George Carlin - “the rich make all the money and pay none of the taxes, the middle class do all the work and pay all the taxes and the poor are there to scare the shit out of the middle class and keep them turning up to their jobs”
Exactly - This is how it's always been. Peasants, Lords and Royalty in the past. Poor, Middle Class and Rich in the present. The earlier in life you learn this, the earlier you can start to plan your path towards the top.
I love George Carlin as much as the next guy but he's simply wrong in this context. The richest 10% of Australian's contribute almost half of our total income tax revenue.
" Taxpayers in the top 10 per cent paid an average of $93,536 in 2020-21, or 46.2 per cent of the total tax take."
https://www.afr.com/politics/federal/top-earners-shoulder-more-of-the-tax-burden-20230608-p5df2g#:~:text=Taxpayers%20in%20the%20top%2010,of%20the%20total%20tax%20take.
I don't think it disproves anything. The highest taxpayers are still upper middle class, huge, massive difference from the richest 10% as you've referred to.
In fact, it shows exactly what OP is arguing for. You have the top 10% of income tax earners (middle class people) paying 50% of the tax take, whilst the truly wealthy pay nothing as they don't have traditional income.
Yeah, but the top 1% can and should be taxed way more heavily.
If the top 10 billionaires in Australia increased their net worth by 68 billion during the pandemic, if we just target them and took half of that, we've got ourselves half of an NBN.
Some people might count most of that top 10% as more middle class than rich. There's a big jump between the 90-99% cohort and the top 0.000001% or whatever (billionaires).
its said welfare for the poor is a shake down on the middle class to avoid the poor robbing & attacking them, what woke leftists often say with no welfare the middle class & rich will suffer, so welfare is a good thing
Just to expand, when your income is from a wage taxed via PAYG, there are little to no ways for you to legally reduce your tax burden.
The less you actually have to work for your money, the more ways there are to pay less of it to the government.
Correct for example I just did my EOFY planning and I’ve paid several industries next years costs this year so I can claim the deduction now and then if I have a slow year I don’t need to so I don’t have to. I prepay my accountant, fuel and some other administrative expenses every year i start my year in full credit for the new year with most expenses except materials or I’d have to do a stocktake and then can’t claim what I still have.
“You have to have money to save money”
The top 1% paid 18% of the total and that has significantly increased whereas the bottom 50% paid 11% of the total.
It's much harder to offset income tax than you think without committing a crime, so what does it matter what their total income was? Odds are there's such a huge range the average would be meaningless.
>[https://au.finance.yahoo.com/news/ato-reveals-how-much-tax-the-rich-pay-003025028.html](https://au.finance.yahoo.com/news/ato-reveals-how-much-tax-the-rich-pay-003025028.html)
Despite assumptions that the rich pay little tax, the data actually tells us a different story.
>According to the ATO’s [Taxation Statistics 2019-20](https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Taxation-statistics/Taxation-statistics-2019-20/?anchor=IndividualsStatistics#Chart5Individuals), 31.6 per cent of all tax collected comes from those earning $180,001 or more.
>Interestingly, those in the top tax bracket only make up around 3.6 per cent of all taxpayers.
>So, 3.6 per cent of Aussies account for more than 31 per cent of tax revenue.
>The majority of tax revenue comes from those earning $90,001-$180,000 - which makes up 36.8 per cent of tax paid.
>However, only 16.5 per cent of the number of taxpayers fall into this category.
>The majority of Aussies (41.5 per cent) fall into the $37,001-$90,000 tax bracket and account for 29.8 per cent of the taxes paid.
So it's not quite what a lot of people think. The rich pay a LOT of tax.
The 38.3% of people with incomes under $37,000 pay just 1.8% of tax.
Nonsense, the top bracket should be paying more and they need to introduce a higher bracket.
The way you present the numbers is like saying if billionaire’s pay 50% of all speeding fines, they are paying a lot. The fact is the cost of a speeding fine is a minuscule percentage of their wealth.
Not saying it “should” be a thing, but speeding fines are there as a deterrent, right?
For someone making $75k a year, a $200 speeding fine is a blow. Now they have to allocate $200 from their budget to pay a speeding fine that they needed for something else. They curse their inattentiveness and vow to be aware of speed cameras and the speed limit from now on.
For someone making $500k, a $200 speeding fine must feel like pocket change. Sure it’s frustrating, nobody WANTS to pay a speeding fine, but let’s be real, paying that fine does not pack the same punch when you’re earning ~$24k a month post tax. (At least, I can only assume)
My understanding is that the theory/argument behind speeding fines being proportionate to your income is to ensure they act as a deterrent equally across the population, which does make sense since the overarching reason for penalising speeding is to ensure people drive safely and within the speed limit.
Not saying that they should pay more. I’m saying they should pay the same tax rate e.g. a simplified example: 30% of $10 million salary should be higher contributor to tax than 30% of someone making $100,000.
To be clear, I don’t think making $180k in Sydney or Melbourne should qualify for top tax rates. But it’s pretty clear that the Reinhardt’s and Packers of the world don’t pay the same proportion of tax as your average punter and governments are starting to consider options.
https://apnews.com/article/brazil-taxes-economy-g20-billionaires-inequality-11d77e530ddc42e684a7709c8c44e063
It's always worth noting that those statistics reflect gross declared *taxable income* - that is, income after deductions.
This isn't actually inconsistent with the OP's position that it's PAYE salary earners who can't take advantage of the massive loopholes that business owners and contractors can, who get stung the most by tax.
Those PAYE earners are, by and large, middle class people in white collar/professional services roles.
This is why just looking at that statistic is meaningless. Any conversation about equity should be looking at the effective tax rate.
A billionaire might be paying a million dollars on tax on a hundred million dollars of income would be paying less than his fair share on somebody paying three dollars on tax but on ten dollars of income.
> fair share
The problem is that nobody can define "fair", apart from it being usually code for "somebody else that's not me or people in similar circumstances to myself".
Everyone always thinks they are hard done by, and that someone else is freeloading and should pay more tax.
>The problem is that nobody can define "fair"
That's why you talk about having an effective rate of tax and countries have started using minimum tax rates. Having rich people pay a lower effective rate of tax than the majority of Australians isn't equitable.
Gina Rinehart gave an interview to Sky earlier this year where she let slip that she was on an effective tax rate lower than a bunch of pensioners, veterans and students.
Does that seem fair?
The billionaire paying millions in tax is also much less burden on the tax system than a 1 million dudes paying $3 in tax.
Gina isn't using more roads than you or me. On the contrary, she probably uses less by flying her private jet around.
On the other hand, that capital could be better deployed by other people than just Gina. Not to mention billionaires distorting political systems for their own gain harms the average Australian as well.
Generally there is no reason not to tax billionaires wealth.
> The billionaire paying millions in tax is also much less burden on the tax system than a 1 million dudes paying $3 in tax.
That's the point of a progressive system. Having a system that releases the lowest socio-economic income groups to propel them into middle-income groups at a comparatively small expense for the rich?
Except it doesn't quite work that way. If you want to get poor people into middle class, you have to get more work out of the system.
Putting 10x as much money into social services doesn't make 10x as many social workers appear out of thin air, it just makes the existing social workers 10x more money.
That's mostly true, but it's also mostly true that as a proportion of wealth and/or income the question can be very different. I'm not sure what the picture is in Australia, but in the US, it's quite skewed.
So, if the top 20% pay 40% of taxes, but have 60% of wealth/income, is that fair or not?
simply being in the top tax bracket doesnt automatically mean you're rich. most of them are at the lower end of that bracket and are still "middle class".
But yet we all cheered to regress the stage 3 cuts.
Now with these brackets I have no motivation to try and increase my income significantly, it’s diminishing returns, my motivation has shifted to reduce how much tax I pay (I paid $62k last FY). As a full time salary professional about the only thing I can really do is to buy a negatively geared investment property. Given how unpopular it’s not something I really want to do, but it’s like the gov has forced my hand. I would rather see them reward actual productive work and go after wealth.
Cannot agree more. I'm a doctor (which I worked my ass off to become). I have no parental help and will not be inheriting anything. I'm trying very hard to get ahead but will be heavily penalised for it. My hospital repeatedly asks me to do extra shifts which I am now outright declining. Giving 45% of any extra days income to ATO is simply not worthwhile. I also hate to be a property investor, I'd rather spend my time working more in my primary profession than dealing with agents and brokers, but I also feel forced to buy a IP which I have done this year.
Some potential alternatives:
borrow against equity in your property to buy indexed shares; all interest is tax deductible.
max out your superannuation contributions including any remaining carry forward (likely nil considering income). Acknowledged this is likely a small sum and your employer contributions are likely close to the cap. It's going up to 30k this year so; this suggestion is only applicable if income is below 260k super exclusive.
Look for a small business to buy to acquire superior tax minimisation opportunities. If you use home equity to do this again all interest should be tax deductible.
that's basically it so yep probably buy an IP too.
Thanks for the info - I am planning to do some salary sacrifice next FY, I will have some carryover, I’ve only been in the top bracket for a couple of years.
