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The Forum > Article Comments > Only rich people want to lower the top tax rate > Comments

Only rich people want to lower the top tax rate : Comments

By Andrew Leigh, published 8/3/2006

Instead of focusing on cutting tax rates we should be making the tax system simpler.

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It's a pity that so few Australians earn a six figure sum. Perhaps our tax system has something to do with it?

How people can argue that the top 4% of income earners should be slugged with a higher tax rate even though it raises so little in the way of revenue is beyond me. It seems to be nothing more than spite.

The point of taxation should be to raise revenue. Not to demonstrate spite or envy towards well healed minority groups
Posted by Terje, Wednesday, 8 March 2006 1:24:28 PM
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Exactly terje

What are the real benefits of taxing 'high' income earners at 48%? It seems to me that people overlook the fact that it raises next to no revenue in order to perpetuate the tall poppy syndrome that is rampant in this country. I'm not advocating eliminating the top tax bracket of 48%-rather it should kick in at a level three to four times greater than what it is now.

The other point is that by whining about the 30% rate for companies and trusts, advocates of improving employment are actually shooting themselves in the foot. For every company/ family trust that is abused there is another one actively employing an Australian. Furthermore the entities that are purely facilitators of tax splitting/avoidance only exist because of the ridiculous amounts anyone is taxed for being a higher than everage earner. Whether average is 35k or 55k is irrelevant to all but calculating the tax free threshold

There are very few wealthy people who support the notion that they should pay the same tax rates as others- the flat tax debate was over before it started for this reason. However as a person who makes @90k pa I'm sick of hearing that i'm 'rich' and watching as a large proportion of my colleagues shift to London, New York, Dubai etc because they are forced to- yes forced because they are trying to save to pay back debts like HECS (unlike all the socialists who picket Woomera rather than earn an honest living).
Posted by wre, Wednesday, 8 March 2006 4:27:11 PM
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great article Andrew. From dealings with the tax office in October I gained the impression that they had electronically collated all my PAYG earnings and share dividends for the 1st quarter. I think the technology is in place now to follow the New Zealand system. Its really frustrating dealing with accountants who are not up to date with the legislation and you only know the accountants a dud when things go pear shaped.

Rebates are very unfair to people on low incomes who have to wait for up to 18 months to get the rebate. Generally they end up not spending, because they need the money now and they know if the paperwork is not all in place they will not get the rebate. You have to be well off to spend in order to claim the rebate.

Most people on top income tax rates only get slugged once before engaging in tax minimisation schemes. These schemes really only work when you have more disposable income than your living expenses. Remember Kerry Packer took the ATO to court reduce his $40,000 tax bill, he was successful. If you are worried about the tax burden of the top 3% you are clearly a wannabe because the top 3% aren't envious they are organised.
Posted by billie, Wednesday, 8 March 2006 5:12:16 PM
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Andrew Leigh doesn't get to the heart of a very complicated problem (but neither does Treasurer Costello's recently announced four week review of the tax system do any better).

It is worth reading the article by Peter Jonson, "The economic case for tax reform" at http://www.onlineopinion.com.au/view.asp?article=4231 for more perspective on the matter.
Posted by MikeM, Wednesday, 8 March 2006 6:50:59 PM
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"The art of taxation is like plucking a goose: to get the most feathers with the least amount of hissing."--Jean-Baptiste Colbert, French Finance Minister under King Louis XIV.

Because of the current Australian tax regime's astonishing inefficiency (I remember reading somewhere that the tax advice industry employs more people in Australia than the motor vehicle industry) and a prodigious 10,000 page tax act that no single person on the face of the earth understands, there may be plenty of feathers, not a lot of hissing, but there is a most extraordinary and damagingly expensive effort and exhorbitant cost.

Is this the right way? Malcolm Turnbull thinks not. Treasurer Costello seemingly has no worries.

Kenneth Allan in a letter to The Australian Financial Review today writes:

"Peter Costello's birthday is not until August 14 so how about buying him a DVD containing the last episode of the Yes Minister comedies. In that episode Jim Hacker is at a loss to understand why the prime minister resigned shortly after the chancellor of the exchequer had resigned. It took Sir Humphrey Appleby to point out that the prime minister stayed in office only long enough to ensure his deputy the chancellor (read treasurer) did not get the top job."

What should we expect if Howard opposes tax reform?
Posted by MikeM, Wednesday, 8 March 2006 8:24:54 PM
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I never thought of myself as an anarchist. Good point though, I guess I do sound like one. I'm frustrated with bureaucracy, that's it. I'm frustrated that people who work for government are not rewarded for nor or they encouraged to use initiative to solve local problems. I've experienced and seen lives hurt unnecessarily by government that does not respond in a compassionate way because of paperwork. Paperwork becomes more important than people.

As for taxes, Yes services must be paid for. I understand that. I also have seen an incredible amount of waste in the name of government service. And lest we forget corruption the sister to waste. As government has grown, accountability has gone in the ditch. I just don't see that government is good when there are so many problems it creates through inefficiency, waste, and corruption.

If I'm an anarchist than so be it. I want people to get tired and demand that government be ethical, accountable, and stop catering to big money. Is it wrong for me to want government to work right?

Yes I can vote and I do. The fundamental problem with that premise now in this century is that there are so many more people that representation on a national level is not feasible. How can one politician possibly represent conservatively 100,000 people. There are not enough ideas in common to make that practical or realistic. Hence I don't feel represented at all.

Are you seeing my point? Am I completely wrong here? Is it wrong to want a system that works like it ideally is supposed to?

I don't have the answers. I do know that getting back to fundamentals is a way to fix it. Accountability, enforcement of ethics laws, smaller government, simplification of tax system, encouraging personal responsibility, we must be willing to hold politicians to a standard higher than what they presently give us.
Posted by Patty Jr. Satanic Feminist, Thursday, 9 March 2006 1:14:17 AM
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