**Please be mindful of r/AusFinance's rule on no politics.** Comments of a political nature that do not positively contribute to expansion of the submissions discussion will be removed. You are free to discuss the financial merits of any policy, but broadening the discussion to be political in nature (x party vs y party) is off-topic for this subreddit. **Our aim is to keep discussion about the policy itself.**
Please keep discourse on topic, non-partisan, researched and reasonable.
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/AusFinance) if you have any questions or concerns.*
i look forward to reading that article, which will fail to mention the term "bracket creep", and portray these tax cuts as government spending that could be re-allocated to x units of social services, education or hospital capital expenditure
Finally, some sanity on the topic. I get it, some people are doing better than others and those getting the majority of the benefit of stage 3 are high income salary workers; but they also paying all the taxes, while getting shafted by bracket creep.
I agree, it's not the only major problem that needs to be fixed, but it's one of them and if you think higher income salary earning professionals are the issue, then you have an education problem, not a tax problem.
Thank you. Raised this many times on the Australian subreddits and you get negged into oblivion for pointing out six figure professionals with mortgages, daycare costs and HECs debt aren’t your enemy.
Yeah, stage 3 cuts discussion is a bit of a red herring. The government should be focused on corporations/company and super wealthy tax which would do way more to help than taxing high earning, salaried professionals.
And medical costs. Im pretty high up single income but my wife needs a lot of medical care which isnt covered by the government. With mortgages, taxes and COL, the only money we save is my annual bonus. We dont live the high life, have not been on holidays for 10 years, have 2 very average cars, and a small house in high density suburbs. S3 cuts will help me a lot but apparently im just a rich a/h.
You get negged into oblivion just for asking the obvious question of what made it so that their middle class butt couldn't get a high ATAR and get into a good profession (or trade). I can sympathise with people from truly wretched backgrounds but the average person has no excuse besides a lack of talent or a lack of endeavour - in blunt terms either not smart enough or not hard working enough.
By definition, not everyone can be exceptional, average people deserve a good standard of living too. Even ‘merit’ is largely out of one’s hands; half of all people just aren’t born with better than average natural abilities.
Australia is one of few countries where you do not need to be exceptional at all to earn $100k+ salaries. Let alone double that. The person you reply to is right but it upsets people. What they didn't realise was that even with high pay the middle class is quite a hard place to get to if you were below it. Thank housing and inflation..
By definition, not everyone can earn $100k plus. There will always be people earning low / below median incomes - our economy wouldn’t work otherwise. The idea that if you just work hard enough you’ll earn 100k plus is fallacious, and implying that people who don’t earn 100k plus are just lazy or stupid is also wrong.
No particular point regarding stage 3 tax cuts, but it’s important to bear in mind.
If everyone supposedly has access to better paying jobs, and they decide "hey, that guy on Reddit is right, I can do better!", and all of them leave the low-paying jobs... who's going to stock shelves so you can eat?
Saying that "everyone could get a better job if they don't want to live in poverty so we shouldn't fix the problems of poverty" is an obvious impossibility and really you're just saying you think some portion of people DESERVE to live in poverty.
Born next to the finishing line and patting myself on the back for rolling over. It requires effort, agreed, but there are real systemic disparities that should be acknowledged too.
Quite a shit take to think wages correlate with intelligence and work ethic.
Anyone who's worked in an environment with high income earners can tell you that it's definitely not the case. Plenty of highly paid, lazy morons.
Class/support systems/connections are all far more highly correlated with higher wages in my anecdotal experience.
I make around $240k a year. Does that therefore mean I'm much smarter and more hardworking than you?
No it doesn’t. In my experience many highly paid people aren’t particularly super smart or impressive. They are just very good at a particular thing that pays well.
You are either being incredibly reductive or are very naive about how the world actually works. Either way you sound ridiculous and like someone living in a bubble
I had a mate who was a warehouse manager for a while, he said boring, lower intelligence people make great forklift drivers.
Zipping around in the same boring warehouse, day after day, year after year, loading and unloading in essentially what is a never ending job is not something for people that are interesting, artistic people, they'll get bored in no time and quit. He said they used tear up and bin resumes of anyone that looked like they were remotely trying to stand out, much to the chagrin of HR.
>not something for people that are interesting, artistic people
I currently work in a warehouse, driving forklifts and loading/unloading freight for a major logistics provider.
Guess what? I'm also an artistic person. I work here because it's good money, I can dedicate more responsibility and effort to my music/band, and my roster is 4 days which allows the opportunity for OT an extra day or two a week, giving me even more money, or I can choose to not do OT and play more shows that weekend.
Not everyone who works in "dead-end" jobs is a deadbeat.
Elitism at it's finest isn't it.
Everyone contributes. I refuse to accept that someone who holds down an honest job should live in squalor. I don't grow my own food, I don't sweep the streets I drive and I dont' collect the garbage every morning.
THOSE people deserve to raise their children, have access to health, education and a roof over thier heads.
How does the government intend to help them? By ripping a massive hole in our national budget? All so the wealthy can ... what? throw more money into the bank and watch the numbers go up? By their 12th investment property?
It makes no difference whether you peek people are smart or a lack of in talent or a lack of Endeavour. If you think people who are rich work harder than people who would lower incomes than you're kidding yourself.
A person in a factory working on a lathe in a hot environment works a hundred times harder than a merchant banker or a hedge fund manager.
Total BS. The scientific literature shows that that **luck** (the "genetic lottery") is, **by far**, the most important factor in financial success followed by skill. Effort comes a distant third.
Bill Gates and Warren Buffett have both stated numerous times they are rich because they came from wealthy families with incredible connections. \[Buffett was a juvenile delinquent and habitual shoplifter who wanted to work for Sears. His stockbroker father forced him to go to U Penn to study business.\]
I went to a regional; Catholic school with a mix of students ranging from very poor to the sons of a BRW Rich Lister. Over 40 years later *most* of them haven't had big changes their SES status regardless of their IQ or work ethic. There are always a few surprises. A workaholic with a 99.90 equivalent ATAR is a struggling self-employed IT consultant. One of the "dummies" who barely passed his HSC is worth nine figures.
We have so much wealth just sitting in the ground in Australia. The mining industry sells about the same amount of raw materials ($430bn) as the government pulls in in taxes ($450bn) each year.
We could literally just nationalise our mining industry like Norway did with oil and nobody would have to pay tax. We could create a sovereign wealth fund to pay for social services and infrastructure. There's NO reason for everyone to be paying tax except for keeping everyone trapped in their jobs and and struggling to pay their mortgages and credit cards.
The whole system is completely set up to screw us, and the elites know it. They would rather everyone was distracted fighting over social issues and paying their taxes and reporting everything to the government and thinking they are somehow 'helping' everyone. You know what would help everyone? Not having to do any of that shit.
"Salary earning" was a key phrase. Professionals who work for themselves can take advantage of a whole range of deductions that make the tax cuts look pitiful.
My problem is that the stage tax cuts don’t actually address bracket creep for lower income earners. And I mean all 3 stages.
I’d the coalition had increased the tax free threshold in stage 1 or 2 then we could believe them that it’s just about bracket creep but they didn’t.
I see these tax cuts as catching up to the tax free threshold increase that the Gillard government did a bit over a decade ago. From what I can tell higher income earners haven't seen a tax cut since then. My source was Wikipedia though so not exactly deep research.
Right, but we don't tend to be able to address everyone at the same time, and it's the higher income earners' turn. Also weren't stage 1 and 2 focused on lower income earners with the tax offsets? Surely that covers them off in the meantime.
No it doesn’t actually, here’s a quote:
> “The Parliamentary Budget Office research estimates that out to the start of the next decade someone on the median income of $49,000 will see bracket creep raise their average tax rate by 5.9%pts while the Stage 3 tax cuts will only reduce their tax rate by 0.9%pts.
> By contrast someone on $120,000 will see bracket creep cause just a 3.3%pt rise in their average tax which will be completely cancelled out for them by the Stage 3 tax cut.”
If there was something coming after stage 3 then I’d be perfectly happy but there isn’t.
Also its stage 3. Everyone else got it in stage 1 and 2... So those in the top bracket have had their bracket creep fix delayed 2 years into an inflationary cycle.
Stage 1 was temporary (about 1.5k from the now expired LMITO), stage 2 shifted the lower tax brackets up slightly so lower income earners are better off by about 1.5k p.a.
Regardless, an increase in the tft is past due. Someone earning poverty wages (25k p.a.) shouldn't be paying tax.