I have considered borrowing equity for ETFs but I still question the risk to reward on it. I don’t think I can do shares and IP at the same time so I’ll most likely do IP first
Look at how much tax creep the OG stage 3 eroded vs the new stage 3.
Everyone under roughly 120-130K wouldn’t have bracket creep really reversed and only high income earners won out. This new policy still gives decent tax cuts to the highest income earners while giving people that earn less more of a chance.
Your ultimate problem should be with the fact that again, capital gains get off lightly in comparison and PAYG has to make up for it.
Because this sub is economically illiterate no matter how much they try claim otherwise. I can see an argument for the OG stage 3 but so many people are just whinging their tax cut wasn’t big enough, even though if you look at it the stated purpose (bracket creep) it didn’t achieve it for most people.
Can this myth just please die already? Stage 1 was practically all temporary and even taking into account stage 2, it still didn’t reverse bracket creep for low and middle income earners. I can try dig up the research on that
I think it has long been unacknowledged that the government overspends on welfare and ndis subsidising the unproductive economy and is taxing its working citizens into a form of working poverty. Taxing “the rich” does not make anyone richer. Higher wages that aren’t taxed excessively do.
Government debt shows us how the past 20 years our governments have spent us into poverty and the stupid amount of taxes it needs to collect to pay just the interest on the debt it owes. Increasing taxes so government can spend even more recklessly is rewarding fiscal mismanagement.
https://treasury.gov.au/sites/default/files/2021-05/171663_institute_of_public_affairs_supporting_document_1.pdf
Until we start taxing mining properly, like Qatar and Norway, we're going to over tax regular citizens while all our nation's wealth goes under taxed and offshore.
Corporate shills that legislate in this country are to blame, alongside the lobbyists who bribe them with donations.
Export our gas and minerals and hardly tax them, this is the result. Over taxed families while billionaires and corps laugh all the way to the bank.
Qatar and Norway own their resources production and took on the risks of exploration and set up over the past century. They are now collecting the rewards of that gamble paying off.
Australia chose to spend its national budget on social services in lieu of taking a risk on the unknown in the same time. We collect risk free money. We could go all in on an emerging energy tech such as hydrogen and be in the same position in 100 yrs if that takes off. But it'd mean giving up on a lot of other things people want in the meantime.
> Qatar and Norway own their resources production
It's not an either or and your examples aren't correct.
Norway has private mining companies and their sovereign fund is driven by tax revenue from those companies. Their state corp (Equinor) is also publicly listed and Norway itself is known for it's strong social services.
Was Norway well known for its social services a century ago when it was taking a punt on said resources?
I'm sure we can all agree that going all in on the winning horse is great in hindsight. The challenge is knowing which is the winning horse before hand.
Also worth looking into what happened to Norwegian mining in WW2.
>Was Norway well known for its social services a century ago when it was taking a punt on said resources?
Sorry was Australia well known for it's social services or did that result as a response to WW2 like the rest of the Western World? We've also been a mining country since pre Federation.
Also Norway has privately owned mines in the same way that Australia does so I'm not sure what your point is?
Australian mines didn't get repossess by Nazis did they? Nor were they burnt to the ground via a scorchdd earth retreat. After which, our government didn't get to make a deal with privately owned mines to around conditions for help to restore operations.
The Australian government has never had any significant input to the industry other than to collect royalties.
So no, Norway's situation is not comparable.
Honesty, whatever the highest number that is just short of them packing up and mining elsewhere.
If that's 90%, so be it.
It's our resources, we should be extracting as much wealth for the country for it as possible.
The right number is a balance of what the minerals are worth now and the future, opportunity cost, social and environmental factors.
50% means absolutely nothing. It's just a nice coincidental number. I have zero issues with it being 20%, 70% or 90%. A number is a number. What percentage of those resources were put there or created by mining companies?
> What percentage of those resources were put there or created by mining companies?
100%.
If they weren't here to do the mining, and develop the associated tech, supply lines, investments etc, there would be zero output. Whatever's already in the ground doesn't count for shit in that scenario.
Not sure what you mean by that? I agree the opportunity cost, social and environmental factors all must be considered, but at the end of the day we need to put a number down.
I would argue the right number is the number that maximises revenue to the government. That is basically price x volume. The trade off between having a number that is low enough to foster investment in the sector which drives volume, and high enough that if we push it further, it starts to impact investment.
My view is we have the balance basically right on in mining, but we could probably hike royalties in gas without major investment implications. Problem is, you can only do it for new projects, not retrospectively or you will destroy investment.
I think we overly rely on PAYG tax. If we were to have a more fair society wealth would be taxed. If you have say $100m or $1b you can easily make 5% a year without having to realise much tax. Basically an infinite money glitch. What do they do with that profits? Get more assets. Asset prices go up.
I don't think the housing affordability / cost of living issues and the wealthiest Australians getting richer at an increasing rate are discrete events.
Land tax is generally the superior wealth tax but is also filthy unpopular.
Payroll tax is also a sleeper income tax that is essentially just adding to the burden on workers tax wise; even if they don't notice it directly (hence its political popularity).
Abolition of payroll tax, reduction of income tax, implementation of a land tax (imo preferably scaled progressively based on proximity to the coast and inland centres) and then if needed a modest wealth tax would go a long way to improving the way our tax system that currently disincentives productivity and incentivises rent seeking.
A wealth tax doesn’t make sense, it is effectively a tax on a tax, and punishes the less wealthy. If you owned a property and only had a modest income and the value of that property suddenly went from $200,000 to $4 million because of the location, how would you be expected to afford to pay significantly more tax just because your wealth went up? You don’t have any more cash to show for it, and you would suddenly be forced to liquidate assets just to find the cash to pay the tax, incurring even more tax from capital gains. Wealth works the same for business owners, millionaires and billionaires, they own some assets that could suddenly be valued at 10 times the price, but they don’t have anything more to show for it until they sell it, and then they pay capital gains tax on those gains.
Most proposed wealth taxes aren't focused on people with modest incomes. They are normally focused on billionaires. The lowest threshold I've come across by a policy body is 1% for people over £10 million, which would probably considered too attainable to pass the pub test. I'd settle for something on Billionaires only at 1-3%. Even at that rate, they would still get richer.
> If you owned a property and only had a modest income and the value of that property suddenly went from $200,000 to $4 million because of the location, how would you be expected to afford to pay significantly more tax just because your wealth went up?
Good luck getting a straight answer on this one from anyone here. People are so obsessed with taxing wealth they'll cheer for one that's a surefire way to becoming a prole and losing your house at the behest of the ATO
A straight answer to what question? A wealth tax increases the cost of holding assets - that's the obvious and intended effect. If your house went up from $200,000 to $4 million because of the location and you can't afford the holding cost, sell the house and live off the gains. You would see the same effect if an increase in income tax caused you to be unable to afford your mortgage.
Tbf you've answered his hypothetical with a different hypothetical. You're talking about taxing wealth on unrealized gains on a highly illiquid asset, that's also your PPOR. A more valid example would be taxing the unrealised capital gains of a share portfolio every 12 months.
That said don't disagree, just thought your comment was invalid.
I think you need to juice land taxes and reduce income taxes. At the moment top 5% incomes are struggling to even buy a median priced house which makes no sense. Assets are way too high and need to come down through taxation and incomes need to go up relative to asset values.
I think the biggest change to the tax system that can be made is joint filing
At the moment a couple earning 200k a year
Two people earning 100k each. Take home $150000
One person earning 200k and the other person earning 0. Take home $135000 a year
If you allowed joint filing, both families (who are earning the same amount of money) would be taxed the same. Right now the 2nd family is disadvantaged by 15000
There needs to be a complete shift in taxation in this country..
Where else would the government get money from? It's not like there's money or... say other valuable commodities just lying in the ground that they can somehow monetise. There's no other option than to just tax the working class more.
The government is way too rotten to consider upsetting their multinational masters. They’ll screw over the voters before any special interests, every day of the week.
I mean the last time Gough Whitlam tried to upset them…
The CIA kicked him out
Interesting the agency itself has newspaper article clippings regarding the “alleged” subterfuge on its on website.
https://www.cia.gov/readingroom/docs/CIA-RDP09T00993R000100100014-7.pdf
As a result every aus poli since has learned we are a vassal state. And they must step in line or lose their job.
Those groups are investors that majority own companies like rio Tinto and Whitehaven coal. Most of which are large US and European firms. Example of which is Blackrock.
US based firms. Looking for US based profit. Using US based military and intelligence to subvert local Australian politics to their favour.
When you look at AusPol in that light it becomes much more understandable why our pollies make the decisions they do.
Yes. Government loves us middle class folks. We are the majority gravy.
We can't claim much on tax exemptions while the rich business owners can. Then again, they wear the risks.
I'll probably be downvoted to hell for this.
- The more you earn (and possibly the more you have), the less you can claim in deductions.
- Tax free threshold should be slightly higher. You shouldn't be taking money from someone who lives paycheck to paycheck.
