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The Forum > Article Comments > Can Australia devise a fairer taxation system? > Comments

Can Australia devise a fairer taxation system? : Comments

By Chris Lewis, published 10/12/2009

The competitive nature of the international economy will limit the impact of any taxation reform in Australia.

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Peter Hume,
If your business only makes $50,000 out of 1 million than your income is $50,000 & you pay tax on $50,000. You have already paid tax on the infrastructure you bought so you only pay tax on what you earn. What is so complicated about that ? Make or spend a $ & you pay 10 cents tax. simple ! I fail to see why business people should be able to write things off when the bloke on the street can't. You'd find a lot more money going around & a hell of a lot of people better off.
Posted by individual, Thursday, 10 December 2009 7:21:51 PM
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WTF?

A 10% tax – a bit of overkill.

With a 0.4% Debit tax all other forms of taxation could be eliminated.
Posted by WTF?, Thursday, 10 December 2009 11:01:40 PM
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WTF
Certainly sounds simpler and easier than what we’ve got.

Individual
I was responding to jayb’s suggestion of abolishing deductions. The assessable income would only be $50,000 if expenses were tax deductible. If they weren’t, it’d be $1,000,000. I can’t see how it would work without causing the economy to collapse.

Stezza
Difficult in 350, or even 700 words, but I’ll try.

Social co-operation can be based on private property, individual freedom and voluntary production and exchange (private sector); or on government - a legal monopoly of ultimate decision-making (jurisdiction), confiscations of property (taxation), and property redistributions based, in a democratic state, on the principle of ‘one person one-vote’.

If we have 100% government, the result must be political totalitarianism, economic chaos, and social collapse. And the closer we approach that state, the more anti-social the result will be. To assert there must be a “balance” of state and private is to beg the question whether state provision is better in any given area.

What about in the other direction? Can we see how society would function if current government were reduced by 5%? By 10%? Easy. We provide goods and services as we’re providing them now. In principle, if people are ready willing and able to pay for a particular service, there is no need for taxation; and if they are not, there is no justification for compelling other people to provide the service.

The classical liberal justification of the state is that a legal monopoly of taxation and force is necessary in order to perform the state’s limited but legitimate functions of protecting life, liberty and property. However in theory, an institution based on monopoly compulsory confiscations to protect against violations of property rights, is a contradiction in terms. Assuming only self-interest, we would expect it to constantly expand, requiring ever-increasing expenditure on, and definition of supposedly necessary ‘protections’; while reducing the protection actually produced, and increasingly benefitting tax-consumers at the expense of tax-payers.

And in practice, that’s what we see. Any attempt by positive law to limit government to its core functions has failed.
Posted by Peter Hume, Friday, 11 December 2009 2:20:15 PM
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We have only to look at the U.S. and the Australian Constitutions, and compare the limited governments they prescribe, with their current leviathans trying to tax all aspects of human activity, to see that these attempts are futile.

Socialism either envisages no limit on government, or envisages it in a model which inexorably leads to bigger and bigger government, and thus should more aptly be named ‘anti-socialism’.

It’s easy to see how we could produce food, without a Department of Agriculture; or forests, without a Department of Forestry; or films, without taxpayers subsidising film-makers.

But how far could we go?

For an interesting discussion of private production of the supposedly core state function of security services, see for example:
http://mises.org/books/private_production_of_defense.pdf

…of roads etc. see:
http://mises.org/books/roads_web.pdf

… law and justice:
http://mises.org/store/Enterprise-of-Law-The-Justice-without-the-State-P297.aspx

In short, the argument is that a compulsory territorial monopoly, which is all a state has to offer, provides no practical or ethical improvement and is actively much worse, than would otherwise obtain by providing goods or services through the operations of individual freedom, private property, and the general requirement of consent to transactions - as much in the supposedly ‘core’ state areas of security, infrastructure, justice and welfare, as in non-core areas such as film-making.

For pragmatic purposes in contemporary Australia, the point is not to assume that we should pay tax for no other reason than that government wants it, and to start now to demand gradually reducing taxation itself; whether or not we try finding cleverer ways of plucking the goose.
Posted by Peter Hume, Friday, 11 December 2009 2:20:52 PM
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Yes, but they won't because they like it the way it is. Tax the low to middle income earner more and more. What government would change it? That's where the tax income comes from. The high income earners have more tax breaks and off shore accounts that you can poke a stick at and can and do employ accountants to lessen their tax and off set their wealth. The PAYE tax payer can't.. You have no choice at all, you can't afford it.
Posted by RaeBee, Friday, 11 December 2009 6:28:34 PM
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It's easy to pay no income tax legally, contrary to popular opinion. You don't need a fancy accountant, or offshore hidey-hole.

You just hold assets, the costs of which are equal to your tax bill. Simple as that.

What gives rich people an unfair advantage is not that the politicians are trying to favour them. It's that they're trying to *disfavour* them, through the progressive tax system. Low and middle income earners try to vote themselves a share of richer people's incomes through the progressive income tax, thinking richer people will have to pay more. But because tax deductions cannot be abolished as PH has pointed out, the richer just take advantage of their higher tax rate, by converting expenses into handouts from the tax man - all paid for by the poor and middle class who thought they were being so clever trying rip them off.
Posted by Jardine K. Jardine, Friday, 11 December 2009 7:27:49 PM
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