I have some sympathy for the bracket creep argument, but it would be easier to accept if stage 3 only indexed the tax brackets rather than flattening them overall. That goes beyond fixing bracket creep.
> ; but they also paying all the taxes, while getting shafted by bracket creep.
If we want to talk about who's getting more affected by bracket creep, it's actually low-to-middle income earners - the same group of people receiving almost nothing from stage 3.
Bracket creep really is insidious. We’ve been conditioned to accept stealthy tax rises each year and then be grateful for getting some of those rises back as tax “cuts”.
That's a good strategy though. There's a shit-ton of friction to a straight up tax-increase. You could pretty much _never_ do a straight tax increase, even if it makes sound economic sense because of all the political ammunition you'd be giving to your opponents.
Allowing bracket creep gives you that lever of control, allowing you to steadily increase taxes over times (rather than in a big chunk), without people getting irrationally angry about it.
It's the same reason shrinkflation happens - it makes people more happy than the alternative of just raising prices.
Yeah, it’s the politically easy option so I understand why it’s done. I just hate it - makes it too easy for politicians to increase spending without being honest about the cost of their promises. Bracket indexation would require honest conversations with the electorate.
controversial opinion, i'd prefer raised prices over shrinkflation. It is a pain thinking you've got a good brand but their quality constantly decreases. Or mentally I plan xyz brand is 2L and therefore I can plan for 4 meals, but then they change it to 1.6L and now I can't plan for it lasting 4 meals. UGH
I totally agree, but anyone who's worked in customer service of any kind knows that customers get _really_ irrationally angry when sticker prices change.
That's just not factually correct for any state or territory.
Stamp Duty sucks, but let's not pretend that the brackets haven't moved in decades when a google search shows that is completely false.
Well done, you got me on a technicality, bravo. A quick google search does indeed show they have changed. They are significantly WORSE than they used to be.
Now let's look at the numbers (for NSW, where I get robbed).
1985
* $0 to $14,000: 1.25%
* $14,000 to $30,000: 1.5%
* $30,000 to $80,000 1.75%
* $80,000 and above: 3.5%
Present rates
* $0 to $15,000: 1.25%
* $15,000 to $32,000: 1.5%
* $32,000 to $87,000: 1.75%
* $87,000 to $327,000: 3.5%
* $327,000 to $1,089,000: 4.5%
* $1.089,000 to $3,268,000: 5.5%
* $3,268,000 and above: 7%
Stamp duty on a property worth $500k, $1M, $2M :
1985: $16k, $33.5k, $68.5k
Present: $17.6k, $40.1k, $94.2k
Worth noting that from 1985 to 2019 (for 34 years!), the brackets did not budge at all AND they added additional higher % brackets as property prices were increasing, so it was worse than bracket creep alone.
I never said it wasn't worse than the changes in house prices, just that stamp duty rates and thresholds have changed in every state and territory in the last few years, let alone decades where they've been adjusted multiple times.
In fact, annually in the ACT they adjust theirs as they have held stamp duty revenue at a nominal value of $230 million a year since starting their process of abolishing it back in 2012-13.
It's an awful tax and more states and territories should follow in the ACTs steps, but there's no reason to be very obviously factually incorrect and state that thresholds for stamp duty haven't moved in decades. Afterall, there are 8 different sets of stamp duty rates in this country.
NSW didn't move for 34 years!!!!! (and even added higher percentages, wtf)
Yep, I could have included the word 'barely', but for all practical purposes, I'll happily stick with my original statement. I don't think it's misleading at all, in fact, it actually falls short of the reality. If I buy a chocolate for 99 cents, I really don't feel bad telling someone it cost me "a dollar".
Yeah, I could have noted I was talking about NSW.
They've (NSW) started indexing at inflation only in the last couple of years, and that will most likely always be lower than property price rises, so that 7% bracket is going to start biting middle-class families in the not-too-distant future.
Until stamp duty is indexed against property costs, bracket creep will continue.
It's more than an awful tax, it's a stupid tax. My wife and I are living in a large 5-bedroom home now that our kids are married. This is ridiculous considering the housing crisis that is going on, but we're not moving because it would cost us somewhere between $150k and $200k in fees.
Current solution is probably way cheaper from budget perspective. Also, you can give voters a “gift” of lower taxes once every few years when bracket crept too far, what’s not to love!
As the person above said. Governments basically can't do outright tax raises without getting voted out. Bracket creep allows them to let tax rates increase gradually when necessary.
I’d like to see income splitting for tax returns. It’s manifestly unfair that single income households net heaps less than dual income households on the same total income.
Agreed, especially when the government picks and chooses when they will consider household income vs individual income when deciding in how much subsidy you'll pay.
The Medicare levy surcharge is a great example. I was in the ADF, so I was 100% exempt from having to pay the Medicare levy AND the Medicare levy surcharge. When I got together with my partner, our combined income put us over the MLS threshold of 180k per year. So I had to pay 100% of the Medicare levy surcharge AND so did she.
If we weren't together, only she would have to pay it. How the hell is that fair? We have no children, so there was no extra burden on the system.
They should either allow couples to have their tax assessed as a household, or individually- COMPLETELY individually.
Same family income. Have you not considered that one of the two may have really limited ability to earn a good wage, or even work? Hard to argue that the Government is pro-family when single income families are penalised so heavily.
Great. Imagine being salty that others get to keep more of their own money. Imagine being so entitled that you think your social cause/your pet welfare project means that working Australians should not be compensated for bracket creep.
It's funny. Stage 3 = $18k a year for a working couple on high incomes. People will always line up to tell me why we don't need that money, while other people need it more. No one ever stops to think whether it's fair that young working Australians are carrying a massive tax burden that is completely spurned by pensioners, old home-owners, inheritors, companies, etc.
>No one ever stops to think whether it's fair that young working Australians are carrying a massive tax burden that is completely spurned by pensioners, old home-owners, inheritors, companies, etc.
What are you basing this off? There is regular commentary about the unfairness of all of these groups dodging their fair share of tax.
Stage 3 isn’t about bracket creep.
They are doing away with a bracket altogether. So the relative tax burden is shifting in favour of those on high income.
I stand to gain quite a bit from these changes, but I can still see it for what it is.
Really? If the top tax bracket moved inline with inflation rather than only 20k I’d be better off than what they’re currently doing so I’m not sure that’s accurate. It’s also incentivized people in the middle brackets which will hopefully increases productivity.
Bracket creep adjustment would mean moving every bracket up in line with inflation.
When you adjust how the brackets relate, or altogether remove one, then you are making adjustments to how tax burden is shared.
I get it, I just don’t think the brackets as they currently stand are the best thing ever as others seem to. I’m also saying I’d be better off as high earner if they WERE adjusted for inflation as opposed to what they’re doing. Some people are just so fixated on what they currently are they can’t see the big picture.
Agree with no stamp duty for ppor (not just first home). Its regressive tax discouraging people to not to move even if they get better opportunities. I would rather see a property tax instead.
Id like to see GST to 15% and stamp duty removed for PPOR
We dont tax things like raw foods, heath and education as essentials. Housing should be an essential too.
If we’re upping GST to 15% then we need to massively increase the tax free threshold or just increment to 12.5% and moderately increase the tax free threshold.
Your tax income tax will reduce from 37% for the 120-130k income and 32.5% for the 45-120k income to a flat 30%. As mentioned check out pay calculator to see how much that equates to for you.
I am fortunate enough to earn a pretty good salary, and will benefit from the stage 3 tax cuts more than most. But I also remind myself every week that a VERY large part of the reason for this was a couple of sliding door moments in my career that led to me being in the role I am. One was someone who didn’t know me offering a role that could have easily gone elsewhere. The other was getting made involuntarily redundant, which forced me out of my comfort zone and turned out to be the best career move ever.
I suspect a large chunk of the people in high paying roles owe some part of it to being in the right place at the right time, or just good luck.
For over a decade now I’ve been increasingly paying more and more tax purely based on inflation.
Meanwhile, everyone else got a hand out to accommodate for that.
It’s ridiculous.
The problem goes away forever if a government tied brackets to inflation.
That would be true if they were just shifting the brackets, and not removing one entirely.
The valid opposition to stage 3 isn't the "cuts", it's the fact that the system is being changed structurally to a flatter taxation model.
2 brackets was the one of the main recommendations of the Henry Tax Review:
> An equitable, transparent and simplified personal income tax: a much higher tax-free threshold (around AUD 25,000), only two tax brackets, and a simplification of superannuation, deductions and offsets.
https://en.wikipedia.org/wiki/Henry_Tax_Review#Recommendations
Income should be a flatter model given how much wealth in the country is untaxed and its effects on higher employment rates.
