Two questions hang in the air above the now-decaying federal budget, like condors waiting for carrion.First, why is Labor spending the political capital of a 50-seat majority on a minor change to capital gains tax on businesses? Second, will housing become more affordable, and therefore be a bad investment and no longer a way to build wealth?For the first time since I started covering housing affordability as a national disaster, I'm optimistic that the tide has turned and that residential real estate will indeed be a poor investment, possibly for decades, which means affordability will gradually improve.But there is a dark side to this.A generation of young families who bought a house recently using too much debt, but hoping, fully expecting, to build equity and wealth, will be devastated. They are facing the loss of whatever equity they now have and a lifetime grind of principal and interest.That especially applies to those who took up the government's 5 per cent deposit offer. They may never have positive equity in their house.It means that the loss of housing affordability over the past 25 years has been a double disaster: for those who don't own a house, and for many of those who do.But there is simply no way to improve housing affordability for those who don't own a house while continuing to build the wealth of those who do, and the national consensus is that affordability must come first.The hill the government is dying onWhy the Albanese government decided to take the next step and use its record majority to apply the tax reform for housing affordability to business as well is a complete mystery.The principle that tax should not distort investment decisions is theoretically sound, but there are bigger tax distortions on which to spend political capital. Ironically the 50 per cent CGT discount replaced the previous inflation adjustment in 1999 for the explicit purpose of distorting investment towards business, and in particular company shares.It didn't work, and instead it created the unintended distortion of turning investment towards real estate and away from business.That massive blunder by John Howard's Liberal government kicked off a 45 per cent surge in house prices over the following three years that began 25 years of steadily worsening affordability and has culminated in a crisis that has reshaped society and, among other things, is helping to destroy the Liberal Party by driving the disaffected towards One Nation.Now it's apparently an urgent priority for this government to make sure investment is not distorted towards business by making sure it has the same CGT adjustment as property, rather than leaving it at 50 per cent as business groups are now unanimously, and a little hysterically, demanding.It has also been decided, again to prevent distortions, that the minimum tax rate for capital gains must be 30 per cent, so the new 30 per cent minimum tax on trust income doesn't result in trust users splitting capital gains with low-tax family members instead.Which means low-income earners lucky enough to make some money from a capital gain of any sort will have to pay more tax on it than they pay on their wages.Is this really the tax reform hill that Prime Minister Anthony Albanese and Treasurer Jim Chalmers want to die on?They have the gods of economic purity fighting with them but as with any tax reform the demons of politics are closing in and it's turning into a bonfire of political vanities.A structural budget deficitIt's not as if it will make much difference to the structural budget deficit.The amounts Treasury plugged into the forward estimates for the change to CGT and the limiting of negative gearing to new dwellings are $1.35 billion in 2028-29 and $2.28 billion in 2029-30; $3.6 billion over five years.So … not much, not quick.Treasury doesn't reveal how much of that money it expects from the negative gearing change and how much from CGT, and nor does it say how much of the extra CGT money it expects to come from housing and how much from business.It probably doesn't know, no-one does, but at a guess I'd say most of it comes from negative gearing and business paying more CGT.The inflation adjustment for CGT is impossible to predict for the next five months, let alone five years, and in any case, Treasury would think that its efforts to make housing more affordable will work, so that there won't be much if anything in the way of housing capital gains in future (with which I agree), so any money plugged into the model for CGT must be from business.Anyway, it's hard to believe that any previous Labor government in history with 94 lower house seats and left-ish radicals with the balance of power in the Senate wouldn't be going for much more ambitious and important tax reform than this.In 2010 Julia Gillard and Wayne Swan got a carbon tax and a minerals resources rent tax through with no majority at all, relying on independents, and in 1985 Bob Hawke and Paul Keating introduced the capital gains and fringe benefits taxes with 82 lower house seats and a hung Senate.A majority and a mandateWhat should Albanese and Chalmers be doing with their majority instead?The loss of housing affordability over the past 25 years has been a double disaster: for those who don't own a house and for many of those who do. (ABC News: Callum Flinn)The most commonly suggested reform is a big shift away from income taxes and towards consumption and resources taxes.It's not so much the top marginal income tax rate of 47 per cent that's the problem, which is about the OECD median of 45 per cent, it's the salary at which it starts — $190,000, or 1.7 times average earnings.That is close to half the OECD median of 3.1 times average earnings.Australia's consumption tax, on the other hand, is exactly half the OECD average of 20 per cent.Economists have argued that there is a case for Australia to increase the GST rate, and there is a campaign to increase taxes on exported LNG. The proceeds could be applied to lowering income taxes across the board.There is also an argument that the federal government should no longer give the GST revenue to the states and the AMA has suggested that it take over all health spending as an offset.That would have the added benefit, says the AMA, of bringing primary care (Medicare) and hospital funding under one roof. It would also end the argument about who takes care of the "Thriving Kids" being removed from the NDIS.Now that would be a worthwhile tax reform and would burnish the legacies of both Albanese and Chalmers. If that reform was ever going to be done, this term would be the time.As for housing, making it a poor investment was not really optional.As pollster Kos Samaras wrote last week: "Labor's path forward does not run through repeating the cultural language of its inner-metropolitan base. It runs through delivering on housing and wages for the very voters who remain loyal."That reform, at least, is working.Last week, the equities division of Macquarie Group produced a research note about housing that said: "There will be little to no real price growth over the coming decade [or two], with the risk now that we are on the cusp of another significant fall."As discussed in this column last week, immigration is falling and housing starts are rising as a result of the housing accord (albeit less than the target), which should result in a surplus of housing for a while at least.That, along with higher interest rates, is already causing house prices to fall in Melbourne and Sydney, and slow elsewhere.The effective increase in CGT and removal of negative gearing for established dwellings should accelerate it.At best, house prices will probably stay roughly where they are for a long time, maybe even two decades as Macquarie predicts.The good news is that this will make housing more affordable.The bad news is that it will be a terrible investment, and a nightmare for those who have stretched themselves to invest in it.Alan Kohler is finance presenter and columnist on ABC News and he also writes for Intelligent Investor.