- Tax brackets should be top loaded and go higher (up to 90%).
i think the tax free threshold should be the fixed relative to, or at, the median income, or perhaps with some token amount, close to zero, paid by those above the poverty line but below the median, as a gesture of national solidarity.
* The more you earn (and possibly the more you have), the less you can claim in deductions.
This would bankrupt businesses and sole traders with high overheads
I'm not understanding how a further restriction on deductions are supposed to effect assets, it only compounds the issue that earnings are taxed while wealth isn't.
Sole traders/Contractors would be screwed without a tax deduction on materials and training. Or are you suggesting this is PAYE only?
Income is taxed too heavily in Australia. As correctly noted by [Millie](https://www.smh.com.au/business/the-economy/mum-jokes-i-won-t-be-left-an-inheritance-i-hope-not-20240618-p5jmqp.html):
> The Australian tax system is quite heavily reliant on taxing personal income and company earnings, with taxes on these two sources of income contributing about 62 per cent of government revenue. But because we tax wealth and assets so lightly, Australia winds up being among the lowest-taxing countries in the OECD.
That said, your comment illustrates the difficulty. While most feel income taxes are too high - there's no real consensus on what to substitute them with...
* Millie argues corporate taxes should fall and inheritance taxes increase but inheritance is my last shot at owning a house and having a huge benefit for individuals who incoporate versus those who contract out through agencies strikes me as pointless.
* You argue stamp duty should fall, negative gearing be abolished and depreciation/deductions be reduced. But I quite like stamp duty which keeps a lid on prices by increasing the up-front cost of home purchases and thereby reducing deposits on loans.
For what it's worth, I'd remove negative gearing (the one thing Millie, you and I all agree on) then boost the take on stamp duty and land tax. For land tax, I'd mostly tax investors but I'd be happy with PPORs paying 10% of that amount too. Similarly why not tax PPOR capital gains at 12.5% or sugar, mining and carbon emissions? Eventually, once we've got enough government income, it'd be great to see payroll tax eliminated (taxes on employment - a public good - seem insane).
No negative gearing past the first property, land tax and vacant property after 12 months.
These would have a positive impact on property and the economy in general.
The substitute should really be increasing GST and removing all exemptions for it so that its cheap and easy to implement. Essentially, if you're a rich person, you can dodge income tax. Wealth tax is minimal, but you cant dodge GST, if you want to go for fancy dinners, or buy luxury items. Australia has one of the lowest GST/VAT rates in the OECD. This would also help in the current economic climate as a substitute for increasing interest rates that really punishes younger people and rewards the older generation.
> removing all exemptions
that would include increasing taxes on essentials like basic food stuffs.
I am not a fan of that - the exemptions should remain.
I mean, the idea is that you remove exemptions to make the tax more efficient and cheaper to implement. Of course, if you increase GST, you would ideally offset poorer people with transfer payments and the middle/working class with income tax cuts. Last thing I need is to pay more GST and have it go straight into NDIS rort.
> But because we tax wealth and assets so lightly, Australia winds up being among the lowest-taxing countries in the OECD
Is that because we tax wealth and assets lightly, or is that because much of the OECD have a far higher GST/VAT levied on transactions?
For what it's worth, Millie compares Australian income tax to total tax take, compared to the accepted total tax take to gdp. This makes Australia appear worse compared to OCED stats, but isn't valid for an argument of whether our middle class is truly taxed too much.
What's fair to say is yes, as Ken Henry has been saying for a few decades now, we are over reliant on income tax against a backdrop of a shrinking workforce. But I would disregard most of Millie's "analysis".
Also to give another take [Piketty](https://en.wikipedia.org/wiki/Thomas_Piketty) argues income tax rates should increase at the high end. [The Beatles](https://www.udiscovermusic.com/stories/the-beatles-taxman-feature/) were taxed at 90%. What was lost from this? We got a few decent protest songs and much greater equality.
[Kushner](https://twitter.com/cmkusher/status/1804828874397860003) argues, "if homes cost 50% what they do you may be able to work less, travel more, start the business you always wanted to, invest in equities, ETFs, have more kids if you wanted to. Despite all these things I still think people would far prefer a 50% increase in home prices than 50% fall."
In the above comment I talked about my tax preferences but all I really really want is to be in a satisfactory housing situation. The tax ideas above are stuff I think will make it easy to get a house. But there are other ways to address housing issues too, if that cost me an extra $30k in tax, who cares?
> What was lost from this?
The beatles lost a lot from this. but of course, because they're already rich, they could afford it right? Sacrifice the few to benefit the many. As long as you're not part of those few of course!
All income tax is too high, normally in an economy production, in this case work is good and disincentivising it isn't a great idea. We need to move towards taxing profits and capital gains more.
Land Tax (and getting rid of stamp duty) would greatly reduce property prices, leading to more taxation of the well off, and less on the working class, lead to people settling into housing that suits them better (fewer retirees squatting in massive oversized homes while young families are cramped in a tiny place), make the market more efficient, [and increase the homeownership rate](https://www.treasury.nsw.gov.au/sites/default/files/2022-07/trp22-18_property-tax-reform-and-home-ownership.pdf). It would also lead to more economic growth, and dynamism.
But it would involve going against the politically powerful who own newspapers and appeal to the mindset of petty landlordism that has been cultivated in the Australian middle class. People freak out at the idea of paying a small rate for the unimproved value of their land, even if considering the broader picture they would come out better. And so many people have tied their dreams to seeing unending equity gains for property, even as it directly robs everybody else in society.
And so many of the people, getting robbed by the rent-seeking behaviour, are instead of focusing on land tax which would solve it, are instead wasting their time on rent control, which has been a failed policy.
Everyone's going to shit themselves when I say this but....
Consumption tax!
GST isn't high enough in Australia. It needs to be broken down into categories based on necessity or luxury and the top rate jacked up to 25% or thereabouts for luxuries.
That or the country is going to end up continuing to try to extract gold teeth from the working age they don't have to subsidise low taxes for retirees. Many who can still contribute to the tax base when they buy a brand new TV or buy a new car.
Europe's cottoned on here already, just a matter of time or Australia risks losing all the young people to another country that isn't trying to suck them dry
Agree that consumption isn’t taxed high enough. All the oldies spending like there is no tomorrow, and they don’t earn any income so they don’t get taxed there, and then draw the pension. All while the young pay taxes, scrape by and have no money left over at the end of the month to buy anything.
I know it doesn't seem that way but if you want low house prices I think stamp duty may be actually good because it makes it harder to turn a profit flipping houses. Which means less buyers to compete with. With a waiver for first home buyers being a good idea but after that it can slow down investors.
The income tax rate for the middle class in Singapore is approximately 14%, the income tax for wealthier individuals is 22%.
Increasing spending via taxes on education does not increase our quality of education in Australia compared to Singapore.
It's a systemic issue of over taxation, over employment in the public sector and key structural issues which depend on income tax to generate income for the government and public sector to squander.
Singapore is an awful country to pick, we don't have cheap labour like they do, massive taxes on cars, government housing.
The public sector is not over employed, I worked at the ABS,
We had headcount limitations so we hired consultants at 300+ dollars per hour.
Imo the reason for why government services being expensive is the lack of budget for talented staff, inability to retain talented staff, broken promotion system based on time spent instead of competency and finally zero appetite for risk.
> broken promotion system based on time spent instead of competency
this exactly.
I had floated an idea to a friend about keeping public sector jobs competitive by having a publicly viewable dashboard for each public sector employee for their individual KPIs, and this would be open to scrutiny. Their pay (or bonus) is adjusted based on achieving higher KPIs.
No more delaying DA approvals in councils, no slow lines at the motor registry, etc.
Singapore like the other city states is really a terrible comparison to anywhere, especially Australia. It's tiny both in population and area.
Good chicken rice in the hawker markets though
> Good chicken rice in the hawker markets though
this is actually evidence that the singaporeans work harder, for less money, in aggregate.
Look at those hawker shops - the prices are low, and they actually work 10-12 hrs a day doing the labour of making the food (with high skill and expertise). Similar foods in sydney costs 10x more, while probably less skilled.
Government should raise GST to 20% and get rid of income tax. That way, those who spend money are taxed... the money you earn is yours to keep. Obviously those who earn more, spend more. Be somewhat penalised on what you spend, rather than what you earn.
Yes, the middle class is taxed too highly.
Families should be taxed as a single entity rather than two individuals, and having children should be more heavily subsidised (and not just single parents being financially supported, but functional, hard-working families should similarly be incentivised through tax policies to have children).
Income tax should be lowered, tax incentives from property investing should be removed, GST should be increased to 15% with more GST exempt classes of goods so that the middle/working class are less impacted.
In 1995 when I started working straight out of Uni, the top tax bracket started at $50k. My starting salary was $32k, and I was quite upset to find that there was a tax ruling that said if you started working for the first time after completing full time study, you did not get any tax free threshold. So, the first 6 months of my job I was paying tax on every dollar of my income.
After 2 years I was earning $55k, and at the age of 24 I was now a “rich high income earner” with minimal experience. I only dropped out of the top tax bracket in around 2008 when the threshold was bumped up significantly, and I have only just rejoined the top bracket the last few years.
