Pericles

>>Consider a $9,000 dole, and a 30% tax rate, initially, on all income.

(Graham Young advised me about a year ago that 30%, not 40%, is necessary so as to include payroll tax in the system)

I've obviously misled you! I'm not seeking to get more out of James Packer. I'm looking at a tax system where all income is taxed the same; where the only possible way of reducing one's tax is to reduce one's income. Where tax-consultancy is obsolete. Packer would gain too, he's on a higher incremental tax now, than the 30% I'm proposing.

Peter Costello once commented that we need a complex tax system because we live in a complex society. He had it precisely arse about - we live in a complex society because of the complexity of our tax laws, laws that almost invariably consist of loopholes that favour the rich. If there are a few to help the poor among the 500,000 odd pages, the poor can't afford the legal advice to find them.

Imagine the simplicity! If I have a business that makes $1,000,000 before paying my staff, I need merely pay the tax-witheld salary agreed on, and send $300,000 to the taxman. I don't need an accountant, and as far as the ATO is concerned, I need not even know the names of my workers. Unless my workers have capital gains or some other unusual windfall, they need not submit a tax return. With the present system, if I have more than six or seven workers, I must spend half a day a week on tax stuff. And it's a reasonable assumption that Australians spend approximately $20Billion on tax compliance costs.

Of course people will still try to avoid tax, and of course we may still have a consumption tax. And we'll still need a (much smaller) Centrelink for people with special needs. I'm only interested in simplifying the tax and welfare system, with a system much fairer, and so simple that all transactions could be done on your typical home computer.

Pericles "His tax lawyer will institute the necessary changes to accommodate your definition"

Not if there are *no* loopholes to exploit.
With a transaction tax, his lawyer will be out of a job.

A bank transaction tax cannot be avoided.
And a higher rate for foreign transactions discourages attempting to offshore your finances.

Packer will pay *more* to transfer money to the Cayman Islands than he would to bank it here.

"the market would simply avoid transacting in Australia if there were alternatives"

There won't be.
It would be made illegal to conduct *domestic* purchases/sales/payments of any kind using foreign accounts.
The money must come from and be paid into an Australian account.

If Packer offshores, when he needs to buy a new Ferrari, he'll then have to transfer (at a higher rate again) money *back* to Australia to pay the dealer.
There is no benefit to using foreign accounts. You just end up paying more tax.

Simple solutions are possible.
It's *perfect* solutions that are impossible.

I must be missing something here, Beaucoupbob.

>>Imagine the simplicity! If I have a business that makes $1,000,000 before paying my staff, I need merely pay the tax-witheld salary agreed on, and send $300,000 to the taxman.<<

How does that differ from the present PAYG set-up?