TaxRambling.com

The 2013/14 Taxation Statistics are out…

My favourite part so far…

So if you earn more than $80,000 you are in the top 19.5% of people who earn anything (excludes kids and other who don’t have to lodge tax returns like those just on a pension…). if you earn more than $180,000 you are in the top 2.9%. That means you are probably relatively richer than you thought you where…

And for those who want a more progressive tax system, those 19.5% of people pay 68.7% of all the individual income tax and the top 2.9% pay 29.8% of all the individual income tax. The top 20% pay 70% of the tax and the top 3% pay 30% of all the tax… Sounds like it is progressive enough…

PS: I keep being told we have a revenue problem and not a spending problem and if we just taxed the rich more we could fix out $35 billion a year structural deficit problem.

So what would we need to do to income taxes of the top 3%, or the top 20% to increase income taxes by $35 billion a year, based on these stats?

• If you only want to go after the top 3% of taxpayers (probably because you have realised your are in the top 20%) to find an additional $35 billion, you need to increase the tax take from these guys by 70%. That means if you earn $180,000 we will need to take just under $100,000 in tax. If you are in the top 1% and earn $350,000 we will take $240,000 in tax.
• Well lets just try to get the extra $35 billion a year from the top 20% who earn more than $80,000 a year. We only have to increase the tax on all these guys by 30%. So if you are earning $80,000, instead of $19k we will now take $25k in tax. And if you are earning $150k, instead of $45k in tax we will take a bit less than $60k

These are ridiculous outcomes and show there is no way we can plug the structural deficit by income tax increases.

We won’t touch the GST.

Every independent economist says increasing the company tax rate will decrease government revenues.

And there is not billions of dollars of tax concessions we can just reasonably turn off (unless you want to tax family homes or end the entire super system) or billions of dollars in unpaid taxes by evil multinationals as Fairfax keeps trying to claim.

What does that leave us to fix the 35 billion structural deficit? Whatever we can do with the tax system, and then we need to cut spending.