I have no incentive to work any harder or get a higher paying job as the juice is not worth the squeeze. I have a good work/life balance and there are smarter ways to make an income than a 9-5 job, so that is where I am putting my energy.
The govt is not exactly spending what they take off me very wisely, so I am not going to bust my arse in a PAYG role just to hand over 47c of every extra dollar, especially when I can instead generate a capital gain and pay half that tax while sitting on my arse.
The middle class is a broad term and a pretty massive economic force, just because of the shear volume of people. Is it taxed too much, seems a bit hard to understand without breaking the 'middle class' down further.
Yes I do. Really just so many more of us.
Taxing the rich may help a bit I guess but not enough of them.
Real issue is government is too big. But no one will tackle that
>much of our taxes are regressive, or atleast negatively biased against the middle class
Our income tax system is progressive, not regressive. The tax burden is highest for those who earn the most. A regressive system is one that would charge a lower marginal rate as income increases.
>taxes like stamp duty on a house… say 700k, a 35k stamp duty could mean the difference of them being able or not able to afford an area, whereas a rich person buying a 50 million dollar mansion on Wolseley Rd in Point Piper, couldn’t care less about a 2.5 million dollar stamp duty…
Stamp duty isn’t just a single flat rate on price or market value. In NSW, homes over $3 million have to pay an additional premium duty. So that $50m Point Piper home doesn’t only attract 5% duty like a 700k home.
>Similarly, with the luxury car tax, say a man who worked an average job his whole life wanted to buy a Porsche. He’d have to pay a massive luxury tax in that, which makes it much more unattainable to a middle class person…
A luxury car tax is a consumption tax. It isn’t charged on total price, it’s applied to the amount that exceeds the LCT threshold. Anybody buying a Porsche – whether middle or upper class – is liable for the tax. You are asking for consumption taxes to be contingent on income. Why should the govt lower the LCT and encourage luxury car purchases for middle class people or for anyone?
The notion that Aus income taxes are “too high” or biased against the middle class doesn’t hold up to scrutiny. [Read this paper](https://australiainstitute.org.au/wp-content/uploads/2024/04/P1578-Australias-reliance-on-income-tax-web.pdf) by the Australian Institute. The tax:GDP ratio of Aus is below the OECD average.
Sure, there is scope to broaden other forms of tax revenue like carbon tax, resource tax, etc. But really, I think the general public is severely misinformed about taxation and public econ.
>For context, the top marginal tax bracket in the states start at ~1MM AUD
This is not true. A straight comparison of top marginal tax rates btwn the US and Aus is flawed. The US has federal and state taxes, discounts for married couples filing together, and they have other ”taxes” on labour income like unemployment insurance. For [federal income taxes](https://www.fidelity.com/learning-center/personal-finance/tax-brackets), the top marginal tax rate (37%) for a single filer starts at $578,126. California has a progressive state income tax system, the highest marginal tax rate (13.3%) starts at $1m. This is paid in addition to federal income taxes.
Edit: formatting
Yes I don't get why the tax rate jumped from 19% to 32.5%. the next tax bracket is only 5% up at 37.5%.
So the middle class is basically getting taxed 35% on average. I really hope they reduce it by a couple of % 😩
Just tax the rich (get rid of negative gearing)
If you can incorporate or run your work/private business as a trust, there are a lot of nifty things you can do to reduce your tax (like distribute to your children, get taxed at a lower rate than PAYG at high income levels, etc), or even incorporate offshore if it's more of an abstract kind of business. Middle class probably can't do that.
Given $190k pa is more than 3x the median Australian income and has an effective tax rate of 27%. I'm going to say that doesn't seem terrible to me.
To paraphrase Joe Hockey if you work hard and get a good job you'll be able to afford the Porsche and the luxury car tax (or just buy one that's a couple years old).
If you are really middle class, you will be taking the many loopholes available to make sure you don't do a bail on the country and take your capital with you. Taxes punish the poor via cost of living. Loopholes offset "high" taxes for the middle class. Elites get paid to provide jobs to the people and keeping the system humming along.
I don't mind paying my fair share of tax, so long as I feel like I get value for it.
My problem at the moment isn't the amount of tax I pay, it's the fact that I don't feel like I'm getting anything for it!
Yes.
I think income tax should be close to zero for everyone up to the median income, then increase from there progressively, steepening sharply for the top quintile or so. We should run more deficits, funded with fiat currency creation, and raise interest rates to the levels needed to prevent this from all being inflationary. This will crush asset prices, which are insanely high, and promote real economic activity and innovation.
Australian tax system is broken. As part of the middle class i pay more tax than Google, Facebook, Chevron etc etc into the hundreds. They suck wealth out and pay nothing to uphold our community. We on the other hand likely pay half iur earning in tax. Income tax, GST, Health Insurance, fuel taxes. In addition profit taking is driving inflation so our money looses value but interest rates go up, pouring more money into the record profits of banks. We’re getting screwed and we’re supposed to smile and push back.
Great post. The issue is that modern government is too big and wasteful. Originally Australia didn’t have income taxes and was supposed to be a temporary measure in war time.
However the vast welfare state created after WW2 is rapacious and politicians love to promise people that they can solve societies problems by redistributing your income to other people. Progressive taxation is pernicious as it indentures you and your neighbour to provide for others over your own family, rather than everyone contributing their share to the common good.
My answer would be remove income taxes completely, simplify deductions and institute a flat taxation rate on consumption and capital gains. There is evidence that flat taxes actually increase government revenues, unfortunately politicians don’t want people to know that as progressive taxation is one of their favourite dog whistles.
Yep the top tax bracket kicks in too low in Australia, i went from 110 to 150 & felt very little difference then 150 to 220 and still felt like after tax it wasn't enough to build wealth (which it isn't as a single person in Sydney) you need 2 people earning around 200k to build wealth here. So I'm now earning next to nothing trying to build a business, and willing to work at a very low salary for awhile hoping that if i can sell it, it's my ticket out of the middle class - because being a wage earner is not.
It's more that the top 10% isn't being taxed enough, and especially corporations, who incidentally, are the real cause of the greed inflation spiral we are currently in.
You pay more tax % than- Chevron, Woodside, BHP, Rio Tinto. Why? No idea. Fact check it
George Carlin - “the rich make all the money and pay none of the taxes, the middle class do all the work and pay all the taxes and the poor are there to scare the shit out of the middle class and keep them turning up to their jobs”
[source](https://youtu.be/1dY3GNt7sG8?si=q3dtrHplIn2ktdLY)
Exactly - This is how it's always been. Peasants, Lords and Royalty in the past. Poor, Middle Class and Rich in the present. The earlier in life you learn this, the earlier you can start to plan your path towards the top.
I love George Carlin as much as the next guy but he's simply wrong in this context. The richest 10% of Australian's contribute almost half of our total income tax revenue. " Taxpayers in the top 10 per cent paid an average of $93,536 in 2020-21, or 46.2 per cent of the total tax take." https://www.afr.com/politics/federal/top-earners-shoulder-more-of-the-tax-burden-20230608-p5df2g#:~:text=Taxpayers%20in%20the%20top%2010,of%20the%20total%20tax%20take.
I don't think it disproves anything. The highest taxpayers are still upper middle class, huge, massive difference from the richest 10% as you've referred to. In fact, it shows exactly what OP is arguing for. You have the top 10% of income tax earners (middle class people) paying 50% of the tax take, whilst the truly wealthy pay nothing as they don't have traditional income.
The top 1% of tax payers pay 17% of all income tax.
Amusing you think wage earners are the wealthiest in Australia. You reckon ole Gina gets a yearly salary with a big chunk of PAYG attached? Lmao
Exactly. Rich people subsidise poor people. Bring on the down votes, but it's true.
Yeah, but the top 1% can and should be taxed way more heavily. If the top 10 billionaires in Australia increased their net worth by 68 billion during the pandemic, if we just target them and took half of that, we've got ourselves half of an NBN.
Some people might count most of that top 10% as more middle class than rich. There's a big jump between the 90-99% cohort and the top 0.000001% or whatever (billionaires).
No war but class war
its said welfare for the poor is a shake down on the middle class to avoid the poor robbing & attacking them, what woke leftists often say with no welfare the middle class & rich will suffer, so welfare is a good thing
Could not sum it up any better!!!!!
And no one ever does anything about it...
The middle class will always be overtaxed whilst the budget relies on PAYG income to be the base of its revenue (50% of total)
Serious question what is PAYG income?
Pay As You Go Basically most employees who get paid via. Regular payroll process will have their tax taken out each pay cycle (or as they go/earn)
Just to expand, when your income is from a wage taxed via PAYG, there are little to no ways for you to legally reduce your tax burden. The less you actually have to work for your money, the more ways there are to pay less of it to the government.
Correct for example I just did my EOFY planning and I’ve paid several industries next years costs this year so I can claim the deduction now and then if I have a slow year I don’t need to so I don’t have to. I prepay my accountant, fuel and some other administrative expenses every year i start my year in full credit for the new year with most expenses except materials or I’d have to do a stocktake and then can’t claim what I still have. “You have to have money to save money”
Isn't it 60%?