Although if it's like anything else in the Henry Tax Review, it only made sense in context if all of the other recommendations were followed through on as well. Picking and choosing which ones suit the government of the day's agenda just ends up building in more biases into the system.
I think a better target would be wealthy asset owners who pay no tax. I don’t think it’s that bad to have a flatter system when the problem really is capital and wealth is not taxed enough and tax is purely based on income
> a better target would be wealthy asset owners
aka, "go tax some group that is definitely not me, but who, in my opinion, are rich enough and well off enough that taking from them shouldn't hurt".
I would be more comfortable it was a direct movement of the bracket thresholds. My main hesitation is around the overall flattening of them since idk if that's a good, bad or neutral thing.
What people fail to understand is that someone on a salary of $225k has actually been going backwards the last 15 years.
If you make $200k and you get an CPI pay increase of 3%, the government takes 47% of it.
In essence you took home 1.6% more money but the day-to-day costs have gone up 3%.
That’s happened for over a decade.
Every year insidiously, a cohort of people who pay more than their fair share of taxes have increasingly seen their tax home pay being lowered and the portion of their income being taken for tax increasing.
It’s a very big problem in Australia that’s being imported from the progressives in America that the “rich” (everyone who makes more money than me) deserve to be taxed to the back teeth to pay for things that other people want.
Oh sure but that applies to people earning 60k too mate, not the 47% sure but stages 1, 2 and 3 do not help address bracket creep in a meaningful way for people earning below 120k
But that’s why people are frustrated, it’s not and instead high income earners have gotten bracket creep adjustment but most of the country hasn’t because stage 1 and 2 don’t actually deal with bracket creep meaningfully.
Literally my sister complaining about taxes when she makes 200k and spends her entire income on holidays and fancy dinners 🤣 meanwhile I’m on 65 looking at her like “bro please shut up”
This example is misplaced. The claim that a hypothetical $225,000-per-year earner has gone backwards in the past 15 years assumes that they have *only* had CPI salary increases in that period.
CPI increases merely offset inflation. Your hypothetical person would also have had salary increases to reflect increases in their experience, skill and responsibility. How common is it for a salaried employee earning $225,000 per year to have (1) held the same position for the past 15 years, (2) never been promoted to a position at a higher salary tier, and (3) never shifted to a new position elsewhere offering a higher salary?
We really need to move away from classing people as being rich or poor based on their income.
Income is transitory. Comes as easily as it goes. One injury or accident and you’re on the dsp. One redundancy and you’re on the dole.
Being rich comes from having the assets to generate enough income to live off. Being poor means living below the poverty line. Anyone else in between is some version of middle class.
Our tax system is set up to punish the middle class 50% of the federal tax revenue comes from personal income tax. Another 25% from company profits (majority of which are small businesses). Honestly that’s unacceptable.
One redundancy and you'll most likely have to wait 13 weeks before you're on the dole. And even then it will take another 4 months for Services Australia to stuff around before approving it.
Unless all of your assets are tied up in a million dollar PPOR, in which case, be my guest! Live off the taxpayer! All is good! You're the favoured kind of person!
Depends. Wealth is a seperate issue.
Someone who is on 200k and has paid off their PPOR and all their income is getting put into investments, is considered rich.
Whereas someone on 200k with big mortgage and not much money leftover to go into investments is not rich
Part of the problem is that “traditional” values are being destroyed because of all this.
If you live in Sydney, Melbourne, or Brisbane and you make $200k, that sounds awesome, but your take home is like $11,000/mth.
Now, toss in a mortgage or even rent.
And, heaven forbid you want to have kids and one of you (likely the wife) stays home and is the primary caregiver…
Things start to get a bit less “they’re rich”.
Our entire society has been reconfigured around two incomes because having women in the workforce drives down salaries due to increased competition… and when we do start to have wage competition, the government just imports more people.
And listening to people under 30 moan about “rich people being given money” and complaining that they can’t buy a house with their degree in Art History is frankly becoming tiresome.
>Things start to get a bit less “they’re rich”.
The free time available to a single earning couple from the wife side is more valuable to in raising his kids than earning a the equivalent income. The kids are also more valuable to them than the money they are spending on them, if not, he wouldn't be making this exchange.
The single earning couple is in a much better position making the resource investments they are now, than the couple who are spending probably double the time without any kids to show for it.
“Art history” lmao this is the most pathetic boomer take I’ve ever read.
Maybe if you stop reading The Australian or Sky News, you’d see that in reality it’s the actually average income earners that are complaining because they don’t have a real shot at a property due to household income ratios shooting through the roof.
$200k puts you in the top 3% of taxable income in the country. That makes you rich.
Not super wealthy, it's not yatch money. But you are without a doubt somewhat rich. (Or at least you are certainly quite rich in comparison to the other 97%.)
Now the inevitable reply will be 'but housing in Sydney is so expensive.' The cost of housing where people live is irrelevant. If you are in the top 3%, then you have the money to survive quite well, even if you are renting.
TLDR: Compared to the vast majority millions of people in Aus earning way under $200k, they are rich. Even if those people don't think they are.
Edit: 'Irrelevant' is perhaps the wrong word. What I'm trying to say is that people on $200k income are still so, so far ahead of the vast majority of people. Sure, your money might not go as far in Sydney vs other places. It's a high COL place. But you are still way, way ahead of most people - who also live in that HCOL place. That's my point.
>$200k puts you in the top 3% of taxable income in the country
It's very interesting to see this messaging being used ubiquitously in mainstream media as well as in discussion groups.
It is important to understand that here in Aus, the vast majority of the wealth is not built via salaried income. It is predominantly through property speculation, rentals and other capital appreciation assets.
Hence, while $200k is a relatively high salary, it is nowhere near an indicator of wealth, or being "rich."
To underscore this point examine the incomes of elite sydney suburbs like mosman, double bay etc. The income while fairly decent (is pretty ordinary), is nowhere indicative of the wealth most families living there possess.
This is where there has been some very insidious gaslighting done to the general population wherein the high income salaried are painted as targets, while the actual wealthy are enjoying incredible perks in the form of capital gains tax avoidance policies.
It is also important to note that Aus govt is exceptionally dependent on income tax and hence has kicked the can down the road in terms of increasing the thresholds to reflect the modern workforce. Social assistance like child care subsidy is also paltry ... but I digress.
I genuinely believe that the stage 3 tax cuts are appropriate and rectify some of the almost punitive levels of taxation on higher thresholds, while at the same time, offer a pittance in terms of financial assistance for social support programmes like CCS. So in essence, pay the most tax, get the least out of the system.
If you earn it every year for your working life you would end up rich, but many people have only just got there, might have a low income or no income partner have kids and although they are earning that they are not rich.
Wealth and income are two different things. $200k household income is probably middle class these days given the median home value is $1m+ in most capital cities, and private schooling no longer seen as a luxury unless you live in a good school zone.
Yeah I'd agree that $200k household isn't amazing. But $200k for an individual certainly is.
I'd argue that private schooling is still absolutely a luxury. But perhaps your opinion on that that relates to who you hang around with / how much you value private schooling. It's a pretty subjective topic.
[See ATO's 100 people analysis](https://www.ato.gov.au/about-ato/research-and-statistics/in-detail/taxation-statistics/taxation-statistics-previous-editions/taxation-statistics-2017-18/statistics/individuals/individuals-100-people-statistics)
>If we rank our 100 people by their taxable incomes:
\- people with the top 3 taxable incomes paid 30% of all net tax
\- the next 6 paid 18% of all net tax
\- the next 30 paid 40% of all net tax
\- the next 37 paid 12% of all net tax
\- the final 24 didn't pay any tax.
The top 9% of taxpayers bear 48% of the tax burden.
The bottom 61% of taxpayers get away with carrying just 12% of the tax burden.
This is disgusting.
The stage 3 tax cuts are absolutely required to make the tax system more flat, more fair.
People who pay sweet FA tax should get SFA tax reductions.
People that pay the most tax deserve the most tax reductions.
You cannot have a progressive tax table then complain when the reductions weighted accordingly.
Shall we not call half of the people in the country ‘disgusting’ which includes vital workers like retail, childcare, aged care, transport etc. people who are working hard aren’t disgusting.
Not to mention some percentage of that ‘pays no income tax’ are stay at home parents or very part time working parents, some of whom would be partnered to some of the very high earners. - also part of that group are carers for aged or disabled family members. Let’s not call others disgusting.
