudest voices is Wilson Asset Management Chair Geoff Wilson AO, who has raised concerns that proposed changes to capital gains tax, negative gearing and trust structures could weaken long-term incentives to invest, own assets and create financial security - particularly for younger Australians already struggling with housing affordability and rising living costs.

“Theft from every aspirational Australian under 40”

Wilson, among the best-placed to know what the Budget contains, has warned of "Labor's CGT slaughter of the young coming in next week's Budget by Jim Chalmers and Anthony Albanese", saying the proposals could effectively double the CGT the government collects on long-term investments.

“This isn’t reform. It’s theft from every aspirational Australian under 40 trying to get ahead," he wrote in a viral LinkedIn post.

"Chalmers is burning the ladder while the boomers are at the top."

“Treasury wants to axe the 50% Capital Gains Tax discount for every asset class shares, businesses, startups, farms, crypto and replace it with old-school inflation indexation. The result? A punitive raid that doubles the tax on long-term success,” he says.

He provided an example of a young investor who puts away $10,000 and compounds it at 15% p.a. over 50 years, growing the investment to roughly $10.84 million.

• Under the current 50% discount: The ATO collects roughly $2.54 million in tax.
• Under their new inflation-indexed regime: The ATO takes over $5.07 million.

“This isn’t reform. It’s a direct assault on aspiration, risk-taking, and wealth creation. Younger Australians locked out of property and relying on equities and entrepreneurship get hammered hardest, while the government lectures about intergenerational equity,” he says.

Wilson reckons the proposals risk driving capital away from productive Australian assets and entrepreneurship.

“Australia doesn’t need more tax grabs. We need productivity, innovation, and incentives for private investment. This policy will drive capital into the family home, term deposits, or offshore, anywhere except productive Australian businesses,” he says.

“This is class warfare”

Roger Montgomery, Founder of Montgomery Investment Management, also said on LinkedIn that Albanese risks creating "class warfare" rather than social cohesion by blaming and taxing boomers for buying homes when they were cheaper.

He says the government wants the general public to believe that older mums and dads are “hoarding wealth” because they own a home or an investment property, but this misses how they got there in the first place.

“A 65-year-old has had 40 years to allow working, saving and investing to compound their wealth. If you’re 25, you’ve only had five years - there’s a big difference … it’s not a wealth gap, it's a time gap," he says.

“Throughout history, older generations have accumulated more than the young because time has had time to work. So it’s not a conspiracy, it’s just the calendar.”

Montgomery argues the overwhelming majority of Australians who have accumulated wealth did so by following the rules society encouraged them to follow: work hard, save, invest and avoid becoming a burden on taxpayers later in life.

He agreed with Wilson’s comments that the upcoming Budget policies are a “raid” on working Australians and a way to hide the government’s economic management shortcomings.

“The government has added $123.6 billion in new spending … and it hasn't even met half of that with new savings. Consequently they need to find a fix and they don’t want to look to themselves - they want to look to your mum and dad.”

The migration "pressure cooker"

Montgomery went as far as to say the government is “gaslighting” Australians by claiming that higher taxes are in the name of intergenerational fairness, pointing to the problems it created in the property market.

He says Australia’s rental vacancy rate is 1.1%, which actually has nothing to do with investment property owners and more to do with high immigration levels, pointing to 96,000 new arrivals in February alone and 500,000 over the past year.

Australia’s housing pressures are increasingly becoming a supply-and-demand crisis rather than a story about investor greed.

“The government is importing a small regional town every single year - that’s not fairness, that’s a pressure cooker," he says.

"And charging your mum and dad additional taxes on their investment properties or giving them less relief even if they have a mortgage on that property isn’t going to solve the problem."

The counter argument

Not everyone agrees the proposed changes would damage prosperity or aspiration.

Writing in The Guardian, economist Saul Eslake argued the Howard-era 50% capital gains tax discount helped turn Australia into “even more of a nation of property speculators” rather than the “nation of shareholders and entrepreneurs” it originally promised to create.

"Over the 25 years since the 1999 change to the CGT regime, the share of housing loans taken out by investors has averaged 35.7%, 9.2 percentage points above the investor share in 1998-99," Eslake wrote.

He also argued the combination of negative gearing and the 50% CGT discount fundamentally changed investor behaviour by allowing investors to convert wage and salary income into more lightly taxed capital gains over time.

Importantly, Eslake challenged the argument that reducing investor incentives would necessarily worsen housing affordability.

He argued that if fewer investors competed against first-home buyers for existing homes, housing affordability could improve and home ownership rates could rise, particularly for younger Australians.