Which is your least favourite tax?

[prawn_86]

Our society already comprises the "Haves" and the "Have Nots". This would exacerbate the divisions.

Only because we are not starting from an equal base anymore. If everyone started from the same amount of assets, with a flat tax, it would be a true laisse faire capitalist system.

Never happen though, but would be interesting

 

[drsmith]

That would be immensely unfair to people on low incomes.
Our society already comprises the "Haves" and the "Have Nots". This would exacerbate the divisions.

This to some extent was addressed above.

A regressive tax statem is the simplest and hence the most transperant but difficult to implement given income support at lower an middle income brackets. This could potentially take decades to unwind in order to satisfy the ideal above.

The initial step would be to fix loopholes in existing taxes and use the proceeds to eleiminate some taxes and reduce the rates of taxation on others. This is hopefully what Henry will address and the government implement.

Unfairness to people on low incomes is one reason why it could only be implemented over a long period of time. Another would be the sudden sacking of public servants such a simplification would bring.

The purpose of taxation is for governments to raise funds to efficiently provide essential services. Our current tax regime fails this on two counts.

1) It also serves as an income re-distribution mechanism through progresivity. Beyond a basic safety net this should be addressed purely by wage levels.

2) There are too many mechanisms (deductions and rebates) by which tax can be avoided.

Both reduce the efficiency of government service delivery increasing the cost and hence taxes needed. The second increases tax rates further by having to overcome shortfalls from deductions and rebates.

 

[Smurf1976]

Inflation. Surely that has to the be ultimate in taxation that affects literally everybody in some way.

One issue I have with Income Tax is that there is no "hours worked" component. For example, I'd argue that someone who worked 3000 hours over 12 months to earn $60,000 is clearly in a worse off position than someone who worked only 2000 hours to earn the same money and tax rates ought to reflect this.

 

[drsmith]

Inflation. Surely that has to the be ultimate in taxation that affects literally everybody in some way.

Inflation is another reason governments like a progressive income tax structure. It's effectively increased taxation by stealth.

One issue I have with Income Tax is that there is no "hours worked" component. For example, I'd argue that someone who worked 3000 hours over 12 months to earn $60,000 is clearly in a worse off position than someone who worked only 2000 hours to earn the same money and tax rates ought to reflect this.

This could be achieved by settings marginal rates for hourly rates of pay. Increased complexity though would be a problem as the annual tax return would have to include hours worked along with income. In the case of private bisuness owners declaring wage income from their business, how can hours worked be verified ?
Potential for tax avoidance ??

Other issues arise with part time workers or for part of the year. Someone for example who works, say, 200 hours in a year and earns $5000 could be subject to tax whereas currently they are not. Income thresholds would still be required to overcome this and for investment income for which no hours are worked.

 

[Bigukraine]

I have no prob with tax it's a fact of life ....but the way it is applied to the different classes i have a problem with !!!

 

[cutz]

Agree with the above poster,

Potentially a low income earner could pay more tax than a wealthy individual, the whole system is way to complicated and top heavy, people that supplement income by working overtime are punished by stepping into a higher tier.

I’m no expert but systems like negative gearing; family trusts and all those other tax reducing structures should be banned, rates need to be reduced, everyone needs to pay their fair share.
:hide:

 

[robots]

hello,

yeah sure thing cutz,

income tax least favourite

the tax free thrershold is almost up to 15k, so someone earning 30k or 40k would pay maybe on 4-6k tax, thats nothing

yet someone smart enough to earn 100k or 200k contributes far more, should be a standard rate for everybody

thankyou
robots

 

[cutz]

yet someone smart enough to earn 100k or 200k contributes far more, should be a standard rate for everybody

It doesn't have to take the smarts to earn good money but yeah you're right, everyone should be paying their fair share.

Negative gearing, trusts and other tax reducing schemes need to be scrapped for a start.

 

[robots]

It doesn't have to take the smarts to earn good money but yeah you're right, everyone should be paying their fair share.

