Why are we penalised for working harder/earning more?

[prawn_86]

Ok, probably a controversial topic, so think of it as an early weekend ediscussion that Kennas would normally post

Why is it the more we earn, the more we get penalised? (excluding the super rich)

Examples:
1. Tax system. More you earn, the more you are taxed.

2. Pension. Spend a lifetime building up assets, then dont get the pension (as measly as it is anyway). Dont you contribute enough tax over your life?

3. Youth Allowance. This is a personal 'favourite' of mine. Im a student and i receive YA due to taking a year off and proving my independence. I have a part time job, but only work one day a week (my choice). This is due to the fact that for every $1 over $240 per fortnight i earn they deduct 50c from my YA. This means that after 14hrs p/f i am effectively working for half my hourly wage. Shouldnt they be trying to encourage students to find work and expand their education/possibilities etc etc?


Do you agree/disagree?

Discuss...

 

[trinity]

Hi prawn_86,

Wanted to add another item to your list,

- How come savers are not rewarded? I just filed our personal taxes, and the interest from our savings were practically halved because we had to pay it back in taxes.

 

[Nyden]

Could not agree with you more with regards to YA prawn. However, what annoyed me more was the fact that I wasn't entitled to it for 13 weeks!

I was told that because I had a considerable amount of savings (that I worked for and saved during my much younger years) that I had to wait 13 weeks in order to get the payment as a student. This completely ticked me off; as had I behaved like a normal irresponsible kid, and blew my money on drugs, sex, cars, and alcohol; the government would be paying me money from day 1 of tertiary study. Alas, because I was responsible and worked hard and saved money, and in the process sacrificed many potential pleasures of life (in order to give myself a head start) - I had to wait to receive money!

So essentially - the rule of the government seems to be; slack, act irresponsibly, don't save a cent, don't seek employment - and we'll reward you for it!

 

[agro]

Ok, probably a controversial topic, so think of it as an early weekend ediscussion that Kennas would normally post

Why is it the more we earn, the more we get penalised? (excluding the super rich)

Examples:
1. Tax system. More you earn, the more you are taxed.

2. Pension. Spend a lifetime building up assets, then dont get the pension (as measly as it is anyway). Dont you contribute enough tax over your life?

3. Youth Allowance. This is a personal 'favourite' of mine. Im a student and i receive YA due to taking a year off and proving my independence. I have a part time job, but only work one day a week (my choice). This is due to the fact that for every $1 over $240 per fortnight i earn they deduct 50c from my YA. This means that after 14hrs p/f i am effectively working for half my hourly wage. Shouldnt they be trying to encourage students to find work and expand their education/possibilities etc etc?


Do you agree/disagree?

Discuss...

take from the rich to give to the poor - always been the case,

the hard worker gets penalized and the bludger gets paid

does not make sense to me

 

[prawn_86]

3. Youth Allowance. This is a personal 'favourite' of mine. Im a student and i receive YA due to taking a year off and proving my independence. I have a part time job, but only work one day a week (my choice). This is due to the fact that for every $1 over $240 per fortnight i earn they deduct 50c from my YA. This means that after 14hrs p/f i am effectively working for half my hourly wage. Shouldnt they be trying to encourage students to find work and expand their education/possibilities etc etc?

The other thing i forgot to add about this is that i then have to pay TAX on the money i earn after my YA has been docked. I only have to pay it on the half of the money, because half comes off my income, so im paying another 30% of that 50c meaning that im losing 65% of my income for ecery $ over $240 p/f i earn.

How stupid....

 

[Smurf1976]

Fundamentally it's welfare. Take more from those with a high income and give some of it to those with a lower income.

I believe absolutely in welfare for those who genuinely need it due to circumstances they are not, in practice, able to change. It's part of what makes for a just society and I'm more than happy to be paying my share of tax to fund it.

But welfare for the bludgers and those who don't really need it is an entirely different matter. Cut them off.

The First Home Owners Grant and the Baby Bonus are classic examples of welfare schemse that, in practice, are widely abused no matter what honest intentions may have lead to their original introduction.

