Liberals’ proposed tax changes would deliver big cuts to the rich, higher taxes for workers

The Coalition’s support for a flat tax system would result in the average Australian worker paying more income tax while high-income earners would pay less and would dramatically widen the gap between rich and poor.

The ACTU said Opposition Leader Tony Abbott’s push for a two-tier tax system would see a millionaire pay $15,300 a year less in tax, while the typical worker could pay up to $184 a year more.

ACTU Secretary Jeff Lawrence said the Liberals are showing their true colours by supporting tax cuts for the rich while ordinary working families pay more.

“There is no case for more tax cuts for high income earners,” Mr Lawrence said.

“Over the past decade, the tax system has become less progressive as high income earners have done very well out of tax cuts.

“If we are to have a debate about personal income tax, then the priority should be to ease the tax burden for low and middle income earners. Most importantly the tax trap that prevents low income earners from fully participating in the workforce needs to be reformed.

“Tony Abbott’s proposal is a con. He says it will benefit workers and people on low incomes, but the main beneficiaries would in fact be the very wealthy.”

Mr Abbott’s proposal would increase taxes on the great bulk of workers who earn between $35,000 and $95,000, while providing tax cuts for high income earners. Someone on $250,000 would pay $4050 a year less, and someone earning $500,000 would get a $150 a week tax cut – or $7800 a year.

But low paid workers in the range of $25,000 to $37,000 would incur a higher effective marginal tax rate, according to ACTU modelling.

“A progressive tax system is a fundamental expression of a fair and equal society,” Mr Lawrence said. “The Liberals’ support for a flat marginal income tax rate for 97% of taxpayers would lead to a more unequal Australia.”

Mr Lawrence also cautioned against further cuts to company tax rates. He said the corporate tax rate would be cut to 29% as a result of the Minerals Resource Rent Tax reforms, and there was no credible evidence that Australia’s company tax system was hindering competitiveness or foreign investment.

“Any changes to company taxes must not alter the overall proportion of all tax revenues paid by business,” Mr Lawrence said.

“The Labor Government needs to reject these unfair and regressive tax reform proposals.”

For christs sakes do you need two bloody threads on the same topic started by you.  Both the bastards are started by you.

These boards are not here for your freaking spamming.  Do you have no respect for the forum rules?

You pulled this same crap at yahoo, I hope the mods here deal with you accordingly.

Quote:

“Over the past decade, the tax system has become less progressive as high income earners have done very well out of tax cuts.

What about over the past 2 or 3 decades? Let's not pick and choose our statistics.

freediver wrote on Oct 30^th, 2010 at 9:13am:

Quote: “Over the past decade, the tax system has become less progressive as high income earners have done very well out of tax cuts. What about over the past 2 or 3 decades? Let's not pick and choose our statistics.

I think that you will find that most of the regressive taxation changes occurred during the Howardian Era - especially post-2000 - and that the changes this century have been savagely-regressive!

Moreover, many of the changes have counter-productively distorted housing, share, superannuation and other markets...

Equitist wrote on Oct 30^th, 2010 at 9:25am:

freediver wrote on Oct 30th, 2010 at 9:13am: Quote: “Over the past decade, the tax system has become less progressive as high income earners have done very well out of tax cuts. What about over the past 2 or 3 decades? Let's not pick and choose our statistics. I think that you will find that most of the regressive taxation changes occurred during the Howardian Era - especially post-2000 - and that the changes this century have been savagely-regressive! Moreover, many of the changes have counter-productively distorted housing, share, superannuation and other markets...

Equatwist with an anti conservative twist! Wonders will never cease!

For the record, I reckon that Henry is hopelessly-misguided in proposing a flattening of our personal income tax system - apart from increasing the tax-free threshold to reflect inflation over the past couple of decades, the opposite should be occurring...

Remembering that, in the financial year that I left high school (FY85), the 60% rate kicked in at a pissy $35,000 when the tax-free threshold was $4,594, we should be restoring progressivity with higher rates at higher thresholds...

I note that Howard and Costello increased that tax free income threshold to $6,000 in FY00 - when the highest marginal rate was 47% at the $60,000 income threshold...

They made subsequent regressive income tax changes - and on the eve of the 2007 election they promised further regressive changes (which were basically matched by the Labs) that would keep the tax free income threshold at a ridiculously low level and the highest marginal rate lowered to kick in a relatively low level...