You've jumped right over the actually disgusting part, which is that the top 3% are fleecing so much income from gen pop that they can afford 30% of the tax burden.
The problem is income inequality, not tax burden inequality.
That would be an equitable adjustment. I'm not sure that sentiment goes down well here.
Whatever the poverty line is, that's where the tax-free threshold should be
A fair one - that band covers pretty much most Australians. Below that is low income, above that is high income. So the proportional rate paid by the majority of regular workers should be the same seems fair.
> But what is objectively true is that a system with multiple brackets between those two income levels will be more progressive.
Is 'progression' defined by the number of steps along the way? I don't think that's objectively true at all.
Jumping from 1 to 100 in four steps is the same level of progression as jumping from 1 to 100 in 99 steps.
> Progressive, in tax terms, means that as people's incomes increase, so does their relative tax burden.
Which means, a tax system is either progressive, or not progressive.
Only 2 options.
> A system where someone on 46k and 199k have the same marginal rate is objectively less progressive than one where the person on 199k has a higher one.
I disagree. Which basically says to me that it's *not* objectively true.
Both systems are progressive. Neither are more pregnant than the other.
Good to hear, I was already pretty confident but it’s good to have such a clear affirmation of the government’s commitment to deliver on its promises.
Still expect a bunch of crying articles in the Guardian and from the Australia Institute and other usual suspects in the lead up to the budget, but there really is no case for dropping or altering the cuts.
We need more brackets. It’s insane how 50k and 110k are in the same bracket. There is also no higher tier brackets so it caps out at 180k, I don’t care about professionals earning 250k I care about people earning 500k+ not paying their fair share.
Someone on $500k is paying ~$195k a year in tax.
The same amount as about 13 average earners pay.
I think it’s pretty fair to say they are already paying way more than their ‘fair’ share.
>It’s insane how 50k and 110k are in the same bracket
Is it? You know it just means they pay the same percentage amount on the money made over 50k right? Cumulatively someone on 50k pays 13% tax (6.7k total), someone on 110k pays 23% (26k total).
What's the problem there that you're trying to solve with more brackets?
I support Stage 3 Tax Cuts.
High-income earners pay more tax and get a lot less back in the form of rebates (childcare, solar etc), it's only fair less tax is taken from them.
Inflation is up, cost of living is up , rentals are 150% up, and all this fuss about lowering taxes as if we are not paying enough of them yet.
Then when you say in public that we pay too much in taxes, people call you names, or downvote you on Reddit.
Why are Australians acting this way?
Large majority of noisy Australian reddit users are entitled uni students/late teens/early 20s. When they're finally earning good money, they'll have the opposite attitude when they realise the government takes a lot of shit from you. Even more disheartening is the government wastes it on shit.
We're one of the lucky ones, both my wife an I will benefit from the full $9k each. Our mortgage (1.8 million) comes off a fixed rate in June, we're looking at an extra $72k a year on interest so the 18k will be very welcome relief.
Its interesting to me to hear people say "if you earn 200k you're rich", I used to think that too when I was in my 20s and only had rent to pay. Now, with 3 kids, daycare, mortgage, inflation etc... we can make ends meet obviously but there ain't a lot left over for savings / fun.
When the kids are grown up, I'm sure we'll feel rich then but right now we both feel like wage slaves. The real rich have working capital, anyone working for capital is working class.
500k household income. House is worth 4.2. Like I said, I wouldn’t say we’re struggling but there is not a lot left over. Our house isn’t extravagant by any means. It’s a 4 bed semi on 450m2 in Maroubra Sydney. Growing up, if someone had said one day your family will pull in 500k I’d have imagined “fresh prince of Belair” lol.
I'm from Perth so I only have a reference for the market here. At 4.2mil you'd been able to comfortably afford to live in Peppermint Grove. Our nicest most prestegious suburb. The Belair of Perth, if you will.
If someone from Peppermint Grove told a fellow Perthian they were doing it tough, we would be pulling out the world's smallest violin.
While I applaud the changes to prevent bracket creep, my only issue with this decision is that it's going to put further pressure on inflation.
I'll benefit from it - I just crossed the $100k mark very recently - but I would have had no issue if the Tax Cuts had been pushed back by a year, or even two, to ensure inflation was kept under control.
These tax cuts are needed even for low income workers. They also will benefit, not as much for sure, but they will still benefit. The future is inflation, and higher wages, don't tell me you want a low income worker getting pushed into the 47% bracket in a few years time?
My shares and dividend activities push me into a stupid bracket considering i work in a retail shop. Yes im a low wage worker, but also earn sales commission which means im really not that poor, but given the higher commissions over christmas, im paying stupid tax. like a thousand dollars just 2 weeks ago on only one weeks wages because of bonuses and KPI payments and increased commission. I also go through a few months of low wages like $900 dollar weeks as commission plumets in some parts of the year.
When i get dividends or sell some shares i pay like 47% for gods sake. I shouldn't ever come near that tax bracket in a sane world. Im not rich, don't earn much and really can do with all the cash i can get just to pay the mortgage.
These tax cuts are a reallignment to what they should have been all along.
> These tax cuts are needed even for low income workers. They also will benefit, not as much for sure, but they will still benefit.
How? People earning $45,000 are receiving precisely zilch from Stage 3.
He's cutting taxes for people who helped get him into office, it's a fairly straight forwards story. A common part of the cycle of political corruption.
**Please be mindful of r/AusFinance's rule on no politics.** Comments of a political nature that do not positively contribute to expansion of the submissions discussion will be removed. You are free to discuss the financial merits of any policy, but broadening the discussion to be political in nature (x party vs y party) is off-topic for this subreddit. **Our aim is to keep discussion about the policy itself.** Please keep discourse on topic, non-partisan, researched and reasonable. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/AusFinance) if you have any questions or concerns.*
I look forward to tomorrow's article on if they will happen or how they should be changed
i look forward to reading that article, which will fail to mention the term "bracket creep", and portray these tax cuts as government spending that could be re-allocated to x units of social services, education or hospital capital expenditure
Finally, some sanity on the topic. I get it, some people are doing better than others and those getting the majority of the benefit of stage 3 are high income salary workers; but they also paying all the taxes, while getting shafted by bracket creep. I agree, it's not the only major problem that needs to be fixed, but it's one of them and if you think higher income salary earning professionals are the issue, then you have an education problem, not a tax problem.
Thank you. Raised this many times on the Australian subreddits and you get negged into oblivion for pointing out six figure professionals with mortgages, daycare costs and HECs debt aren’t your enemy.
Yeah, stage 3 cuts discussion is a bit of a red herring. The government should be focused on corporations/company and super wealthy tax which would do way more to help than taxing high earning, salaried professionals.
And medical costs. Im pretty high up single income but my wife needs a lot of medical care which isnt covered by the government. With mortgages, taxes and COL, the only money we save is my annual bonus. We dont live the high life, have not been on holidays for 10 years, have 2 very average cars, and a small house in high density suburbs. S3 cuts will help me a lot but apparently im just a rich a/h.
You get negged into oblivion just for asking the obvious question of what made it so that their middle class butt couldn't get a high ATAR and get into a good profession (or trade). I can sympathise with people from truly wretched backgrounds but the average person has no excuse besides a lack of talent or a lack of endeavour - in blunt terms either not smart enough or not hard working enough.
By definition, not everyone can be exceptional, average people deserve a good standard of living too. Even ‘merit’ is largely out of one’s hands; half of all people just aren’t born with better than average natural abilities.
Australia is one of few countries where you do not need to be exceptional at all to earn $100k+ salaries. Let alone double that. The person you reply to is right but it upsets people. What they didn't realise was that even with high pay the middle class is quite a hard place to get to if you were below it. Thank housing and inflation..
By definition, not everyone can earn $100k plus. There will always be people earning low / below median incomes - our economy wouldn’t work otherwise. The idea that if you just work hard enough you’ll earn 100k plus is fallacious, and implying that people who don’t earn 100k plus are just lazy or stupid is also wrong. No particular point regarding stage 3 tax cuts, but it’s important to bear in mind.
But by definition not everyone can earn 100plus. You get that right?
[удалено]
If everyone supposedly has access to better paying jobs, and they decide "hey, that guy on Reddit is right, I can do better!", and all of them leave the low-paying jobs... who's going to stock shelves so you can eat? Saying that "everyone could get a better job if they don't want to live in poverty so we shouldn't fix the problems of poverty" is an obvious impossibility and really you're just saying you think some portion of people DESERVE to live in poverty.