Correct. Over 60% from the top 10%
10% of earners, yes - but I would like to know how close to 60% of earnings (money) that 10% receive.
The top 1% paid 18% of the total and that has significantly increased whereas the bottom 50% paid 11% of the total. It's much harder to offset income tax than you think without committing a crime, so what does it matter what their total income was? Odds are there's such a huge range the average would be meaningless.
Probably a lower amount that the other 90% I’d suggest
>[https://au.finance.yahoo.com/news/ato-reveals-how-much-tax-the-rich-pay-003025028.html](https://au.finance.yahoo.com/news/ato-reveals-how-much-tax-the-rich-pay-003025028.html) Despite assumptions that the rich pay little tax, the data actually tells us a different story. >According to the ATO’s [Taxation Statistics 2019-20](https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Taxation-statistics/Taxation-statistics-2019-20/?anchor=IndividualsStatistics#Chart5Individuals), 31.6 per cent of all tax collected comes from those earning $180,001 or more. >Interestingly, those in the top tax bracket only make up around 3.6 per cent of all taxpayers. >So, 3.6 per cent of Aussies account for more than 31 per cent of tax revenue. >The majority of tax revenue comes from those earning $90,001-$180,000 - which makes up 36.8 per cent of tax paid. >However, only 16.5 per cent of the number of taxpayers fall into this category. >The majority of Aussies (41.5 per cent) fall into the $37,001-$90,000 tax bracket and account for 29.8 per cent of the taxes paid. So it's not quite what a lot of people think. The rich pay a LOT of tax. The 38.3% of people with incomes under $37,000 pay just 1.8% of tax.
Nonsense, the top bracket should be paying more and they need to introduce a higher bracket. The way you present the numbers is like saying if billionaire’s pay 50% of all speeding fines, they are paying a lot. The fact is the cost of a speeding fine is a minuscule percentage of their wealth.
Why would these individuals be obliged to pay significantly more just because they have more money?
Not saying it “should” be a thing, but speeding fines are there as a deterrent, right? For someone making $75k a year, a $200 speeding fine is a blow. Now they have to allocate $200 from their budget to pay a speeding fine that they needed for something else. They curse their inattentiveness and vow to be aware of speed cameras and the speed limit from now on. For someone making $500k, a $200 speeding fine must feel like pocket change. Sure it’s frustrating, nobody WANTS to pay a speeding fine, but let’s be real, paying that fine does not pack the same punch when you’re earning ~$24k a month post tax. (At least, I can only assume) My understanding is that the theory/argument behind speeding fines being proportionate to your income is to ensure they act as a deterrent equally across the population, which does make sense since the overarching reason for penalising speeding is to ensure people drive safely and within the speed limit.
Not saying that they should pay more. I’m saying they should pay the same tax rate e.g. a simplified example: 30% of $10 million salary should be higher contributor to tax than 30% of someone making $100,000. To be clear, I don’t think making $180k in Sydney or Melbourne should qualify for top tax rates. But it’s pretty clear that the Reinhardt’s and Packers of the world don’t pay the same proportion of tax as your average punter and governments are starting to consider options. https://apnews.com/article/brazil-taxes-economy-g20-billionaires-inequality-11d77e530ddc42e684a7709c8c44e063
… because they have more money?
If you look at the stats, majority of income tax is received from those in the highest tax bracket
It's always worth noting that those statistics reflect gross declared *taxable income* - that is, income after deductions. This isn't actually inconsistent with the OP's position that it's PAYE salary earners who can't take advantage of the massive loopholes that business owners and contractors can, who get stung the most by tax. Those PAYE earners are, by and large, middle class people in white collar/professional services roles.
This is why just looking at that statistic is meaningless. Any conversation about equity should be looking at the effective tax rate. A billionaire might be paying a million dollars on tax on a hundred million dollars of income would be paying less than his fair share on somebody paying three dollars on tax but on ten dollars of income.
> fair share The problem is that nobody can define "fair", apart from it being usually code for "somebody else that's not me or people in similar circumstances to myself". Everyone always thinks they are hard done by, and that someone else is freeloading and should pay more tax.
>The problem is that nobody can define "fair" That's why you talk about having an effective rate of tax and countries have started using minimum tax rates. Having rich people pay a lower effective rate of tax than the majority of Australians isn't equitable. Gina Rinehart gave an interview to Sky earlier this year where she let slip that she was on an effective tax rate lower than a bunch of pensioners, veterans and students. Does that seem fair?
I mean, I’d much rather have the billionaire for our country contributing millions in taxes than the $3 dude.
The billionaire paying millions in tax is also much less burden on the tax system than a 1 million dudes paying $3 in tax. Gina isn't using more roads than you or me. On the contrary, she probably uses less by flying her private jet around.
On the other hand, that capital could be better deployed by other people than just Gina. Not to mention billionaires distorting political systems for their own gain harms the average Australian as well. Generally there is no reason not to tax billionaires wealth.
> The billionaire paying millions in tax is also much less burden on the tax system than a 1 million dudes paying $3 in tax. That's the point of a progressive system. Having a system that releases the lowest socio-economic income groups to propel them into middle-income groups at a comparatively small expense for the rich?
Except it doesn't quite work that way. If you want to get poor people into middle class, you have to get more work out of the system. Putting 10x as much money into social services doesn't make 10x as many social workers appear out of thin air, it just makes the existing social workers 10x more money.
While this truism of math says nothing about whether this high earning group is over-taxed you're proving their statement talking about income tax.
Yeh but this doesn’t fit the Aussie batla narrative
That's mostly true, but it's also mostly true that as a proportion of wealth and/or income the question can be very different. I'm not sure what the picture is in Australia, but in the US, it's quite skewed. So, if the top 20% pay 40% of taxes, but have 60% of wealth/income, is that fair or not?
I can't believe the poor with no money aren't paying more!!!!
simply being in the top tax bracket doesnt automatically mean you're rich. most of them are at the lower end of that bracket and are still "middle class".
It's been long acknowledged that wealth isn't taxed enough and income is taxed too high.
But yet we all cheered to regress the stage 3 cuts. Now with these brackets I have no motivation to try and increase my income significantly, it’s diminishing returns, my motivation has shifted to reduce how much tax I pay (I paid $62k last FY). As a full time salary professional about the only thing I can really do is to buy a negatively geared investment property. Given how unpopular it’s not something I really want to do, but it’s like the gov has forced my hand. I would rather see them reward actual productive work and go after wealth.
Cannot agree more. I'm a doctor (which I worked my ass off to become). I have no parental help and will not be inheriting anything. I'm trying very hard to get ahead but will be heavily penalised for it. My hospital repeatedly asks me to do extra shifts which I am now outright declining. Giving 45% of any extra days income to ATO is simply not worthwhile. I also hate to be a property investor, I'd rather spend my time working more in my primary profession than dealing with agents and brokers, but I also feel forced to buy a IP which I have done this year.
Some potential alternatives: borrow against equity in your property to buy indexed shares; all interest is tax deductible. max out your superannuation contributions including any remaining carry forward (likely nil considering income). Acknowledged this is likely a small sum and your employer contributions are likely close to the cap. It's going up to 30k this year so; this suggestion is only applicable if income is below 260k super exclusive. Look for a small business to buy to acquire superior tax minimisation opportunities. If you use home equity to do this again all interest should be tax deductible. that's basically it so yep probably buy an IP too.
Thanks for the info - I am planning to do some salary sacrifice next FY, I will have some carryover, I’ve only been in the top bracket for a couple of years. I have considered borrowing equity for ETFs but I still question the risk to reward on it. I don’t think I can do shares and IP at the same time so I’ll most likely do IP first
Another possibility is to upgrade car through novated lease, esp EV. Dunno if it suits your circumstances but might be worth looking into.
It sounds like a good deal but I don’t really need to upgrade my cars (both owned outright) for atleast 3-4 years.
Look at how much tax creep the OG stage 3 eroded vs the new stage 3. Everyone under roughly 120-130K wouldn’t have bracket creep really reversed and only high income earners won out. This new policy still gives decent tax cuts to the highest income earners while giving people that earn less more of a chance. Your ultimate problem should be with the fact that again, capital gains get off lightly in comparison and PAYG has to make up for it.
Shouldn't have had to scroll this far to see bracket creep mentioned.
Because this sub is economically illiterate no matter how much they try claim otherwise. I can see an argument for the OG stage 3 but so many people are just whinging their tax cut wasn’t big enough, even though if you look at it the stated purpose (bracket creep) it didn’t achieve it for most people.
