Stage 3 tax cuts

[think positive]

Great post

[David]

Something ironic I've noticed about this discussion is that all of us are coming to it with ideological preconceptions – TP and Skids think that people on six figures pay too much tax, I think they pay too little, PTID and Stui think there should be a balance between the two positions – and these views tend to inform Liberal and Labor government policies too (this tax cut being, of course, a relic from the previous government). But those positions are all largely unmoored from the question of specific figures, both in terms of what they currently are and what is being proposed. Who's to say they're not already too low, or too high, and what an ideal percentage for various salary categories would actually be if you were starting from scratch? That's largely missing from this discussion.

PTID, I think you actually fundamentally misunderstand my position here. I don't think more well-off people should pay more tax because I see wealth as a moral failing. I simply believe that higher-taxing societies tend to be higher-quality societies – in terms of better services, infrastructure and social support – and I look at our tax percentages in comparison with other countries (European social democracies, even Australia itself in the past) and feel like our tax rates are relatively low in comparison (though not as low as some, e.g. the US, which I think is a case in point of what insufficient government spending can do to a society).

I totally accept that some people on the left see taxation policy as a punitive tool against the rich. That's not my position. I believe in incentive and don't believe in equality of outcome for its own sake. But if we're talking about damaging moral perspectives, the narrative of the deserving rich and undeserving poor is the biggest problem in my view, and is one that far too often informs tax policy. You can see it right here in arguments supporting these tax cuts.

We have little to fear from the opposing "moral" view, on the other hand – because I think we can all agree that it's largely the wealthy and powerful who tend to shape policy, not those who resent them.

[Pies4shaw]

I actually don't get why anyone would think that more of a burden should fall upon people who receive, in the grand scheme of things (and certainly not meaning to demean people who work hard for relatively modest incomes) relatively modest incomes. There isn't much difference between someone earning $100,000 and someone earning $200,000 - I've always felt that politicians and the media were pulling our legs when they suggest that people in such income brackets are "wealthy". In Australia, "high" taxable income almost never means wealth - what it usually means is people who work hard, do heaps of overtime and have no substantial investments/investment strategies that enable them to minimize their tax. I haven't looked at census data on incomes for years but the last time I did, the data showed that people in Broadmeadows (when it was the manufacturing urban fringe) had the highest average taxable incomes and people in Toorak had relatively low taxable incomes. There was only ever one reason that could be correct - and the reason had nothing whatsoever to do with "wealth".

[Skids]

The big difference between a family on $100k and $200k P4S is that those earning $200k will not qualify for one bit of government assistance. Those on $100k could qualify for some or all of the below government assistance.

Tax on $100k is $25k (+the employer pays $10.5k) - total tax = $35,500
Tax on $200k is $65k (+ the employer pays $21k) - total tax = $86,000

The family on $100k will be able to access;
Family Tax Benefit Part A
Family Tax Benefit Part B
Schoolkids bonus
Health Care card
Paid parental leave pay
Dad and Partner pay
Child care benefit
Jobs, Education and Training
Child Care Fee Assistance
Parenting Payment
Rent Assistance

https://www.servicesaustralia.gov.au/sites/default/files/documents/co029-1509en.pdf

[Pies4shaw]

^ Yes, I accept that - but I think that tends to reinforce the fundamental proposition that people on $200K aren't "wealthy" - the definition of "wealthy" can't be that one gets paid enough income that one doesn't qualify anymore for government benefits.

The real "wealthy" receive (I nearly said "earn") that (and more) in a week.

[watt price tully]

So back to the stage 3 tax cuts. Eliminate them for those earning over $175,000 end of story. The issue of the politics lies as always in the perception. The economy simply can’t afford tax cuts to the relatively wealthier members of the public.

We need to re fashion tax such that Australia is no longer a mine for companies who pay little or no tax in Australia especially in relation to super profiteering.

That’s just the start.

[stui magpie]

[think positive]

Yep totally agree. And it’s exactly what I meant when I asked david to define exactly what he thinks wealthy means!

[What'sinaname]

[pietillidie]

[think positive]

Meanwhile there are family trusts and really good accountants who set up various offshoots and make magic happen.

