A key argument the federal government advances to support its proposed tax on superannuation balances exceeding $3 million is that it is only a modest change that affects a minuscule 0.5 per cent of superannuation fund members.

It’s a valid argument – as far as it goes. But in three critical ways, it’s deeply flawed. First, the government’s refusal to index the $3 million cap means the number of impacted fund members will continue to grow. In fact, it probably already has given the government’s 0.5 per cent figure is based on data that is at least a few years old.