Much to my surprise I find a lot of things RTT is explaining I broadly agree with , yet I consider myself an unreconstructed socialist !
Part of the problem with the Tax Act is its provisions , rulings, exemption and what have you fills about three walls of the local Accountants Office. Serious consideration needs to be given to simplifying the Tax Act so that its administration is simpler. This would address a lot of the tax minimisation strategies that wealthier corporates and individuals are able to take advantage of, to the detriment of other taxpayers.
Whilst I generally support the idea of progressive tax , I also think that the current three brackets of personnel tax rates undermine the concept . When I first went to work I the 1970s I think there were ten or twelve tax brackets. That made sense to me as a system of progressive tax. I think the top rate at that time was 50% ( I am happy to be corrected on this )
Regarding Corporate Tax, the Economist Magazine in the 1970s was in favour of a no deductions flat rate turnover tax or an even lower flat tax rate on capital inflow. In the latter case the intent was to knock off inter corporate loans as a means of tax avoidance , and in the former case the intent was to raise a similar amount of company tax but expressed as a tax on turnover, with a special definition for financial institutions which are effectively profiting of differentials , so a normal turnover definition would not apply.
Whilst I cannot remember the actual rates discussed I thought the simplification and redefinition of what was taxed made a lot of sense, was cheap to administer , significantly reduced tax avoidance ( effectively made avoidance a form of fraud ) and everyone paid an appropriate share.
Without now knowing the maths behind it, I think it is a concept well worth another look at.
For your consideration and thoughts,
Best wishes and regards, Radioman ( listening to Rachmaninoff Piano Concerto No2 )
I think it was over 50c when I first started work in the 80's, maybe as high as 60c.
Personally I feel this is an insult to anyone to pay such a high rate of tax. Yes there are those born with a silver spoon in their mouth, but much of this income bracket are those who studied hard, worked hard and took personal financial risks and usually creating jobs for others in the process. This also drove a brain drain to the USA (my dad had a few friends who left Australia mostly due to excess income taxation) and other locations and makes seeking tax avoidance options highly profitable.
Personally I feel the govt should rely more on a tax of spending than a tax of earning to encourage money to move around the economy more and more difficult to avoid any taxation.
Anyway, yes I believe there was also more tax brackets but this made sense considering the huge variation.
My thoughts are today, keep it simple, set 4 income brackets
Medicare, to me the medical system should be fully funded by medicare levy, set the rate such that it must cover the projected budget for next year and any losses or profit from previous year. This is then outside govt influence and not some arbarity number, with govt only able to look at the cost of running the health system as a way to reduce the costs to taxpayer. I believe to be fully funded, the Medicare levy is around 10% and I'd extend to dental and corrective eyewear.
Bottom 25% - No tax and no Medicare. Whats the point they are dependent on mostly welfare anyway and encourages them to work as much as they can
25-50% of income earners - Tax at say 10-15%
50-75% of income earners - Tax at say 15-20%
75-100% of income earners - Tax at say 20-30%
(all are based on previous years income spread and adjusted annually)
Actual rates would vary based on other factors and what would take to balance the budget. As I said I would look at more taxing spending and thus increase GST to 12.5% for 100% of goods or 15% to those goods taxed now. The increased revenue enables the states to be more independent of the feds financially and in return their health portfolio's would be closed and handed over to the feds. Single Health department for the country funded by one source of revenue apart from Private insurance patients and gap fees etc.
I see what you mean about have no deductions to simplify but the issue is the deductions are often there for a reason, especially for employees who have to fund part of their own employment costs such as transport, tools and uniforms. Its also there to encourage wealthier income earners to channel their investments into areas that benefit lower income areas in the country and stimulate growth. However I agree its not 100% perfect right now and there are numerous things that can be closed down such as negative gearing on existing properties.
Additionally it as interesting reading the data on govt welfare payments based on income on ABS site, clearly there are some issues that need to be resolved. For the above brackets, I would basically remove most welfare entitlements from average income earners and above and all welfare entitlements for 75% of income earners and above.
I'd also have reducing child welfare payments based on number of kids people have.
- 100% for Child 1,
- 70% for child 2
- 50% for child 3
Exception for multiple births, not applied retrospectively for existing children and pregnancies.
We do not need taxpayers money to pay for people to breed (often from the lower end of the gene pool), its far cheaper to bring in cashed up and educated immigrants who usually have qualifications earned elsewhere and add more positively to the gene pool.