Negative gearing, trusts and other tax reducing schemes need to be scrapped for a start.

hello,

nah, you earn a $1 you pay a set tax rate $0.20 or $0.15 or $0.40 and that way its even

NG, trusts and other tax reducing schemes are available to everybody has nothing to do with taxation

thankyou
robots

 

[cutz]

NG, trusts and other tax reducing schemes are available to everybody has nothing to do with taxation

thankyou
robots

Incorrect,

Tax reducing schemes are not available to everybody, take someone who is busy paying off the first home, huge mortgage due to the property bubble is probably not going to enter into a negative gearing strategy ( why someone would want to now is beyond me anyhow ).

This same person may be working for the man on PAYE, working heaps of overtime to pay of the first mortgage, no trust arrangements available here.

See Robots, the system is unfair.

 

[mazzatelli]

Stamp Duty

yet someone smart enough to earn 100k or 200k contributes far more, should be a standard rate for everybody

I'd disagree, utility differs among individuals, companies - no one likes to pay tax, but e.g. a $0.4 per $1 tax rate would affect the standard of living of someone earning $40k significantly more than someone earning $400k

 

[robots]

Incorrect,

Tax reducing schemes are not available to everybody, take someone who is busy paying off the first home, huge mortgage due to the property bubble is probably not going to enter into a negative gearing strategy ( why someone would want to now is beyond me anyhow ).

This same person may be working for the man on PAYE, working heaps of overtime to pay of the first mortgage, no trust arrangements available here.

See Robots, the system is unfair.

hello,

you are focusing on an individuals circumstances, you need to put that aside and look at the tax issue

in the examples you provide those "people" are still eligible to use any tax reducing schemes that are around whether that be NG, trust or any other

thankyou
robots

 

[It's Snake Pliskin]

Just heard on 2gb.com Morrison drive programme that NSW has raised stamp duty on property. Can anyone find an article on this?

 

[trainspotter]

From an email I received about 10 years ago. Still relevant.

The Tax System – Explained With Beer

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.

If they paid their bill the way we pay our taxes, it would go something like this:

* The first four men (the poorest) would pay nothing.
* The fifth would pay $1.
* The sixth would pay $3.
* The seventh would pay $7.
* The eighth would pay $12.
* The ninth would pay $18.
* The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.

‘Since you are all such good customers,’ he said, ‘I’m going to reduce the cost of your daily beer by $20.’

‘Drinks for the ten now cost just $80.’

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:
* The fifth man, like the first four, now paid nothing (100% savings).
* The sixth now paid $2 instead of $3 (33%savings).
* The seventh now pay $5 instead of $7 (28%savings).
* The eighth now paid $9 instead of $12 (25% savings).
* The ninth now paid $14 instead of $18 (22% savings).
* The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

‘I only got a dollar out of the $20,’ declared the sixth man. He pointed to the tenth man, ‘but he got $10!’

‘Yeah, that’s right,’ exclaimed the fifth man. ‘I only Saved a dollar, too.

It’s unfair that he got ten times more than I!’

‘That’s true!!’ shouted the seventh man. ‘Why should he get $10 back when I got only two? The wealthy get all the breaks!’

‘Wait a minute,’ yelled the first four men in unison. ‘We didn’t get anything at all. The system exploits the poor!’

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

 

[Hedders]

The beer analogy is sensational Trainspotter!

My least favourite tax is payroll tax- it's the most lame grab for cash I've ever come across. When I owned 2 stores that ran independently of each other, I paid payroll tax as if all the staff were under one roof. I paid a LOT more payroll tax compared to the scenario of the businesses having separate owners (one store would not have paid any payroll tax at all).

The thing that really gets on my wick about tax in general though is handing over money to a government that fritters it away on layers of inefficient beaurocracy. I try not to think about it too much.

If I could introduce one quick way of reducing the current tax expenditure, I'd look at the way politicians are paid- give them a $100K annual pay rise, then make them pay for their own travel/dinners/incidentals. And when they retire from office, let them live on super/savings like the rest of us.