FYI, some of the tax schedules for relevant tax periods are contained in this old post of mine: -

http://www.ozpolitic.com/forum/YaBB.pl?num=1279955932/0


Equitist wrote on Jul 24^th, 2010 at 5:18pm:

I, for one, am concerned about the increasingly-regressive nature of our taxation system on individuals and families - and the associated opportunity costs to the nation as a whole. So, as a matter of interest, I suggest that people utilise the following tables to calculate the comparative WEATH-fare BENEFITS to middle-high income Aussies over the past decade (and quarter century)... I suggest that people first calculate relative tax payable (for FY86, FY01, and FY10/11) on, say: - * Diferent $25K income increments up to $150K, then jump by $50K to $250K, and then calculate the tax on $500K and $1M * Or use the latest FY10 or FY11 thresholds for a more direct comparison Then: - Take a look at the current annual Newstart and Aged Pension rates... IM(not-so)HO, the results will surprise most and alarm some - not least because the Libs are carrying on so much about the post-2007 Federal debt and deficit, despite being the proud architects of the biggest budget black holes in Australian history... http://www.ato.gov.au/individuals/ Quote: Residents 1985–86 Taxable income/Tax on this income $0–$4,594 = Nil $4,595–$12,499 = 25 cents for each $1 over $4,595 $12,500–$19,499 = $1,976.26 + 30 cents for each $1 over $12,500 $19,500–$27,999 = $4,076.25 + 46 cents for each $1 over $19,500 $28,000–$34,999 = $7,986.25 + 48 cents for each $1 over $28,000 $35,000 and over = $11,346.25 + 60 cents for each $1 over $35,000 2000-01 Taxable income /Tax on this income $1 - $6,000 = Nil $6,001 - $20,000 = 17 cents for each $1 over $6,000 $20,001 - $50,000 = $2,380 + 30 cents for each $1 over $20,000 $50,001 - $60,000 = $11,380 + 42 cents for each $1 over $50,000 $60,001 and over = $15,580 + 47 cents for each $1 over $60,000 2009–10 Taxable income/Tax on this income 0 – $6,000 = Nil $6,001 – $35,000 = 15c for each $1 over $6,000 $35,001 – $80,000 = $4,350 plus 30c for each $1 over $35,000 $80,001 – $180,000 = $17,850 plus 38c for each $1 over $80,000 $180,001 and over = $55,850 plus 45c for each $1 over $180,000 2010–11 Taxable income/Tax on this income 0 – $6,000 = Nil $6,001 – $37,000 = 15c for each $1 over $6,000 $37,001 – $80,000 = $4,650 plus 30c for each $1 over $37,000 $80,001 – $180,000 = $17,550 plus 37c for each $1 over $80,000 $180,001 and over = $54,550 plus 45c for each $1 over $180,000 The above rates do not include the Medicare levy...(read Medicare levy reduction or exemption for more information). Tax offsets reduce the tax payable. Tax offsets based on taxable income levels apply to a range of circumstances. For more information read About tax offsets. Of course, income tax breaks have been but one of many regressive taxation and WEALTHfare measures - and many middle-high income individuals now have an effective marginal tax rate of only 15%, thanks to the effectively-exclusive Superannuation Tax Concessions scam. The past decade has been really good for some Aussies - and not others, eh!? On that other thread, I suggested that we should restore a semblance of progressivity, by reintroducing one or more high-end thresholds - either 60% at, say, $250K or maybe 50% at $250K and 60% at $500K (and, given that the lower thresholds are remarkably close together, why not have additional threshold/s at, say, $750K, $1M, etc.!?). Of course, taxation is but one of many socio-economic engineering tools but I think that it is time to address both the growing income and wealth inequity and other opportunity costs - especially in terms the Federal Govt's crucial roles in providing equitable access to affordable essential services and infrastructure and ensuring long-term socio-economic stability and environmental sustainability. Discuss.

PS I note that the Labs have finally decided to increase the tax free threshold to a more reasonable level...