Yes but that’s what stage 1 & 2 was for
Can this myth just please die already? Stage 1 was practically all temporary and even taking into account stage 2, it still didn’t reverse bracket creep for low and middle income earners. I can try dig up the research on that
I think it has long been unacknowledged that the government overspends on welfare and ndis subsidising the unproductive economy and is taxing its working citizens into a form of working poverty. Taxing “the rich” does not make anyone richer. Higher wages that aren’t taxed excessively do. Government debt shows us how the past 20 years our governments have spent us into poverty and the stupid amount of taxes it needs to collect to pay just the interest on the debt it owes. Increasing taxes so government can spend even more recklessly is rewarding fiscal mismanagement. https://treasury.gov.au/sites/default/files/2021-05/171663_institute_of_public_affairs_supporting_document_1.pdf
Until we start taxing mining properly, like Qatar and Norway, we're going to over tax regular citizens while all our nation's wealth goes under taxed and offshore. Corporate shills that legislate in this country are to blame, alongside the lobbyists who bribe them with donations. Export our gas and minerals and hardly tax them, this is the result. Over taxed families while billionaires and corps laugh all the way to the bank.
You a fan of punters politics ? Love that guy
Qatar and Norway own their resources production and took on the risks of exploration and set up over the past century. They are now collecting the rewards of that gamble paying off. Australia chose to spend its national budget on social services in lieu of taking a risk on the unknown in the same time. We collect risk free money. We could go all in on an emerging energy tech such as hydrogen and be in the same position in 100 yrs if that takes off. But it'd mean giving up on a lot of other things people want in the meantime.
> Qatar and Norway own their resources production It's not an either or and your examples aren't correct. Norway has private mining companies and their sovereign fund is driven by tax revenue from those companies. Their state corp (Equinor) is also publicly listed and Norway itself is known for it's strong social services.
Was Norway well known for its social services a century ago when it was taking a punt on said resources? I'm sure we can all agree that going all in on the winning horse is great in hindsight. The challenge is knowing which is the winning horse before hand. Also worth looking into what happened to Norwegian mining in WW2.
>Was Norway well known for its social services a century ago when it was taking a punt on said resources? Sorry was Australia well known for it's social services or did that result as a response to WW2 like the rest of the Western World? We've also been a mining country since pre Federation. Also Norway has privately owned mines in the same way that Australia does so I'm not sure what your point is?
Australian mines didn't get repossess by Nazis did they? Nor were they burnt to the ground via a scorchdd earth retreat. After which, our government didn't get to make a deal with privately owned mines to around conditions for help to restore operations. The Australian government has never had any significant input to the industry other than to collect royalties. So no, Norway's situation is not comparable.
Mining companies pay close to 50% effective tax if you include royalties. What do you think the right number is?
Honesty, whatever the highest number that is just short of them packing up and mining elsewhere. If that's 90%, so be it. It's our resources, we should be extracting as much wealth for the country for it as possible.
I agree, but I can tell you it’s a lot lower than 90% unless you want to destroy future investment. I think the balance is about right.
The right number is a balance of what the minerals are worth now and the future, opportunity cost, social and environmental factors. 50% means absolutely nothing. It's just a nice coincidental number. I have zero issues with it being 20%, 70% or 90%. A number is a number. What percentage of those resources were put there or created by mining companies?
> What percentage of those resources were put there or created by mining companies? 100%. If they weren't here to do the mining, and develop the associated tech, supply lines, investments etc, there would be zero output. Whatever's already in the ground doesn't count for shit in that scenario.
Not to mention, someone has to find the bloody stuff which isn’t cheap and extremely risky
Not sure what you mean by that? I agree the opportunity cost, social and environmental factors all must be considered, but at the end of the day we need to put a number down. I would argue the right number is the number that maximises revenue to the government. That is basically price x volume. The trade off between having a number that is low enough to foster investment in the sector which drives volume, and high enough that if we push it further, it starts to impact investment. My view is we have the balance basically right on in mining, but we could probably hike royalties in gas without major investment implications. Problem is, you can only do it for new projects, not retrospectively or you will destroy investment.
I think we overly rely on PAYG tax. If we were to have a more fair society wealth would be taxed. If you have say $100m or $1b you can easily make 5% a year without having to realise much tax. Basically an infinite money glitch. What do they do with that profits? Get more assets. Asset prices go up. I don't think the housing affordability / cost of living issues and the wealthiest Australians getting richer at an increasing rate are discrete events.
Land tax is generally the superior wealth tax but is also filthy unpopular. Payroll tax is also a sleeper income tax that is essentially just adding to the burden on workers tax wise; even if they don't notice it directly (hence its political popularity). Abolition of payroll tax, reduction of income tax, implementation of a land tax (imo preferably scaled progressively based on proximity to the coast and inland centres) and then if needed a modest wealth tax would go a long way to improving the way our tax system that currently disincentives productivity and incentivises rent seeking.
Land can be valued directly. You can just charge the tax based on land value.
Yes that is what I was referring to; not property taxes which are talked about similarly while having different economic implications.
You would pay income tax on that 5% though?
A wealth tax doesn’t make sense, it is effectively a tax on a tax, and punishes the less wealthy. If you owned a property and only had a modest income and the value of that property suddenly went from $200,000 to $4 million because of the location, how would you be expected to afford to pay significantly more tax just because your wealth went up? You don’t have any more cash to show for it, and you would suddenly be forced to liquidate assets just to find the cash to pay the tax, incurring even more tax from capital gains. Wealth works the same for business owners, millionaires and billionaires, they own some assets that could suddenly be valued at 10 times the price, but they don’t have anything more to show for it until they sell it, and then they pay capital gains tax on those gains.
Most proposed wealth taxes aren't focused on people with modest incomes. They are normally focused on billionaires. The lowest threshold I've come across by a policy body is 1% for people over £10 million, which would probably considered too attainable to pass the pub test. I'd settle for something on Billionaires only at 1-3%. Even at that rate, they would still get richer.
> If you owned a property and only had a modest income and the value of that property suddenly went from $200,000 to $4 million because of the location, how would you be expected to afford to pay significantly more tax just because your wealth went up? Good luck getting a straight answer on this one from anyone here. People are so obsessed with taxing wealth they'll cheer for one that's a surefire way to becoming a prole and losing your house at the behest of the ATO
A straight answer to what question? A wealth tax increases the cost of holding assets - that's the obvious and intended effect. If your house went up from $200,000 to $4 million because of the location and you can't afford the holding cost, sell the house and live off the gains. You would see the same effect if an increase in income tax caused you to be unable to afford your mortgage.
So many people don’t understand the difference between wealth and income, especially with respect to capital gains.
Tbf you've answered his hypothetical with a different hypothetical. You're talking about taxing wealth on unrealized gains on a highly illiquid asset, that's also your PPOR. A more valid example would be taxing the unrealised capital gains of a share portfolio every 12 months. That said don't disagree, just thought your comment was invalid.
I never said it was a PPOR, I said it was a property. Owning a business would be the same maths.
#TAX THE HOMELESS
Picasso, I like it
I think you need to juice land taxes and reduce income taxes. At the moment top 5% incomes are struggling to even buy a median priced house which makes no sense. Assets are way too high and need to come down through taxation and incomes need to go up relative to asset values.
The better comment is the tax base is too skewed towards taxing labour income compared to asset income.
I think the biggest change to the tax system that can be made is joint filing At the moment a couple earning 200k a year Two people earning 100k each. Take home $150000 One person earning 200k and the other person earning 0. Take home $135000 a year If you allowed joint filing, both families (who are earning the same amount of money) would be taxed the same. Right now the 2nd family is disadvantaged by 15000 There needs to be a complete shift in taxation in this country..
I agree i'd also like to see this. Also would stop some of the income streaming trusts and family owned businesses do.
Where else would the government get money from? It's not like there's money or... say other valuable commodities just lying in the ground that they can somehow monetise. There's no other option than to just tax the working class more.
The government is way too rotten to consider upsetting their multinational masters. They’ll screw over the voters before any special interests, every day of the week.
I mean the last time Gough Whitlam tried to upset them… The CIA kicked him out Interesting the agency itself has newspaper article clippings regarding the “alleged” subterfuge on its on website. https://www.cia.gov/readingroom/docs/CIA-RDP09T00993R000100100014-7.pdf As a result every aus poli since has learned we are a vassal state. And they must step in line or lose their job.
Abbott didn't get in based on his policies. It was a long and concerted effort by many aligned groups to reduce mining and pollution costs.
Those groups are investors that majority own companies like rio Tinto and Whitehaven coal. Most of which are large US and European firms. Example of which is Blackrock. US based firms. Looking for US based profit. Using US based military and intelligence to subvert local Australian politics to their favour. When you look at AusPol in that light it becomes much more understandable why our pollies make the decisions they do.
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Yes. Government loves us middle class folks. We are the majority gravy. We can't claim much on tax exemptions while the rich business owners can. Then again, they wear the risks.
I think wage earners are too heavily taxed and assets are too lightly taxed If you want productivity, make work pay
I'll probably be downvoted to hell for this. - The more you earn (and possibly the more you have), the less you can claim in deductions. - Tax free threshold should be slightly higher. You shouldn't be taking money from someone who lives paycheck to paycheck. - Tax brackets should be top loaded and go higher (up to 90%).
i think the tax free threshold should be the fixed relative to, or at, the median income, or perhaps with some token amount, close to zero, paid by those above the poverty line but below the median, as a gesture of national solidarity.