If we capped the Baby Bonus to an amount no greater than 10% of the mother's lifetime income tax payments prior to having the child then that would stop the abuse for sure. Those who have worked get the bonus, those who see it as easy cash miss out. An exemption for the genuinely disadvantaged OK, but not for those who see having a child as simply a way to get cash - it's not uncommon.

As for the FHOG, I can't see how it's helped anyone other than those selling, not buying, real estate. In came the grant, up went prices. That's middle class welfare, not genuine assistance for first home buyers and it's a complete waste of my taxes.

 

[Romano]

My son does not even qualify for YA, due to the fact that he went straight to uni from school, and his parents earn over $55k in total. Its not a breeze when he has to live away from home and we pay all his expenses, rent etc, plus keep 2 others at private school. We play plenty of taxes, but a little help from the government would go a long way. He has been able to supplement what we can give him with some part time work, but it is an unfair system. there are a lot of other kids in the same boat. $55k is no big income these days, but a lot of families cannot afford to sent their kids away to uni if there is no gov. support

 

[trinity]

I think the politicians have the definition of high income and middle income all wrong.

 

[cuttlefish]

I agree - it sucks - and its even more appalling seeing how it gets wasted.

 

[Hyperion]

Prawn,

I'm in similar situation as yourself and have thought exactly the same thing regarding youth allowance.

Effective marginal tax rate of 65%... its ridiculous.

Youth allowance is such a joke.....

 

[Nashezz]

Our tax system is like that because as you earn more you need less of what you earn to actually live/survive and you can afford to pay extra back. The more you earn, the easier it is to make more so you can still get uber rich while you pay higher taxes.

If you don't need the pension then why should you get it? It runs counter to the philosophy most often expressed on people undeserving of the dole, the so-called 'bludgers'. (Have any of you tried to live on the dole - it's not a whole lot of fun I can tell you, just a total struggle - anyway willing to actually stay on it, some minor percentage of 4% by the way, is welcome to it in my books). The pension is a welfare safety net and should be only paid if necessary. Otherwise everyone would be up in arms about having to pay massive tax just to fund pensions. This bill would be far far higher then the bill for 'unemployment benefits'.

The YA situation seems silly to me. Work needs to be encouraged not discouraged.

 

[fordxbt]

damn straight. i work 2 jobs because im trying to save $$$ early.
the tax department now wants $2600 this year.
why should i pay double tax for working twice as hard to get ahead?
hence my outrageous deductions

 

[Wysiwyg]

I will get back to the thread topic but first this...

Im a student and i receive YA due to taking a year off and proving my independence.

Just wondering why you think you deserve a government handout for proving independance and taking a year off uni. studies?

I have a part time job, but only work one day a week (my choice). This is due to the fact that for every $1 over $240 per fortnight i earn they deduct 50c from my YA. This means that after 14hrs p/f i am effectively working for half my hourly wage. Shouldnt they be trying to encourage students to find work and expand their education/possibilities etc etc?

The answer is obvious.If people (not saying you) are given a comfortable amount to live off then they won`t work.Laziness is a crippling Australian disease.The incentive is to get off the handouts and become self supportive of which you are partially doing.


Now the subject.

Firstly taxes are necessary to maintain an orderly society so the tax structure is designed so everyone on work for pay contributes in smaller or greater amounts to the kitty so we have the society we live in.We know this.

The bit about working harder is the overtime taxes.For my want to work more than the minimum working week hours, the government reaches into my pocket and says ..... thankyou Wysiwyg for working longer hours, give me half and run along now like a good lad.Cough cough.

This is THE most blatant legal take that a social system can enforce.Taxes on overtime should be taxed at the normal rate.

 

[Julia]

Fundamentally it's welfare. Take more from those with a high income and give some of it to those with a lower income.

I believe absolutely in welfare for those who genuinely need it due to circumstances they are not, in practice, able to change. It's part of what makes for a just society and I'm more than happy to be paying my share of tax to fund it.

