Who pays all the tax? Who pays no tax?

havo · Apr 20, 2015

US statistics unfortunately. It appears that the top income earners pay ALL the tax.

raven · Apr 20, 2015

^^^^
that's not correct !
paye earners are the largest tax base in oz !

willrocks · Apr 20, 2015

I'm pretty sure the top 1% pay nothing.

mmm....shiney! · Apr 20, 2015

In the US I think the $0 - $10 000 range pay a huge proportion of their incomes in tax, not income tax, just other taxes which cannot be offset because they don't earn enough. I'll try and find the article I was reading a couple of weeks ago, I was going to post it but thought many here would just go meh.

The higher earners do pay the most tax as well according to the same article.

havo · Apr 20, 2015

mmm....shiney! said:

In the US I think the $0 - $10 000 range pay a huge proportion of their incomes in tax, not income tax, just other taxes which cannot be offset because they don't earn enough. I'll try and find the article I was reading a couple of weeks ago, I was going to post it but thought many here would just go meh.

The higher earners do pay the most tax as well according to the same article.
Click to expand...

In addition to income taxes there are sales taxes. Of course wealthier people consume more... so they end up paying even more tax!

mmm....shiney! · Apr 20, 2015

havo said:

mmm....shiney! said:

In the US I think the $0 - $10 000 range pay a huge proportion of their incomes in tax, not income tax, just other taxes which cannot be offset because they don't earn enough. I'll try and find the article I was reading a couple of weeks ago, I was going to post it but thought many here would just go meh.

The higher earners do pay the most tax as well according to the same article.
Click to expand...

In addition to income taxes there are sales taxes. Of course wealthier people consume more... so they end up paying even more tax!
Click to expand...

Which negates the oft use argument that income tax is a great equaliser.

mmm....shiney! · Apr 20, 2015

Here it is :

[imgz=http://forums.silverstackers.com/uploads/753_-1x-1-1.jpg][/imgz]

The tax burden rises progressively with income, with the wealthiest paying a third of their income to the federal government. One exception to the tax rate's steady rise through the income brackets: Americans who earn less than $10,000 per year, who don't get enough from their earned income tax credits at tax time to make up for the payroll and excise taxes they pay all year.
Click to expand...

http://www.bloomberg.com/news/articles/2015-04-10/how-much-americans-really-pay-in-taxes

Caput Lupinum · Apr 20, 2015

meh

havo · Apr 20, 2015

raven said:

^^^^
that's not correct !
paye earners are the largest tax base in oz !
Click to expand...

that maybe so, but low income earners in australia do receive some of the highest subsidies in the world. i guess it's what makes this place so pleasant to live in.

Source:http://www.oecd-ilibrary.org/economics/economic-growth-from-the-household-perspective_5jz5m89dh0nt-en Calculated from Table 5, OECD, 2014

JulieW · Apr 21, 2015

Dire letter in today's Daily Reckoning newsletter:

This next response would be funny if it weren't so sadly accurate for what's happening in the land of the small business person. That is, red tape forces down incomes and increases welfare dependence.

Corporates are great at avoiding taxes on profits - including the GST component.

Entire industries are restructuring to avoid the payroll taxes (including the GST component), mostly by swapping employees for "independent contractors". There is a loophole that makes this legal - which the larger organisations are using. The rest don't get it right and end up being exterminated by prosecution and back-taxes. With independent contractors, the payroll component of GST is pushed onto the worker, who doesn't then have to pay superannuation guarantee and the total business payroll is kept below the level of State payroll taxes.

The rest of us tried increasing prices to compensate for the taxes - but revenues didn't go up. We're a service business relying on household discretionary income - as this goes down, so does our revenue. So we cope by reducing the number of work hours available. To keep abreast of taxes we've had to reduce work hours available by over 30% since the GST and superannuation tax were introduced. Thank goodness debt is so cheap now - most businesses are up to their eyeballs in it trying to pay the taxes.

So now the business owner has a lower income - and is eligible for more family tax assistance. The employees have lower incomes - and are also eligible for more family tax assistance; or lose their jobs and become eligible for unemployment benefits. The funds we could be using to invest and grow the business are all going to the ATO as GST and profit tax.
Click to expand...

To give some perspective to this: from The Age today:

Australia $29 billion system of franking credits for investors is skewed heavily to the rich and ripping a hole in the budget, a new analysis has found, with one tax break found nowhere else in the world costing almost $5 billion a year.

Millions of Australians benefit from franking credits, which allow investors who receive dividends to claim a tax credit at the corporate rate of 30 per cent.