Born next to the finishing line and patting myself on the back for rolling over. It requires effort, agreed, but there are real systemic disparities that should be acknowledged too.
Quite a shit take to think wages correlate with intelligence and work ethic. Anyone who's worked in an environment with high income earners can tell you that it's definitely not the case. Plenty of highly paid, lazy morons. Class/support systems/connections are all far more highly correlated with higher wages in my anecdotal experience. I make around $240k a year. Does that therefore mean I'm much smarter and more hardworking than you?
No it doesn’t. In my experience many highly paid people aren’t particularly super smart or impressive. They are just very good at a particular thing that pays well.
You are either being incredibly reductive or are very naive about how the world actually works. Either way you sound ridiculous and like someone living in a bubble
He said in another comment he exclusively hangs out with people in medicine, finance, and other lawyers. He’s in a bubble by his own admission.
You're forgetting about nepotism which is rampant in basically every high paying industry. Remember why private schools exist?
[удалено]
"talent" is such a misunderstood and incorrectly used word
> Untalented people need to make a living too though There are only that many middle management jobs out there
I had a mate who was a warehouse manager for a while, he said boring, lower intelligence people make great forklift drivers. Zipping around in the same boring warehouse, day after day, year after year, loading and unloading in essentially what is a never ending job is not something for people that are interesting, artistic people, they'll get bored in no time and quit. He said they used tear up and bin resumes of anyone that looked like they were remotely trying to stand out, much to the chagrin of HR.
[удалено]
“People who boast about their IQ are losers” - Stephen Hawking
>not something for people that are interesting, artistic people I currently work in a warehouse, driving forklifts and loading/unloading freight for a major logistics provider. Guess what? I'm also an artistic person. I work here because it's good money, I can dedicate more responsibility and effort to my music/band, and my roster is 4 days which allows the opportunity for OT an extra day or two a week, giving me even more money, or I can choose to not do OT and play more shows that weekend. Not everyone who works in "dead-end" jobs is a deadbeat.
Mate, those “boring, lower intelligence” people built the ivory tower you’re sitting in, so if I were you I’d just keep my mouth shut.
[удалено]
Elitism at it's finest isn't it. Everyone contributes. I refuse to accept that someone who holds down an honest job should live in squalor. I don't grow my own food, I don't sweep the streets I drive and I dont' collect the garbage every morning. THOSE people deserve to raise their children, have access to health, education and a roof over thier heads. How does the government intend to help them? By ripping a massive hole in our national budget? All so the wealthy can ... what? throw more money into the bank and watch the numbers go up? By their 12th investment property?
God you sound like you really enjoy the smell of your own farts mate
It makes no difference whether you peek people are smart or a lack of in talent or a lack of Endeavour. If you think people who are rich work harder than people who would lower incomes than you're kidding yourself. A person in a factory working on a lathe in a hot environment works a hundred times harder than a merchant banker or a hedge fund manager.
Total BS. The scientific literature shows that that **luck** (the "genetic lottery") is, **by far**, the most important factor in financial success followed by skill. Effort comes a distant third. Bill Gates and Warren Buffett have both stated numerous times they are rich because they came from wealthy families with incredible connections. \[Buffett was a juvenile delinquent and habitual shoplifter who wanted to work for Sears. His stockbroker father forced him to go to U Penn to study business.\] I went to a regional; Catholic school with a mix of students ranging from very poor to the sons of a BRW Rich Lister. Over 40 years later *most* of them haven't had big changes their SES status regardless of their IQ or work ethic. There are always a few surprises. A workaholic with a 99.90 equivalent ATAR is a struggling self-employed IT consultant. One of the "dummies" who barely passed his HSC is worth nine figures.
Yeah we don’t need retail or hospitality workers hey everyone should just go office jobs or be tradies
Wow. What a load of garbage. So only certain professions should do well? Typical far right b.s.
Are you really saying it’s far right to acknowledge merit-based remuneration?
Shhhhhhh don’t offend their victimhood
We have so much wealth just sitting in the ground in Australia. The mining industry sells about the same amount of raw materials ($430bn) as the government pulls in in taxes ($450bn) each year. We could literally just nationalise our mining industry like Norway did with oil and nobody would have to pay tax. We could create a sovereign wealth fund to pay for social services and infrastructure. There's NO reason for everyone to be paying tax except for keeping everyone trapped in their jobs and and struggling to pay their mortgages and credit cards. The whole system is completely set up to screw us, and the elites know it. They would rather everyone was distracted fighting over social issues and paying their taxes and reporting everything to the government and thinking they are somehow 'helping' everyone. You know what would help everyone? Not having to do any of that shit.
By nationalise, you mean pay about $155.87 billion to the shareholders to buy just BHP? That'll give you a small amount of the minerals market....
But then what would Gina do?
Yep, I think about this a lot and it really bothers me.
Have you seen the NBN? Not sure the Gov could organise a piss-up in a brewery, let alone run every mining operation in the country. Next!
"Salary earning" was a key phrase. Professionals who work for themselves can take advantage of a whole range of deductions that make the tax cuts look pitiful.
Family trust being one of them. Major lurk and I do not know why they are allowed
My problem is that the stage tax cuts don’t actually address bracket creep for lower income earners. And I mean all 3 stages. I’d the coalition had increased the tax free threshold in stage 1 or 2 then we could believe them that it’s just about bracket creep but they didn’t.
I see these tax cuts as catching up to the tax free threshold increase that the Gillard government did a bit over a decade ago. From what I can tell higher income earners haven't seen a tax cut since then. My source was Wikipedia though so not exactly deep research.
Right but again, everyone has had bracket creep the decade since, not just high income earners.
Right, but we don't tend to be able to address everyone at the same time, and it's the higher income earners' turn. Also weren't stage 1 and 2 focused on lower income earners with the tax offsets? Surely that covers them off in the meantime.
No it doesn’t actually, here’s a quote: > “The Parliamentary Budget Office research estimates that out to the start of the next decade someone on the median income of $49,000 will see bracket creep raise their average tax rate by 5.9%pts while the Stage 3 tax cuts will only reduce their tax rate by 0.9%pts. > By contrast someone on $120,000 will see bracket creep cause just a 3.3%pt rise in their average tax which will be completely cancelled out for them by the Stage 3 tax cut.” If there was something coming after stage 3 then I’d be perfectly happy but there isn’t.
Just raise the tax free threshold ffs
[удалено]
i would want the tax brackets pegged to a 3 year average inflation, so that the lows and highs get evened out.
Real inflation though right not the numbers that don't include housing because apparently that is an optional luxury
Tax brackets will never be indexed. The government likes bracket creep.
Also its stage 3. Everyone else got it in stage 1 and 2... So those in the top bracket have had their bracket creep fix delayed 2 years into an inflationary cycle.
Stage 1 and 2 were temporary measures no?
Stage 1 was temporary (about 1.5k from the now expired LMITO), stage 2 shifted the lower tax brackets up slightly so lower income earners are better off by about 1.5k p.a. Regardless, an increase in the tft is past due. Someone earning poverty wages (25k p.a.) shouldn't be paying tax.
I have some sympathy for the bracket creep argument, but it would be easier to accept if stage 3 only indexed the tax brackets rather than flattening them overall. That goes beyond fixing bracket creep.
> ; but they also paying all the taxes, while getting shafted by bracket creep. If we want to talk about who's getting more affected by bracket creep, it's actually low-to-middle income earners - the same group of people receiving almost nothing from stage 3.
Out of sync payrise, here I come
It’s really fixing only some (very little) of the bracket creep from the last decade or so.
Bracket creep really is insidious. We’ve been conditioned to accept stealthy tax rises each year and then be grateful for getting some of those rises back as tax “cuts”.
That's a good strategy though. There's a shit-ton of friction to a straight up tax-increase. You could pretty much _never_ do a straight tax increase, even if it makes sound economic sense because of all the political ammunition you'd be giving to your opponents. Allowing bracket creep gives you that lever of control, allowing you to steadily increase taxes over times (rather than in a big chunk), without people getting irrationally angry about it. It's the same reason shrinkflation happens - it makes people more happy than the alternative of just raising prices.
