Australian Politics Forum

Too much tax? Middle income Australians pay 11 cents in the dollar, says the Australian Council of Social Service

Date
January 24, 2015

Mr 50 per cent: Joe Hockey says Australians spend six months of the year working to fill the government's coffers, a claim disputed by a new report.

Australians pay far less tax than they believe, a new report finds, and certainly far less tax than the Treasurer thinks they do. :-?

Mr Hockey told Fairfax radio on Monday that Australians paid nearly half their income in tax.

"When Australians spend the first six months of the year working for the government with tax rates nearly 50 cents in the dollar it is a disincentive," he said.

"You're working July, August, September, October, November, December just for the government and then you start working for yourself and your own household income after that for another six months - it is a disincentive."

A report released on Saturday by the Australian Council of Social Service finds that personal tax as a proportion of a middle-earning household's income is just 11 per cent - a good deal less than other calculations and far less less than the Treasurer's.

High-earning households pay 20 per cent of their household income.

ACOSS arrives at the figures by including all household income in its total, including untaxed or lightly taxed income washed through superannuation, family trusts and negatively geared properties.

"To get a true picture you need to look at total income rather than just taxable income," ACOSS chief executive Cassandra Goldie said.

The personal tax scale prepared by ACOSS is quite progressive. The bottom one-fifth of households pay 3 per cent of their income in personal tax, the next group pays 7 per cent, middle group 11 per cent, the second-top group 15 per cent and the top group 20 per cent.

But the progressivity vanishes when other forms of tax are included. Including the goods and services tax and other consumption taxes such as petrol and tobacco excise, the lowest earning household pays 24 per cent of its income in tax and the highest earning household only a little more at 28 per cent.

Dr Goldie said the goods and services tax hit low earners far harder than high earners meaning they paid much more in consumption tax than income tax while high earners paid much more in income tax than consumption tax.

"It shows how skewed the tax debate is becoming. We seem to be only talking about the GST, yet our modelling shows that lifting the GST would hit hit the lowest earners far more than the highest earners," she said. :(

Superannuation tax concessions and those for trusts, negative gearing and capital gains were far more likely to raise money from well off households than the GST

ACOSS has prepared the research paper as part of its contribution to the governments tax review which Mr Hockey will launched early next month.

"We are about to be embroiled in a very contested debate and we have the treasurer suggesting people are contributing half their income to tax which is simply not accurate," she said. "How can we possibly get responsible debate about reform when we don't even have good transparency about the facts?"

"We are releasing this paper to demonstrate that based on the Bureau of Statistics data and appropriate modelling people on higher incomes are contributing around 28 per cent. They are able to pay more."

Read more: http://www.smh.com.au/business/the-economy/too-much-tax-middle-income-australians-pay-11-cents-in-the-dollar-says-the-australian-council-of-social-service-20150123-12w9s1.html#ixzz3PfynFb3l

In the Netherlands, everyone has access to free healthcare, free childcare, free education, free university degrees, free public transport and so on. The only catch? They pay a much higher tax rate than we do. BUT, they're happy to do so because of the services they receive in return and the high quality of those services. Can't ever see that happening here, sadly. Too many people are too selfish to see past their own little world.

wrote on Jan 24^th, 2015 at 6:04am:

"It shows how skewed the tax debate is becoming. We seem to be only talking about the GST, yet our modelling shows that lifting the GST would hit hit the lowest earners far more than the highest earners," she said

Only if there is no compo. A major proportion of 'low income' household's income is just regurgitated tax. In other words a large proportion of their incomes is just other peoples tax already paid. This is in effect negative tax.

For example an individual on Newstart receives $515 f/n. Of this they can only pay a max of 10% GST. Then according to Goldie they pay another 14% on petrol and tobacco taxes (they must do a lot of driving & smoke a lot looking work :D).

Quote:

But the progressivity vanishes when other forms of tax are included. Including the goods and services tax and other consumption taxes such as petrol and tobacco excise, the lowest earning household pays 24 per cent of its income in tax

Dr Goldie also leaves out, public transport concessions, rent subsidies, health care cards, utilities discounts, Govt bonuses, medicare exemptions, tax free threshold etc etc which are all negative tax payments.