This is not corporations or big business, it’s average people working 12 hour days, or 7 days a week.

The maximum Tex an individual should pay should be no more than 40%.

Since covid andthe crazy money doled out people don’t want to work. And then there is David, who whinges about being just into the next tier, and having to pay his Dept back, while freely admitting he could earn more, but in the same breathe expecting those who do to pay more tax than him. Talk about your cake and eat it!

I’m not just having a crack here, we all have choices, to have and when to have kids, to save for a house first, or rent, uni or a different path. 2 blue collar qualifications here, house first, kids later, no fancy cars or holidays til we could afford it, very minimal govt assistance ever, idont begrudge the choices of others, but entitlement pisses me off. One of my closest friends bleeds the system dry, it makes me sick.

[think positive]

[pietillidie]

^You can't expect others to duplicate your attributes though. There are so many unique characteristics and experiences that combine to make you who you are, and those things just can't be copied. You should be thankful for that uniqueness!

I found my way to a productive place, but I had to pursue my own path because I had no hope of ever being conventional. Now, I use the strengths far too many people tried to humiliate out of me by solving difficult problems for companies. But no thanks to anyone else, that's for sure.

We have to keep pathways and possibilities open for people so they can find their way. For some, that will mean a more rigid or conventional route, but plenty will need a different path that won't make sense at first glance. Brains, experiences, personalities and capabilities are just too diverse, and we can't blame people for being made differently.

On tax rates, the percentages are less important than the ability for people to live a decent and hopeful life, a necessity that underwrites a stable society. Then, the comes the task of incentivising people to work hard and innovate once that is assured. But nothing happens without overall stability first; that's an absolute given fact when you look at countries across the world; i.e., would you really want to live in most of them?

Obviously, if we can do more with a lower tax rate, I'm all for that, and consider such smart policy the point of politics. As David rightly says, though, most HQ societies are not low taxing, even though I have no doubt we can invest more cleverly. But talking about investing more cleverly and actually doing it are two different things.

As an example, imagine if we had spent more money readying society for the pandemic, which was always an extremely obvious global risk. (Just a reminder, Trump axed the agency in China monitoring virus outbreaks on the ground, although other countries shouldn't have been relying on that, although China did the deal with American researchers because of their pre-eminent position). Or, consider the pointless costly nonsense of Brexit here; or the insanely costly delay caused by the climate denial years; or the foolish, lazy dependence on global oil markets directly and openly manipulated by OPEC tyrants and thugs like Putin; or, the monumentally costly Iraq misadventure earlier this century.

Plenty of the very most costly and damaging decisions which have ultimately required taxes to be higher to pay for the clean up come from the very people who support political parties that blindly seek to reduce their own individual tax today at the expense of such outrageously poor decisions as those above. And everyone has to pay for those mistakes, even though I doubt David ever voted for them.

So, fingers point in multiple directions here.

Also, income is ultimately calculated in advance already bearing in mind tax rates (tax regimes are set ahead of tax collection), so what people earn after taxes is actually their market value, irrespective of how they 'feel' about it. Something like EBITDA is used in business analysis to isolate core operational profitability, but no one talks about personal income that way, no matter how much people imagine the government is taking away something that's 'theirs'. It never was 'theirs', and has already been factored into socioeconomic settings based on an earlier democratic and legislative process.

So, moaning about tax is ultimately moaning about both markets and democracies, which are both built on and sustained by progressive taxation (as I say, except in weird capital and tax havens which live off normal economies), and which I don't think anyone here really wants to swap out for something else in a hurry. So, what feels bad isn't necessarily bad, and can't be changed anyhow without making everyone worse off.

[David]

[stui magpie]

But why is the disconnect between skills/workload and salaries related to taxation?

My view is that Taxation is purely how governments raise revenue to pay for services, it's not about income redistribution or fixing inequities. They shouldn't take more than they need in the first place and it should be linked to salaries so those who can least afford it pay the least and those who can most afford it pay the most, which currently happens.

One of those services is Centrelink payments to people.

Income tax is only one of the taxes in place. Wealthy people get slugged more in stamp duty because they buy more expensive houses, pay more in GST because they buy more expensive stuff, etc.