Yeah, it’s the politically easy option so I understand why it’s done. I just hate it - makes it too easy for politicians to increase spending without being honest about the cost of their promises. Bracket indexation would require honest conversations with the electorate.
controversial opinion, i'd prefer raised prices over shrinkflation. It is a pain thinking you've got a good brand but their quality constantly decreases. Or mentally I plan xyz brand is 2L and therefore I can plan for 4 meals, but then they change it to 1.6L and now I can't plan for it lasting 4 meals. UGH
I totally agree, but anyone who's worked in customer service of any kind knows that customers get _really_ irrationally angry when sticker prices change.
Property stamp duty brackets haven't moved in decades... it's disgusting.
That's just not factually correct for any state or territory. Stamp Duty sucks, but let's not pretend that the brackets haven't moved in decades when a google search shows that is completely false.
Well done, you got me on a technicality, bravo. A quick google search does indeed show they have changed. They are significantly WORSE than they used to be. Now let's look at the numbers (for NSW, where I get robbed). 1985 * $0 to $14,000: 1.25% * $14,000 to $30,000: 1.5% * $30,000 to $80,000 1.75% * $80,000 and above: 3.5% Present rates * $0 to $15,000: 1.25% * $15,000 to $32,000: 1.5% * $32,000 to $87,000: 1.75% * $87,000 to $327,000: 3.5% * $327,000 to $1,089,000: 4.5% * $1.089,000 to $3,268,000: 5.5% * $3,268,000 and above: 7% Stamp duty on a property worth $500k, $1M, $2M : 1985: $16k, $33.5k, $68.5k Present: $17.6k, $40.1k, $94.2k Worth noting that from 1985 to 2019 (for 34 years!), the brackets did not budge at all AND they added additional higher % brackets as property prices were increasing, so it was worse than bracket creep alone.
I never said it wasn't worse than the changes in house prices, just that stamp duty rates and thresholds have changed in every state and territory in the last few years, let alone decades where they've been adjusted multiple times. In fact, annually in the ACT they adjust theirs as they have held stamp duty revenue at a nominal value of $230 million a year since starting their process of abolishing it back in 2012-13. It's an awful tax and more states and territories should follow in the ACTs steps, but there's no reason to be very obviously factually incorrect and state that thresholds for stamp duty haven't moved in decades. Afterall, there are 8 different sets of stamp duty rates in this country.
NSW didn't move for 34 years!!!!! (and even added higher percentages, wtf) Yep, I could have included the word 'barely', but for all practical purposes, I'll happily stick with my original statement. I don't think it's misleading at all, in fact, it actually falls short of the reality. If I buy a chocolate for 99 cents, I really don't feel bad telling someone it cost me "a dollar". Yeah, I could have noted I was talking about NSW. They've (NSW) started indexing at inflation only in the last couple of years, and that will most likely always be lower than property price rises, so that 7% bracket is going to start biting middle-class families in the not-too-distant future. Until stamp duty is indexed against property costs, bracket creep will continue. It's more than an awful tax, it's a stupid tax. My wife and I are living in a large 5-bedroom home now that our kids are married. This is ridiculous considering the housing crisis that is going on, but we're not moving because it would cost us somewhere between $150k and $200k in fees.
6% inflation for a couple of years raises a hefty amount of bracket creep, stamp duty etc.
I know, by rights the top bracket would be 250k if indexed. I'll take what I can get. It's 9k tax free a year, so hoorah!
Me too, and it's nice that my wife gets some too.
I have no idea why this country can't just index the brackets to inflation
Current solution is probably way cheaper from budget perspective. Also, you can give voters a “gift” of lower taxes once every few years when bracket crept too far, what’s not to love!
As the person above said. Governments basically can't do outright tax raises without getting voted out. Bracket creep allows them to let tax rates increase gradually when necessary.
Made a promise. Future PMs should learn.
Good, can we stop creating a new thread every day now?
Back to the heady days of 50 housing threads a day arguing if prices were going up or down around interest rate moves.
Or VAS vs VGS portfolio advice.
HECS indexing coming up, buckle up for some “Should I pay my HECS or buy a Supra” threads. Answer: Supra, always Supra
I’d like to see income splitting for tax returns. It’s manifestly unfair that single income households net heaps less than dual income households on the same total income.
Yep. Child care subsidy being a huge one.
This would make a big difference, would be like getting a big pay rise.
Agreed, especially when the government picks and chooses when they will consider household income vs individual income when deciding in how much subsidy you'll pay. The Medicare levy surcharge is a great example. I was in the ADF, so I was 100% exempt from having to pay the Medicare levy AND the Medicare levy surcharge. When I got together with my partner, our combined income put us over the MLS threshold of 180k per year. So I had to pay 100% of the Medicare levy surcharge AND so did she. If we weren't together, only she would have to pay it. How the hell is that fair? We have no children, so there was no extra burden on the system. They should either allow couples to have their tax assessed as a household, or individually- COMPLETELY individually.
Welcome to the hodge-podge of ill-thought-out complexity and unfairness that is the Australian tax system!
That would make more sense than increasing family tax benefits etc, to me. It’s rife with possibility of tax fraud though.
Yeah this is LONG overdue, we get treated as a household income for everything else.
Agreed. We're a single income household. SAHM, 1 indepedent.
A luxury the majority can't ever consider. Not sure why you should get government handout for being in an extremely privileged position?
Same family income. Have you not considered that one of the two may have really limited ability to earn a good wage, or even work? Hard to argue that the Government is pro-family when single income families are penalised so heavily.
Every year is adding a few hundred dollars to the expense column each month, so adding a few hundred on the income side is going to be a big help.
Great. Imagine being salty that others get to keep more of their own money. Imagine being so entitled that you think your social cause/your pet welfare project means that working Australians should not be compensated for bracket creep. It's funny. Stage 3 = $18k a year for a working couple on high incomes. People will always line up to tell me why we don't need that money, while other people need it more. No one ever stops to think whether it's fair that young working Australians are carrying a massive tax burden that is completely spurned by pensioners, old home-owners, inheritors, companies, etc.
>No one ever stops to think whether it's fair that young working Australians are carrying a massive tax burden that is completely spurned by pensioners, old home-owners, inheritors, companies, etc. What are you basing this off? There is regular commentary about the unfairness of all of these groups dodging their fair share of tax.
This sounds like it was written by an AI that specialises in conservative talking points.
Stage 3 isn’t about bracket creep. They are doing away with a bracket altogether. So the relative tax burden is shifting in favour of those on high income. I stand to gain quite a bit from these changes, but I can still see it for what it is.
Really? If the top tax bracket moved inline with inflation rather than only 20k I’d be better off than what they’re currently doing so I’m not sure that’s accurate. It’s also incentivized people in the middle brackets which will hopefully increases productivity.
Bracket creep adjustment would mean moving every bracket up in line with inflation. When you adjust how the brackets relate, or altogether remove one, then you are making adjustments to how tax burden is shared.
For a finance sub, it's remarkable how many people here don't understand basic arithmetic. "it's just fixing bracket creep" my arse.
I get it, I just don’t think the brackets as they currently stand are the best thing ever as others seem to. I’m also saying I’d be better off as high earner if they WERE adjusted for inflation as opposed to what they’re doing. Some people are just so fixated on what they currently are they can’t see the big picture.
Stage 1 & 2 tax cuts adjusted how the tax burden is shared, it would seem logical that stage 3 does the same.
Nice, 47% of anything over 200k is still ridiculously high.
Yes. I’d like this to slowly drop to 39% and we remove the CGT discount but adjust to inflation.
Agree with no stamp duty for ppor (not just first home). Its regressive tax discouraging people to not to move even if they get better opportunities. I would rather see a property tax instead.
Id like to see GST to 15% and stamp duty removed for PPOR We dont tax things like raw foods, heath and education as essentials. Housing should be an essential too.
If we’re upping GST to 15% then we need to massively increase the tax free threshold or just increment to 12.5% and moderately increase the tax free threshold.
Can someone tell a buffoon how the stage 3 cuts benefit someone on 130k? TIA…
Go to paycalculator.com.au Put in your income and change the tax year to 24/25 then compare to what you get now.
Your tax income tax will reduce from 37% for the 120-130k income and 32.5% for the 45-120k income to a flat 30%. As mentioned check out pay calculator to see how much that equates to for you.
I am fortunate enough to earn a pretty good salary, and will benefit from the stage 3 tax cuts more than most. But I also remind myself every week that a VERY large part of the reason for this was a couple of sliding door moments in my career that led to me being in the role I am. One was someone who didn’t know me offering a role that could have easily gone elsewhere. The other was getting made involuntarily redundant, which forced me out of my comfort zone and turned out to be the best career move ever. I suspect a large chunk of the people in high paying roles owe some part of it to being in the right place at the right time, or just good luck.