But welfare for the bludgers and those who don't really need it is an entirely different matter. Cut them off.

I agree, Smurf. I'd hate to live in a society where we are not prepared to support those who are not, for whatever reason, unable to support themselves. I think this should include Youth Allowance which is an absolutely pathetic amount. I really admire any of you who are managing to exist on this, and probably having to buy textbooks as well.

Considering this makes Brendan Nelson's populist cry for increased single pension look silly. If he feels so strongly about the aged, then what about people who are trying to exist on Disability Pensions, YA, Widows' and Veterans' pensions.

The First Home Owners Grant and the Baby Bonus are classic examples of welfare schemse that, in practice, are widely abused no matter what honest intentions may have lead to their original introduction.

If we capped the Baby Bonus to an amount no greater than 10% of the mother's lifetime income tax payments prior to having the child then that would stop the abuse for sure. Those who have worked get the bonus, those who see it as easy cash miss out. An exemption for the genuinely disadvantaged OK, but not for those who see having a child as simply a way to get cash - it's not uncommon.

No, it's not uncommon. Until recently I was working with a community agency and seeing the "disadvantaged". Those prospective mothers whom I asked "what are you going to do with the baby bonus" invariably replied "take all the kids to Dreamworld for a week", "get a new TV and some good games for the kids", "buy some new clothes", etc etc. Not once did any of them suggest the money would actually go towards a fund for the coming child.

As for the FHOG, I can't see how it's helped anyone other than those selling, not buying, real estate. In came the grant, up went prices. That's middle class welfare, not genuine assistance for first home buyers and it's a complete waste of my taxes.

Shouldn't the price of the house being purchased have been capped?
Seems wrong to me that people can buy a house worth over a million with the FHOG.

Re self funded retirees not getting the age pension, the system is perhaps not as unfair as it seems in that there is quite a reasonable level of income and assets allowed before the age pension is not able to be accessed, i.e. for a married couple I think it's about $850K in assets (not including the family home) to get a small amount of pension plus all the benefits that accompany it i.e. concessions on rates, rego, medical etc.

One thing that, although rare, really should be changed is when people win Lotto (or something similar) and get over $1M, blow the lot, and then claim welfare benefits. There should be legislation to prevent this sort of irresponsibility.

 

[Temjin]

1. Tax system. More you earn, the more you are taxed.

That is why those on the "employment quadrant" are still in the rat race. Own a business instead. Ok, I know this sound all too Kiyosak"ish", but he had a point.

There is nothing we can do except to own our business and enjoy lots of tax advantages or move to another country.

2. Pension. Spend a lifetime building up assets, then dont get the pension (as measly as it is anyway). Dont you contribute enough tax over your life?

Unfortunately, that's called socialism. The politicians who introduced such laws were practically "forced" to do so because it would be politically suicide not to do so. Beside, if someone refuses to introduce it, someone else will in order to grab some votes for their own personal benefits. That's life.

3. Youth Allowance. This is a personal 'favourite' of mine. Im a student and i receive YA due to taking a year off and proving my independence. I have a part time job, but only work one day a week (my choice). This is due to the fact that for every $1 over $240 per fortnight i earn they deduct 50c from my YA. This means that after 14hrs p/f i am effectively working for half my hourly wage. Shouldnt they be trying to encourage students to find work and expand their education/possibilities etc etc?

I'm quite confused with what you are trying to say here. hehe Are you trying to look for more YA? Or are you suggesting that the YA should be cut off so that there are more incentives for students to work without relying on government payouts?

 

[prawn_86]

Ok a lot here to respond to, so i have tried to lump the quote in some sort of similar thoughts:

The YA situation seems silly to me. Work needs to be encouraged not discouraged.

I agree

I agree, Smurf. I'd hate to live in a society where we are not prepared to support those who are not, for whatever reason, unable to support themselves. I think this should include Youth Allowance which is an absolutely pathetic amount. I really admire any of you who are managing to exist on this, and probably having to buy textbooks as well.