Designed to avoid double taxation, the so-called franking credits net households $10 billion each year, with companies benefiting by a similar amount. The final one-third goes to superannuation funds, charities and trusts.

According to a study by the Australia Institute, the wealthiest 10 per cent of households those earning disposable income of more than $207,000 gain almost 75 per cent of the $10 billion in franking credits siphoned directly to them.

The distributional analysis, based on modelling by the National Centre for Social and Economic Modelling, also shows the richest 20 per cent of households get $8.3 billion in franking credits while the poorest 20 per cent of households benefit to the tune of just $164 million.

With some 61 per cent of super funds held by the richest 20 per cent of Australians, most of the franking credits directed through the retirement income system also accrues to the wealthy.

"Like so many of the loopholes in our tax system, the way that franking credits are treated delivers a bonanza for many high-income earners and delivers virtually nothing to low-income earners," said Richard Denniss, the executive director of the Australia Institute.

In a unique feature of Australia's system, investors without tax liabilities to offset against franking credits are given a cash payout by the Australian Tax Office, costing $4.6 billion in 2012-13.

According to NATSEM, more one million Australians get the refund from the ATO, a policy introduced by former Treasurer Peter Costello in 2000.
http://www.theage.com.au/business/f...billion-franking-credits-20150421-1mov1f.html
Click to expand...

Small business owners pushed on to welfare assistance. Wealthy superannuants being granted cash concessions against the income they earn over 60.

Skewed?

mmm....shiney! · Apr 21, 2015

JulieW said:

Small business owners pushed on to welfare assistance. Wealthy superannuants being granted cash concessions against the income they earn over 60.

Skewed?
Click to expand...

No one is granting anyone a cash concession.

It is indicative of a stupid law if businesses seek to reduce their tax by restructuring their employment structures by hiring contractors in order to avoid a payroll tax. It basically says that such a tax is a hindrance to employment.

Obviously you consider a payroll tax justifiable?

There is nothing stopping small business operators from employing contractors.

There is nothing stopping lower income earners from buying shares and receiving franking credits.

There is nothing stopping Richard Denniss from continuing to be a dickhead. :lol:

havo · Apr 21, 2015

I guess my original thought was that even with all these "concessions" the top income earners still pay ALL the tax. Anyway that's what the data seems to show.

bordsilver · Apr 21, 2015

Reposting this table from a few months ago:

then we see that the:
- Bottom fifth pay 0.2% of the tax
- next 20% pay 4.7%
- Middle fifth pay 13.0%
- next 20% pay 23.3%
- Top fifth pay 58.8% of the tax take

Note that this is household income and not individuals, but I think the clear trend is there.

But as can be seen, our welfare system has a lot of redistribution of the taxes resulting in the bottom 40% of households by income paying no net tax and being net recipients.

As yes, Richard Denniss continues to be a dickhead. The so-called tax concessions are always greater in value for the people who pay more in tax. In basic arithmetic. 1% tax back on a $50,000 salary is $500 but is $5,000 on a $500,000 salary (which is just under what Prime Ministers earn). Changes to marginal tax rates always affect high income people more in absolute dollars (both up and down).

havo · Apr 21, 2015

bordsilver said:

Reposting this table from a few months ago:

http://d65852kwq1u8u.cloudfront.net/uploads/753_6824_net_tax_payable.png

then we see that the:
- Bottom fifth pay 0.2% of the tax
- next 20% pay 4.7%
- Middle fifth pay 13.0%
- next 20% pay 23.3%
- Top fifth pay 58.8% of the tax take

Note that this is household income and not individuals, but I think the clear trend is there.

But as can be seen, our welfare system has a lot of redistribution of the taxes resulting in the bottom 40% of households by income paying no net tax and being net recipients.

As yes, Richard Denniss continues to be a dickhead. The so-called tax concessions are always greater in value for the people who pay more in tax. In basic arithmetic. 1% tax back on a $50,000 salary is $500 but is $5,000 on a $500,000 salary (which is just under what Prime Ministers earn). Changes to marginal tax rates always affect high income people more in absolute dollars (both up and down).
Click to expand...

It's become a huge industry in Australia. The welfare system is estimated to redistribute $150 bn annually. That puts the big 4 banks' profit of $29 bn in 2014 in perspective doesn't it.

How long can it last? Who knows, who cares? Of course when the **** hits the fan it will be the 1 percenters fault!

Anyway Stackers, gold and silver... a little bit of offshore in your pocket.

sources
http://www.abc.net.au/news/2015-02-25/welfare-system-reveals-five-basic-payments-plan/6259982).
http://www.smh.com.au/business/bank...-for-2014-financial-year-20141027-11caf2.html

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