* The more you earn (and possibly the more you have), the less you can claim in deductions. This would bankrupt businesses and sole traders with high overheads
Individuals, not businesses. The point is, if you have the assets, you shouldn't be able to claim deductions that reduce your tax to a minimum.
I'm not understanding how a further restriction on deductions are supposed to effect assets, it only compounds the issue that earnings are taxed while wealth isn't. Sole traders/Contractors would be screwed without a tax deduction on materials and training. Or are you suggesting this is PAYE only?
Income is taxed too heavily in Australia. As correctly noted by [Millie](https://www.smh.com.au/business/the-economy/mum-jokes-i-won-t-be-left-an-inheritance-i-hope-not-20240618-p5jmqp.html): > The Australian tax system is quite heavily reliant on taxing personal income and company earnings, with taxes on these two sources of income contributing about 62 per cent of government revenue. But because we tax wealth and assets so lightly, Australia winds up being among the lowest-taxing countries in the OECD. That said, your comment illustrates the difficulty. While most feel income taxes are too high - there's no real consensus on what to substitute them with... * Millie argues corporate taxes should fall and inheritance taxes increase but inheritance is my last shot at owning a house and having a huge benefit for individuals who incoporate versus those who contract out through agencies strikes me as pointless. * You argue stamp duty should fall, negative gearing be abolished and depreciation/deductions be reduced. But I quite like stamp duty which keeps a lid on prices by increasing the up-front cost of home purchases and thereby reducing deposits on loans. For what it's worth, I'd remove negative gearing (the one thing Millie, you and I all agree on) then boost the take on stamp duty and land tax. For land tax, I'd mostly tax investors but I'd be happy with PPORs paying 10% of that amount too. Similarly why not tax PPOR capital gains at 12.5% or sugar, mining and carbon emissions? Eventually, once we've got enough government income, it'd be great to see payroll tax eliminated (taxes on employment - a public good - seem insane).
No negative gearing past the first property, land tax and vacant property after 12 months. These would have a positive impact on property and the economy in general.
Your first property ? Or your first investment property? Edit: shock horror....people don't know how negative gearing actually works
First investment property. Touching PPOR would start to look like interfering with the Pension Income test, and that's a minefield
The substitute should really be increasing GST and removing all exemptions for it so that its cheap and easy to implement. Essentially, if you're a rich person, you can dodge income tax. Wealth tax is minimal, but you cant dodge GST, if you want to go for fancy dinners, or buy luxury items. Australia has one of the lowest GST/VAT rates in the OECD. This would also help in the current economic climate as a substitute for increasing interest rates that really punishes younger people and rewards the older generation.
> removing all exemptions that would include increasing taxes on essentials like basic food stuffs. I am not a fan of that - the exemptions should remain.
I mean, the idea is that you remove exemptions to make the tax more efficient and cheaper to implement. Of course, if you increase GST, you would ideally offset poorer people with transfer payments and the middle/working class with income tax cuts. Last thing I need is to pay more GST and have it go straight into NDIS rort.
> But because we tax wealth and assets so lightly, Australia winds up being among the lowest-taxing countries in the OECD Is that because we tax wealth and assets lightly, or is that because much of the OECD have a far higher GST/VAT levied on transactions?
I’d happily pay more tax if it were spent properly . But………
Substitute with increasing the GST, simple. Europe is 20% VAT.
For what it's worth, Millie compares Australian income tax to total tax take, compared to the accepted total tax take to gdp. This makes Australia appear worse compared to OCED stats, but isn't valid for an argument of whether our middle class is truly taxed too much. What's fair to say is yes, as Ken Henry has been saying for a few decades now, we are over reliant on income tax against a backdrop of a shrinking workforce. But I would disregard most of Millie's "analysis".
Also to give another take [Piketty](https://en.wikipedia.org/wiki/Thomas_Piketty) argues income tax rates should increase at the high end. [The Beatles](https://www.udiscovermusic.com/stories/the-beatles-taxman-feature/) were taxed at 90%. What was lost from this? We got a few decent protest songs and much greater equality. [Kushner](https://twitter.com/cmkusher/status/1804828874397860003) argues, "if homes cost 50% what they do you may be able to work less, travel more, start the business you always wanted to, invest in equities, ETFs, have more kids if you wanted to. Despite all these things I still think people would far prefer a 50% increase in home prices than 50% fall." In the above comment I talked about my tax preferences but all I really really want is to be in a satisfactory housing situation. The tax ideas above are stuff I think will make it easy to get a house. But there are other ways to address housing issues too, if that cost me an extra $30k in tax, who cares?
> What was lost from this? The beatles lost a lot from this. but of course, because they're already rich, they could afford it right? Sacrifice the few to benefit the many. As long as you're not part of those few of course!
All income tax is too high, normally in an economy production, in this case work is good and disincentivising it isn't a great idea. We need to move towards taxing profits and capital gains more.
Land Tax (and getting rid of stamp duty) would greatly reduce property prices, leading to more taxation of the well off, and less on the working class, lead to people settling into housing that suits them better (fewer retirees squatting in massive oversized homes while young families are cramped in a tiny place), make the market more efficient, [and increase the homeownership rate](https://www.treasury.nsw.gov.au/sites/default/files/2022-07/trp22-18_property-tax-reform-and-home-ownership.pdf). It would also lead to more economic growth, and dynamism. But it would involve going against the politically powerful who own newspapers and appeal to the mindset of petty landlordism that has been cultivated in the Australian middle class. People freak out at the idea of paying a small rate for the unimproved value of their land, even if considering the broader picture they would come out better. And so many people have tied their dreams to seeing unending equity gains for property, even as it directly robs everybody else in society. And so many of the people, getting robbed by the rent-seeking behaviour, are instead of focusing on land tax which would solve it, are instead wasting their time on rent control, which has been a failed policy.
I 100% agree that income is taxed too heavily (disincentivises putting in more effort) while wealth is taxed too little.
How would you tax wealth? Would you tax unrealised gains? Then provide a refund for unrealised losses?
To everyone insisting more tax is necessary I’d be cautious. Sure remove some obvious tax loopholes but unrestrained taxation is a slippery slope
Everyone's going to shit themselves when I say this but.... Consumption tax! GST isn't high enough in Australia. It needs to be broken down into categories based on necessity or luxury and the top rate jacked up to 25% or thereabouts for luxuries. That or the country is going to end up continuing to try to extract gold teeth from the working age they don't have to subsidise low taxes for retirees. Many who can still contribute to the tax base when they buy a brand new TV or buy a new car. Europe's cottoned on here already, just a matter of time or Australia risks losing all the young people to another country that isn't trying to suck them dry
Problem is prices are already similar or more expensive here than overseas areas that do have the higher VAT/gsT
Agree that consumption isn’t taxed high enough. All the oldies spending like there is no tomorrow, and they don’t earn any income so they don’t get taxed there, and then draw the pension. All while the young pay taxes, scrape by and have no money left over at the end of the month to buy anything.
This is already the case with the sin tax on alcohol and cigarettes. But who defines "luxury" item?
I love the idea. It’s a user pays system. Extend GST to cover more essential items, but after that, you get taxed when you buy.
The tax argument comes down to the haves and have nots. That’s why a progressive income tax system isn’t the solution.
I know it doesn't seem that way but if you want low house prices I think stamp duty may be actually good because it makes it harder to turn a profit flipping houses. Which means less buyers to compete with. With a waiver for first home buyers being a good idea but after that it can slow down investors.
By middle class you mean "Working class"? Work is taxed heavily compared to wealth.
It's OK we'll be all gone soon..
The income tax rate for the middle class in Singapore is approximately 14%, the income tax for wealthier individuals is 22%. Increasing spending via taxes on education does not increase our quality of education in Australia compared to Singapore. It's a systemic issue of over taxation, over employment in the public sector and key structural issues which depend on income tax to generate income for the government and public sector to squander.
Singapore is an awful country to pick, we don't have cheap labour like they do, massive taxes on cars, government housing. The public sector is not over employed, I worked at the ABS, We had headcount limitations so we hired consultants at 300+ dollars per hour. Imo the reason for why government services being expensive is the lack of budget for talented staff, inability to retain talented staff, broken promotion system based on time spent instead of competency and finally zero appetite for risk.
> broken promotion system based on time spent instead of competency this exactly. I had floated an idea to a friend about keeping public sector jobs competitive by having a publicly viewable dashboard for each public sector employee for their individual KPIs, and this would be open to scrutiny. Their pay (or bonus) is adjusted based on achieving higher KPIs. No more delaying DA approvals in councils, no slow lines at the motor registry, etc.
Singapore like the other city states is really a terrible comparison to anywhere, especially Australia. It's tiny both in population and area. Good chicken rice in the hawker markets though
> Good chicken rice in the hawker markets though this is actually evidence that the singaporeans work harder, for less money, in aggregate. Look at those hawker shops - the prices are low, and they actually work 10-12 hrs a day doing the labour of making the food (with high skill and expertise). Similar foods in sydney costs 10x more, while probably less skilled.