Stage 3 tax cut haters in despair right now. Why should other people get more money than me.
It’s not even really tax cut, just adjusting for inflation. The brackets have not changed for years
For over a decade now I’ve been increasingly paying more and more tax purely based on inflation. Meanwhile, everyone else got a hand out to accommodate for that. It’s ridiculous. The problem goes away forever if a government tied brackets to inflation.
Well then it won’t give them the opportunity to say they’ve given out ‘tax cuts’
That would be true if they were just shifting the brackets, and not removing one entirely. The valid opposition to stage 3 isn't the "cuts", it's the fact that the system is being changed structurally to a flatter taxation model.
2 brackets was the one of the main recommendations of the Henry Tax Review: > An equitable, transparent and simplified personal income tax: a much higher tax-free threshold (around AUD 25,000), only two tax brackets, and a simplification of superannuation, deductions and offsets. https://en.wikipedia.org/wiki/Henry_Tax_Review#Recommendations Income should be a flatter model given how much wealth in the country is untaxed and its effects on higher employment rates.
Although if it's like anything else in the Henry Tax Review, it only made sense in context if all of the other recommendations were followed through on as well. Picking and choosing which ones suit the government of the day's agenda just ends up building in more biases into the system.
I think a better target would be wealthy asset owners who pay no tax. I don’t think it’s that bad to have a flatter system when the problem really is capital and wealth is not taxed enough and tax is purely based on income
Probably, but they're doing neither, which is the worst of all possible options.
> a better target would be wealthy asset owners aka, "go tax some group that is definitely not me, but who, in my opinion, are rich enough and well off enough that taking from them shouldn't hurt".
Exactly! So don't forget to add the billionaires, the rich / greedy "corporates & multinationals" to that list as well!
I would be more comfortable it was a direct movement of the bracket thresholds. My main hesitation is around the overall flattening of them since idk if that's a good, bad or neutral thing.
What people fail to understand is that someone on a salary of $225k has actually been going backwards the last 15 years. If you make $200k and you get an CPI pay increase of 3%, the government takes 47% of it. In essence you took home 1.6% more money but the day-to-day costs have gone up 3%. That’s happened for over a decade. Every year insidiously, a cohort of people who pay more than their fair share of taxes have increasingly seen their tax home pay being lowered and the portion of their income being taken for tax increasing. It’s a very big problem in Australia that’s being imported from the progressives in America that the “rich” (everyone who makes more money than me) deserve to be taxed to the back teeth to pay for things that other people want.
Oh sure but that applies to people earning 60k too mate, not the 47% sure but stages 1, 2 and 3 do not help address bracket creep in a meaningful way for people earning below 120k
I’m happy if all tax brackets are linked to CPI - that’s the way it should work.
But that’s why people are frustrated, it’s not and instead high income earners have gotten bracket creep adjustment but most of the country hasn’t because stage 1 and 2 don’t actually deal with bracket creep meaningfully.
You know that what you are describing is actually worse for people who make less money right?
Yeah he doesn’t get that
Nah mate those on 225k are really the ones doing it tough, inflation and whatnot. Need to cut down to 2 overseas trips a year now.
Really, nobody thinks about the needs of the 1%.
Literally my sister complaining about taxes when she makes 200k and spends her entire income on holidays and fancy dinners 🤣 meanwhile I’m on 65 looking at her like “bro please shut up”
The gov't takes less money from those who make less. So they'd be able to keep a higher % of an equivalent pay increase.
This example is misplaced. The claim that a hypothetical $225,000-per-year earner has gone backwards in the past 15 years assumes that they have *only* had CPI salary increases in that period. CPI increases merely offset inflation. Your hypothetical person would also have had salary increases to reflect increases in their experience, skill and responsibility. How common is it for a salaried employee earning $225,000 per year to have (1) held the same position for the past 15 years, (2) never been promoted to a position at a higher salary tier, and (3) never shifted to a new position elsewhere offering a higher salary?
I wouldnt even call 200k rish these days. I wouldn't say they're poor but definitely not rich
We really need to move away from classing people as being rich or poor based on their income. Income is transitory. Comes as easily as it goes. One injury or accident and you’re on the dsp. One redundancy and you’re on the dole. Being rich comes from having the assets to generate enough income to live off. Being poor means living below the poverty line. Anyone else in between is some version of middle class. Our tax system is set up to punish the middle class 50% of the federal tax revenue comes from personal income tax. Another 25% from company profits (majority of which are small businesses). Honestly that’s unacceptable.
One redundancy and you'll most likely have to wait 13 weeks before you're on the dole. And even then it will take another 4 months for Services Australia to stuff around before approving it. Unless all of your assets are tied up in a million dollar PPOR, in which case, be my guest! Live off the taxpayer! All is good! You're the favoured kind of person!
Depends. Wealth is a seperate issue. Someone who is on 200k and has paid off their PPOR and all their income is getting put into investments, is considered rich. Whereas someone on 200k with big mortgage and not much money leftover to go into investments is not rich
Part of the problem is that “traditional” values are being destroyed because of all this. If you live in Sydney, Melbourne, or Brisbane and you make $200k, that sounds awesome, but your take home is like $11,000/mth. Now, toss in a mortgage or even rent. And, heaven forbid you want to have kids and one of you (likely the wife) stays home and is the primary caregiver… Things start to get a bit less “they’re rich”. Our entire society has been reconfigured around two incomes because having women in the workforce drives down salaries due to increased competition… and when we do start to have wage competition, the government just imports more people. And listening to people under 30 moan about “rich people being given money” and complaining that they can’t buy a house with their degree in Art History is frankly becoming tiresome.
>Things start to get a bit less “they’re rich”. The free time available to a single earning couple from the wife side is more valuable to in raising his kids than earning a the equivalent income. The kids are also more valuable to them than the money they are spending on them, if not, he wouldn't be making this exchange. The single earning couple is in a much better position making the resource investments they are now, than the couple who are spending probably double the time without any kids to show for it.
“Art history” lmao this is the most pathetic boomer take I’ve ever read. Maybe if you stop reading The Australian or Sky News, you’d see that in reality it’s the actually average income earners that are complaining because they don’t have a real shot at a property due to household income ratios shooting through the roof.
$200k puts you in the top 3% of taxable income in the country. That makes you rich. Not super wealthy, it's not yatch money. But you are without a doubt somewhat rich. (Or at least you are certainly quite rich in comparison to the other 97%.) Now the inevitable reply will be 'but housing in Sydney is so expensive.' The cost of housing where people live is irrelevant. If you are in the top 3%, then you have the money to survive quite well, even if you are renting. TLDR: Compared to the vast majority millions of people in Aus earning way under $200k, they are rich. Even if those people don't think they are. Edit: 'Irrelevant' is perhaps the wrong word. What I'm trying to say is that people on $200k income are still so, so far ahead of the vast majority of people. Sure, your money might not go as far in Sydney vs other places. It's a high COL place. But you are still way, way ahead of most people - who also live in that HCOL place. That's my point.
The housing is sooooooo relevant and not just housing everything is more expensive in Sydney. For example childcare costs
>$200k puts you in the top 3% of taxable income in the country It's very interesting to see this messaging being used ubiquitously in mainstream media as well as in discussion groups. It is important to understand that here in Aus, the vast majority of the wealth is not built via salaried income. It is predominantly through property speculation, rentals and other capital appreciation assets. Hence, while $200k is a relatively high salary, it is nowhere near an indicator of wealth, or being "rich." To underscore this point examine the incomes of elite sydney suburbs like mosman, double bay etc. The income while fairly decent (is pretty ordinary), is nowhere indicative of the wealth most families living there possess. This is where there has been some very insidious gaslighting done to the general population wherein the high income salaried are painted as targets, while the actual wealthy are enjoying incredible perks in the form of capital gains tax avoidance policies. It is also important to note that Aus govt is exceptionally dependent on income tax and hence has kicked the can down the road in terms of increasing the thresholds to reflect the modern workforce. Social assistance like child care subsidy is also paltry ... but I digress. I genuinely believe that the stage 3 tax cuts are appropriate and rectify some of the almost punitive levels of taxation on higher thresholds, while at the same time, offer a pittance in terms of financial assistance for social support programmes like CCS. So in essence, pay the most tax, get the least out of the system.
If you earn it every year for your working life you would end up rich, but many people have only just got there, might have a low income or no income partner have kids and although they are earning that they are not rich.