The bottom line is that a lot of lower income households don't pay any friggin tax at all. They actually receive other people's taxes in income.

Dr Goldie would appear to be a pretty good snake oil salesman.

(I shall now dive in my foxhole and wait for the onslaught)

Swagman wrote on Jan 24^th, 2015 at 8:06am:

wrote on Jan 24^th, 2015 at 6:04am:

and how long before any compo is swallowed up by inflation? you think todays pensioners still feel they're being compensated for the GST.

Armchair_Politician wrote on Jan 24^th, 2015 at 7:19am:

Wow. Has someone stolen armchair's password.

Armchair_Politician wrote on Jan 24^th, 2015 at 7:19am:

says the guy who spent 6 yrd crying about the carbon tax ...... idiot.

Netherlands has a strong union movement and a huge manufacturing capability.

Probably didn’t have a 6th rate leader like Howard as PM for 12 years, or a congenital idiot like Costello as Treasurer.

Swagman wrote on Jan 24^th, 2015 at 8:06am:

wrote on Jan 24^th, 2015 at 6:04am:

The study included total household income. Are you suggesting they excluded certain income streams?

Please fill us in how you know this, Swaggie.

Everyone is entitled to Medicare payments. Everyone over a certain age is entitled to subsidized public transport. Many, if they organise their incomes smartly, get aged pensions and health care cards.

Subsidised housing is only for very low income earners - those who don’t pay any tax. If you live in state housing and work, you pay market rent.

Health care cards are only for those on very low incomes or Centrelink benefits.

All the things you’ve mentioned are means-tested. With the exception of Medicare payments, the more you earn, the less you get, but with Medicare, the more you earn the more you pay the levy.

Income tax does not kick in until you earn over $20,000. Dole payments are included in this, but you wouldn’t get a dole payment if you earn what the payment’s worth anyway. When you declare any income to Centrelink, they cut your payment accordingly.

And if you don’t declare it, they catch you. Despite all Scott Morrison’s guff, there are very few welfare cheats. There are few cash-in-hand jobs you can get without a tax file number. The computers are all linked up. Immigration even tell Centrelink if you leave the country. Your bank tells the tax office how much interest you’ve made.

Household income is household income. The study shows that, when you include consumption taxes, the poor pay nearly as much as the rich. How about that?

Doesn’t look like the rich do pay it ALL, does it?

Household income is a really good way to assess real wages, map social/economic trends and understand demographics. Personal income excludes all this.

Household income can even be used to predict population growth, which is a fundamental factor in national wealth.

Household income is a good way to understand relationships and how they create personal wealth. A recent study on household income levels showed how, at a certain income level, household incomes jump, highlighting a growing inequality of wealth distribution.

This is because people now choose partners based on equality of income/ professional capacity. Gone are the days of rich executives with non-working housewives. Child care is increasingly outsourced. Professionals and high income earners now choose partners largely in the same field on similar incomes as themselves. They often work similar hours and have similar ambitions and career goals.

Not only does this phenomenon shape a small class of very high income households, these households produce less children, and increasingly, no children. This, of course, adds to their wealth.

This phenomenon is contributing to increasing wealth inequality in developed countries, and it’s identified by looking at household income, as opposed to personal income.

MOTR wrote on Jan 24^th, 2015 at 8:41am:

Armchair_Politician wrote on Jan 24^th, 2015 at 7:19am:

Wow. Has someone stolen armchair's password.

We're weaning him to The Light Side - the side that espouses no party but only People... Guess that makes The Light Side some sort of socialist or something - tough....

Swagman wrote on Jan 24^th, 2015 at 8:06am:

wrote on Jan 24^th, 2015 at 6:04am:

In other words a large proportion of their incomes is just ~~other peoples~~ tax already paid.

At what point do you miss the point that all pay taxes, so it is NOT 'other people's tax', and that taxes are not just GST and income tax?

Australian Politics Forum
http://www.ozpolitic.com/forum/YaBB.pl General Discussion >> Federal Politics >> Australians Pay Far Less Tax Than They Believe http://www.ozpolitic.com/forum/YaBB.pl?num=1422043474 Message started by imcrookonit on Jan 24^th, 2015 at 6:04am