I agree with this too, there definetly needs to be some form of welfare. Who is deserving is a topic for yet another thread (which i think has been debated a few times).

That is why those on the "employment quadrant" are still in the rat race. Own a business instead. Ok, I know this sound all too Kiyosak"ish", but he had a point.

I'm quite confused with what you are trying to say here. hehe Are you trying to look for more YA? Or are you suggesting that the YA should be cut off so that there are more incentives for students to work without relying on government payouts?

Yeh, have you read that book again recently...?

Im trying to say that my Youth Allowance should stay the same, while i work part time and study full time. Study is my primary 'employement' as such, so why should i be punished when i seek secondary employment and contribute further to the econmy.

If they want to make sure people are not wroughting the system, apply a minimum grade for those that are studying. That way anyone that fails a subject has their YA cut. This would not only make sure that people didnt take on too much external paid work, but that they didnt go out and 'binge' drink (something which seems very salient in the media these days).

Just wondering why you think you deserve a government handout for proving independance and taking a year off uni. studies?

Personally i think i should deserve YA without having to had proven my independence. My original home town is over 2 hoours drive from the city in a rural area. This means i have to pay rent on top of all the other expenses (as Romano mentioned), so why shouldnt i be entitled to the same standard as someone my age from the city?

Aside from that point, I think that uni studies should be encouraged. A couple decades ago there was no HECS and every student recieved YA (im not 100% sure of this, please correct me if thats wrong). My fathers generation got to go to uni for free and then contributed to society through increased taxes on increased (statistical: not all students get increased earnings) earnings.


Good to see a bit of robust discussion happening

 

[Wysiwyg]

Personally i think i should deserve YA without having to had proven my independence.

Okay thanks for that but I still don`t understand how people think it`s there right.Like if you don`t give it to me I won`t work and if you do give it to me I`ll think about supporting myself via work for pay.I started work when 15 y.o. so I missed any government assistance program.

 

[prawn_86]

Okay thanks for that but I still don`t understand how people think it`s there right.Like if you don`t give it to me I won`t work and if you do give it to me I`ll think about supporting myself via work for pay.I started work when 15 y.o. so I missed any government assistance program.

Hmm, perhaps my comments did sound a bit arrogant.I dont feel as though its my entitlement to get YA, but it is the rules/laws, so therefore i dont see why i cant/shouldnt get it when others can.

I'm all for equality, providing it is actually equal. I think every student should be able to YA, or none. Same with the dole, or the pension. Why should those that work harder/more and contribute more not recieve what others do? Thats the crux of this thread

Obviously there need to be some exceptions, like the disabled, but you get my drift...

 

[pepperoni]

some people out there really really need the help our taxes give

Ill happily give $5 to bludgers etc as long $1 goes to a person that needs it.

Who knows but with a bit of bad luck one of us might need $300k in medical etc ... good to know they will get it ... even if we pay a premium for that safety net.

And god help people in counties that turn a blind eye to their needy

 

[aleckara]

YA is a pet hate of mine.

My parents earned more than 55k, way more. But in their infinite wisdom they had bascially told me to pay rent while living with them. Which meant I would have to work a lot more than the average student, and not get the full independence of living on my own.

At university I would see the same person on YA. They didn't need to work as much as I would, and due to YA while they are being subsided they were living close to the city with their independence financed by the government to. I had to travel at least 2.5 hours a day to get there. These students have their own place to crash and do the things that young adults do with freedom and confidence not feeling the responsibility of being in someone else's pocket.

When I was at school years ago it was often the case that the kids with money to spend often did so because YA was deposited into their accounts. The kids with parents that were rich enough seemed to live the poorer lifestyle.

Other people at uni, who had parents who work hard share the same concerns. If YA was respective across all students (who are usually struggling equally) I would have no problems. But it isn't. The reality is that students who don't have government help have to work - and hope they have a natural aptitude at uni and be satisfied with less than average marks. It isn't equitable and actually puts poorer people in a better footing, not just financially but in terms of their independence and gives them an advantage in their development imo.