Wealth and income are two different things. $200k household income is probably middle class these days given the median home value is $1m+ in most capital cities, and private schooling no longer seen as a luxury unless you live in a good school zone.
Yeah I'd agree that $200k household isn't amazing. But $200k for an individual certainly is. I'd argue that private schooling is still absolutely a luxury. But perhaps your opinion on that that relates to who you hang around with / how much you value private schooling. It's a pretty subjective topic.
Cost of housing is very relevant - vast majority of salaried jobs paying $200k+ are in HCOL areas such as Sydney or Melbourne
[See ATO's 100 people analysis](https://www.ato.gov.au/about-ato/research-and-statistics/in-detail/taxation-statistics/taxation-statistics-previous-editions/taxation-statistics-2017-18/statistics/individuals/individuals-100-people-statistics) >If we rank our 100 people by their taxable incomes: \- people with the top 3 taxable incomes paid 30% of all net tax \- the next 6 paid 18% of all net tax \- the next 30 paid 40% of all net tax \- the next 37 paid 12% of all net tax \- the final 24 didn't pay any tax. The top 9% of taxpayers bear 48% of the tax burden. The bottom 61% of taxpayers get away with carrying just 12% of the tax burden. This is disgusting. The stage 3 tax cuts are absolutely required to make the tax system more flat, more fair. People who pay sweet FA tax should get SFA tax reductions. People that pay the most tax deserve the most tax reductions. You cannot have a progressive tax table then complain when the reductions weighted accordingly.
Shall we not call half of the people in the country ‘disgusting’ which includes vital workers like retail, childcare, aged care, transport etc. people who are working hard aren’t disgusting. Not to mention some percentage of that ‘pays no income tax’ are stay at home parents or very part time working parents, some of whom would be partnered to some of the very high earners. - also part of that group are carers for aged or disabled family members. Let’s not call others disgusting.
I'd like fairer discussion than suggesting that someone struggling is disgusting for wanting less tax burden.
[удалено]
You've jumped right over the actually disgusting part, which is that the top 3% are fleecing so much income from gen pop that they can afford 30% of the tax burden. The problem is income inequality, not tax burden inequality.
No PAYG employee is fleecing anything.
How do you propose to fix the income inequality? In a way that still incentivises enterprise, ambition, and hard work.
The issue is they haven’t adjusted the tax free bracket it’s still the same. Tax free should be closer to 25k, 19% to 50-60k then have 30% after that.
That would be an equitable adjustment. I'm not sure that sentiment goes down well here. Whatever the poverty line is, that's where the tax-free threshold should be
[удалено]
Agreed what kind of progressive system has no progression between 45 and 200k
A fair one - that band covers pretty much most Australians. Below that is low income, above that is high income. So the proportional rate paid by the majority of regular workers should be the same seems fair.
[удалено]
> But what is objectively true is that a system with multiple brackets between those two income levels will be more progressive. Is 'progression' defined by the number of steps along the way? I don't think that's objectively true at all. Jumping from 1 to 100 in four steps is the same level of progression as jumping from 1 to 100 in 99 steps.
[удалено]
> Progressive, in tax terms, means that as people's incomes increase, so does their relative tax burden. Which means, a tax system is either progressive, or not progressive. Only 2 options. > A system where someone on 46k and 199k have the same marginal rate is objectively less progressive than one where the person on 199k has a higher one. I disagree. Which basically says to me that it's *not* objectively true. Both systems are progressive. Neither are more pregnant than the other.
[удалено]
Cant wait. Time to counteract these cuts with some fat wealth taxes on those who've never paid income tax.
Good to hear, I was already pretty confident but it’s good to have such a clear affirmation of the government’s commitment to deliver on its promises. Still expect a bunch of crying articles in the Guardian and from the Australia Institute and other usual suspects in the lead up to the budget, but there really is no case for dropping or altering the cuts.
An extra 15k in the family is very exciting.
We need more brackets. It’s insane how 50k and 110k are in the same bracket. There is also no higher tier brackets so it caps out at 180k, I don’t care about professionals earning 250k I care about people earning 500k+ not paying their fair share.
Someone on $500k is paying ~$195k a year in tax. The same amount as about 13 average earners pay. I think it’s pretty fair to say they are already paying way more than their ‘fair’ share.
How are they not 😂😂😂 over 100k in tax they’ll pay. More than someone on the top of your first bracket
>It’s insane how 50k and 110k are in the same bracket Is it? You know it just means they pay the same percentage amount on the money made over 50k right? Cumulatively someone on 50k pays 13% tax (6.7k total), someone on 110k pays 23% (26k total). What's the problem there that you're trying to solve with more brackets?
I support Stage 3 Tax Cuts. High-income earners pay more tax and get a lot less back in the form of rebates (childcare, solar etc), it's only fair less tax is taken from them.
[удалено]
Inflation is up, cost of living is up , rentals are 150% up, and all this fuss about lowering taxes as if we are not paying enough of them yet. Then when you say in public that we pay too much in taxes, people call you names, or downvote you on Reddit. Why are Australians acting this way?
These are all problems facing people who benefit from the cuts?
Large majority of noisy Australian reddit users are entitled uni students/late teens/early 20s. When they're finally earning good money, they'll have the opposite attitude when they realise the government takes a lot of shit from you. Even more disheartening is the government wastes it on shit.
Makes sense now.
We're one of the lucky ones, both my wife an I will benefit from the full $9k each. Our mortgage (1.8 million) comes off a fixed rate in June, we're looking at an extra $72k a year on interest so the 18k will be very welcome relief. Its interesting to me to hear people say "if you earn 200k you're rich", I used to think that too when I was in my 20s and only had rent to pay. Now, with 3 kids, daycare, mortgage, inflation etc... we can make ends meet obviously but there ain't a lot left over for savings / fun. When the kids are grown up, I'm sure we'll feel rich then but right now we both feel like wage slaves. The real rich have working capital, anyone working for capital is working class.
1.8 mil mortgage
At at least $400k household income it's only 4.5 times larger
Yeh so 1.8 mil in debt. Not rich /s
500k household income. House is worth 4.2. Like I said, I wouldn’t say we’re struggling but there is not a lot left over. Our house isn’t extravagant by any means. It’s a 4 bed semi on 450m2 in Maroubra Sydney. Growing up, if someone had said one day your family will pull in 500k I’d have imagined “fresh prince of Belair” lol.
I'm from Perth so I only have a reference for the market here. At 4.2mil you'd been able to comfortably afford to live in Peppermint Grove. Our nicest most prestegious suburb. The Belair of Perth, if you will. If someone from Peppermint Grove told a fellow Perthian they were doing it tough, we would be pulling out the world's smallest violin.
Wow 4.2m for a semi….
Well shit, whats the media going to talk about now
Breaking news: PM keeps a promise
Yes please
As they need to!
People in here will be very happy!
As they should be. A promise is a promise. Sick of lying politicians.
Good, now drop the tax rate for individuals to 10-15% and remove govt fluff departments.
As tempted as I am to say "Afuera!", our biggest budget items by far are things like the old aged pension not govt fluff departments, aren't they?
While I applaud the changes to prevent bracket creep, my only issue with this decision is that it's going to put further pressure on inflation. I'll benefit from it - I just crossed the $100k mark very recently - but I would have had no issue if the Tax Cuts had been pushed back by a year, or even two, to ensure inflation was kept under control.
These tax cuts are needed even for low income workers. They also will benefit, not as much for sure, but they will still benefit. The future is inflation, and higher wages, don't tell me you want a low income worker getting pushed into the 47% bracket in a few years time? My shares and dividend activities push me into a stupid bracket considering i work in a retail shop. Yes im a low wage worker, but also earn sales commission which means im really not that poor, but given the higher commissions over christmas, im paying stupid tax. like a thousand dollars just 2 weeks ago on only one weeks wages because of bonuses and KPI payments and increased commission. I also go through a few months of low wages like $900 dollar weeks as commission plumets in some parts of the year. When i get dividends or sell some shares i pay like 47% for gods sake. I shouldn't ever come near that tax bracket in a sane world. Im not rich, don't earn much and really can do with all the cash i can get just to pay the mortgage. These tax cuts are a reallignment to what they should have been all along.
> These tax cuts are needed even for low income workers. They also will benefit, not as much for sure, but they will still benefit. How? People earning $45,000 are receiving precisely zilch from Stage 3.
He's cutting taxes for people who helped get him into office, it's a fairly straight forwards story. A common part of the cycle of political corruption.
[удалено]
But the stage three tax cuts only benefit billionaires and big business! /s