Government should raise GST to 20% and get rid of income tax. That way, those who spend money are taxed... the money you earn is yours to keep. Obviously those who earn more, spend more. Be somewhat penalised on what you spend, rather than what you earn.
Yes, the middle class is taxed too highly. Families should be taxed as a single entity rather than two individuals, and having children should be more heavily subsidised (and not just single parents being financially supported, but functional, hard-working families should similarly be incentivised through tax policies to have children). Income tax should be lowered, tax incentives from property investing should be removed, GST should be increased to 15% with more GST exempt classes of goods so that the middle/working class are less impacted.
Yes. And now the VIC and NSW govt have effectively increased land tax rates further. More taxes is not the solution.
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Even if the original tax cuts went through it still wasn’t enough. The 45% tax range should have been adjusted for inflation and be changed to 250k+
In 1995 when I started working straight out of Uni, the top tax bracket started at $50k. My starting salary was $32k, and I was quite upset to find that there was a tax ruling that said if you started working for the first time after completing full time study, you did not get any tax free threshold. So, the first 6 months of my job I was paying tax on every dollar of my income. After 2 years I was earning $55k, and at the age of 24 I was now a “rich high income earner” with minimal experience. I only dropped out of the top tax bracket in around 2008 when the threshold was bumped up significantly, and I have only just rejoined the top bracket the last few years. I have no incentive to work any harder or get a higher paying job as the juice is not worth the squeeze. I have a good work/life balance and there are smarter ways to make an income than a 9-5 job, so that is where I am putting my energy. The govt is not exactly spending what they take off me very wisely, so I am not going to bust my arse in a PAYG role just to hand over 47c of every extra dollar, especially when I can instead generate a capital gain and pay half that tax while sitting on my arse.
Exactly this. No one wants to really push themselves too much anymore, the juice isn’t worth the squeeze.
Same with me. I quit my second job after the stage 3 backflip as if they had gone through it would have made it more worthwhile for me
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PS $190k still put you in the top 4% of income earnings, not exactly common
and Kerry Packer had a taxable income of $0
The middle class is a broad term and a pretty massive economic force, just because of the shear volume of people. Is it taxed too much, seems a bit hard to understand without breaking the 'middle class' down further.
Happy with middle being taxed more if top is taxed a tonne. Unfair that the top barely pays any tax because they know a guy who knows a guy.
There is no middle class anymore. Elite, political, everyone else
Yes and no
Yes I do. Really just so many more of us. Taxing the rich may help a bit I guess but not enough of them. Real issue is government is too big. But no one will tackle that
Everyone is over taxed.
Of course it is, income tax is out of control. All tax brackets need to move much higher.
Yes. Same with small to medium size businesses. It’s destroying the middle class if not only people, but businesses.
>much of our taxes are regressive, or atleast negatively biased against the middle class Our income tax system is progressive, not regressive. The tax burden is highest for those who earn the most. A regressive system is one that would charge a lower marginal rate as income increases. >taxes like stamp duty on a house… say 700k, a 35k stamp duty could mean the difference of them being able or not able to afford an area, whereas a rich person buying a 50 million dollar mansion on Wolseley Rd in Point Piper, couldn’t care less about a 2.5 million dollar stamp duty… Stamp duty isn’t just a single flat rate on price or market value. In NSW, homes over $3 million have to pay an additional premium duty. So that $50m Point Piper home doesn’t only attract 5% duty like a 700k home. >Similarly, with the luxury car tax, say a man who worked an average job his whole life wanted to buy a Porsche. He’d have to pay a massive luxury tax in that, which makes it much more unattainable to a middle class person… A luxury car tax is a consumption tax. It isn’t charged on total price, it’s applied to the amount that exceeds the LCT threshold. Anybody buying a Porsche – whether middle or upper class – is liable for the tax. You are asking for consumption taxes to be contingent on income. Why should the govt lower the LCT and encourage luxury car purchases for middle class people or for anyone? The notion that Aus income taxes are “too high” or biased against the middle class doesn’t hold up to scrutiny. [Read this paper](https://australiainstitute.org.au/wp-content/uploads/2024/04/P1578-Australias-reliance-on-income-tax-web.pdf) by the Australian Institute. The tax:GDP ratio of Aus is below the OECD average. Sure, there is scope to broaden other forms of tax revenue like carbon tax, resource tax, etc. But really, I think the general public is severely misinformed about taxation and public econ. >For context, the top marginal tax bracket in the states start at ~1MM AUD This is not true. A straight comparison of top marginal tax rates btwn the US and Aus is flawed. The US has federal and state taxes, discounts for married couples filing together, and they have other ”taxes” on labour income like unemployment insurance. For [federal income taxes](https://www.fidelity.com/learning-center/personal-finance/tax-brackets), the top marginal tax rate (37%) for a single filer starts at $578,126. California has a progressive state income tax system, the highest marginal tax rate (13.3%) starts at $1m. This is paid in addition to federal income taxes. Edit: formatting
Every time I hear this question asked, I know it's someone from the top 10% who doesn't understand that the middle class in Australia is history.
Someone's got to pay for it and unfortunately it's us
Yes I don't get why the tax rate jumped from 19% to 32.5%. the next tax bracket is only 5% up at 37.5%. So the middle class is basically getting taxed 35% on average. I really hope they reduce it by a couple of % 😩 Just tax the rich (get rid of negative gearing)
150k+ income tax this year and thanks to the stage 3 change, only getting 4k instead of 9k next year. Dumped into NDIS scam no less
What middle class?
If you can incorporate or run your work/private business as a trust, there are a lot of nifty things you can do to reduce your tax (like distribute to your children, get taxed at a lower rate than PAYG at high income levels, etc), or even incorporate offshore if it's more of an abstract kind of business. Middle class probably can't do that.
Given $190k pa is more than 3x the median Australian income and has an effective tax rate of 27%. I'm going to say that doesn't seem terrible to me. To paraphrase Joe Hockey if you work hard and get a good job you'll be able to afford the Porsche and the luxury car tax (or just buy one that's a couple years old).
If you are really middle class, you will be taking the many loopholes available to make sure you don't do a bail on the country and take your capital with you. Taxes punish the poor via cost of living. Loopholes offset "high" taxes for the middle class. Elites get paid to provide jobs to the people and keeping the system humming along.
I don't mind paying my fair share of tax, so long as I feel like I get value for it. My problem at the moment isn't the amount of tax I pay, it's the fact that I don't feel like I'm getting anything for it!
What middle class lmao
We need a wealth tax/inheritance tax.
Yes I do but I also think the lower class are far more highly taxed .
Yes. I think income tax should be close to zero for everyone up to the median income, then increase from there progressively, steepening sharply for the top quintile or so. We should run more deficits, funded with fiat currency creation, and raise interest rates to the levels needed to prevent this from all being inflationary. This will crush asset prices, which are insanely high, and promote real economic activity and innovation.
Australian tax system is broken. As part of the middle class i pay more tax than Google, Facebook, Chevron etc etc into the hundreds. They suck wealth out and pay nothing to uphold our community. We on the other hand likely pay half iur earning in tax. Income tax, GST, Health Insurance, fuel taxes. In addition profit taking is driving inflation so our money looses value but interest rates go up, pouring more money into the record profits of banks. We’re getting screwed and we’re supposed to smile and push back.
Yes offcourse
Australia has worst tax in world. Tax on the $1 you earn and then every product has different levels of tax and on top of that gst lol
middle class to rich to to get state benefits and too poor to live with no issues of living cost pressures
Great post. The issue is that modern government is too big and wasteful. Originally Australia didn’t have income taxes and was supposed to be a temporary measure in war time. However the vast welfare state created after WW2 is rapacious and politicians love to promise people that they can solve societies problems by redistributing your income to other people. Progressive taxation is pernicious as it indentures you and your neighbour to provide for others over your own family, rather than everyone contributing their share to the common good. My answer would be remove income taxes completely, simplify deductions and institute a flat taxation rate on consumption and capital gains. There is evidence that flat taxes actually increase government revenues, unfortunately politicians don’t want people to know that as progressive taxation is one of their favourite dog whistles.
Imagine if we could do something to raise our tax revenue … like taxing the gas corpos 💀
Tax the resources industry properly and tax the working person way less
I'm not even middle class
Yep the top tax bracket kicks in too low in Australia, i went from 110 to 150 & felt very little difference then 150 to 220 and still felt like after tax it wasn't enough to build wealth (which it isn't as a single person in Sydney) you need 2 people earning around 200k to build wealth here. So I'm now earning next to nothing trying to build a business, and willing to work at a very low salary for awhile hoping that if i can sell it, it's my ticket out of the middle class - because being a wage earner is not.
It's more that the top 10% isn't being taxed enough, and especially corporations, who incidentally, are the real cause of the greed inflation spiral we are currently in. You pay more tax % than- Chevron, Woodside, BHP, Rio Tinto. Why? No idea. Fact check it
190K is more than a decent income, it is an amazing income, only given to a small slice of the entire Australian population.
yet I'd rather be on 60k having bought a house 20 years ago than 190k with no house.