FYI: -

http://www.aph.gov.au/library/pubs/RP/BudgetReview2010-11/TaxPersonalIncome.htm


Quote:

Budget 2010–11: Taxation Personal income tax Les Nielson Overall, the 2010–11 Federal Budget made few changes to the personal income tax regime. This brief covers the major, already legislated, changes to commence on 1 July 2010 and the changes proposed in the Budget. Already legislated changes—personal income tax rates As previously legislated, the personal income tax rates will reduce from 1 July 2010, as shown in the following tables. The current personal income tax rates are as follows: Marginal personal income tax rates 2009–10 [Table removed due to formatting - see attachment.] Source: Parliamentary Library estimates On 1 July 2010 the personal income tax rates will change to the following: Marginal personal income tax rates 2010–2011 [Table removed due to formatting - see attachment.] Source: Parliamentary Library estimates The Low Income Tax Offset (LITO) will increase to $1500 per annum in the 2010–11 tax year (compared with $1350 in the previous year) giving a tax free income threshold of $16 000 for taxpayers with incomes up to $30 000 per annum in 2010–11 (compared with $15 000 in the previous year).[1] The LITO is no longer available once the taxpayer’s income reaches $67 500 in 2010–11. The following table illustrates the effect of the above changes: Income tax rate and LITO changes net effect 2009–10 and 2010–11 $ p.a. [Table removed due to formatting - see attachment.] Source: Parliamentary Library estimates Changes announced in the 2010–11 Budget Medicare levy changes The government proposes to increase the low income Medicare levy threshold with effect from 1 July 2009, i.e. for the current financial year. This threshold is the annual income level below which no Medicare levy is payable. The new thresholds are $18 488 for a single person (up from $17 794 for 2008–09) and $31 196 for a family (up from $30 025 for 2008–09). Each dependent student or child increases the threshold by $2865 (up from $2787 for 2008–09). Pensioners (such as disability pensioners), who are below Age Pension Age (65 but increasing to 67 over the next 13 years) will also receive an increase in this threshold to $27 697 for the 2009–10 tax year, compared with $25 299 for the 2008–09 tax year.[2] Tax offsets The net medical expenses tax offset allows a person to claim a tax offset equal to 20 per cent of unreimbursed eligible medical expenses above a set threshold, currently $1500 p.a. For example, if a person has $1600 worth of unreimbursed eligible medical expenses in a tax year they may claim a tax offset of $20, which is equal to 20 per cent of $100. The government proposes to raise this annual threshold to $2000 from 1 July 2010 and index it to the consumer price index from 1 July 2011.[3] This threshold was last increased in 2002–03. Tax deductions From 1 July 2011, the government proposes to provide individual taxpayers with a 50 per cent tax discount in respect of the first $1000 of interest earned from bank accounts, bonds, debentures and annuity products.[4] Though details of this proposed measure are still to be finalised, the workings of the proposed tax discount appear to be similar to the current 50 per cent discount on taxable capital gains, whereby 50 per cent of realised capital gains are exempt from tax[5] . Taking this approach as a model for the proposed measure, 50 per cent of the first $1000 in interest earned from the above products would not be subject to personal income tax. This makes the measure a tax deduction (rather than a tax offset) because it reduces a taxpayer’s taxable income. Assuming a six per cent per annum interest rate, the full 50 per cent discount would apply to individuals with a saving balance of up to $16 666.67. However, individuals with savings balances above this level will only be eligible for a $500 tax deduction.[6] The government has noted that, assuming the benefit gained from the discount is reinvested each year, a middle-income taxpayer with $17 000 invested at 6 per cent per annum will, after five years, have a balance almost $1000 higher than if they had not received the discount.[7] The proposed measure implements a revised version of a recommendation of the Henry Tax Review.[8] From 1 July 2012, personal income taxpayers will have a choice when filing their tax returns. Either they can continue to claim itemised work-related expenses and the cost of managing tax affairs as tax deductions (backed up by the relevant receipts etc. should that prove necessary) or they can claim a standard $500 tax deduction. This standard deduction amount will rise to $1000 in the 2013–14 tax year.[9] This particular measure, designed to free most personal taxpayers from having to prepare a tax return, was proposed in the recent Henry Tax Review.[10]

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From the same source, here's another interesting analysis of historical changes...

http://www.aph.gov.au/library/pubs/RB/BudgetReview/PersonalIncomeTax.htm


Quote:

[...] The major change in the personal income tax scales for 2007–08 was the raising of the threshold at which the 30 per cent tax rate applies from $25 001 to $30 001 p.a. This change will benefit most tax-payers (not those in the $6001 to $25 000 p.a. bracket), but produce a larger proportionate benefit to those on a lower income. In the 2008–09 financial year the personal income tax thresholds again change, with the emphases on cutting the tax of those on a higher income. Low income tax offset From 1 July 2007 the low income tax offset will increase from a maximum of $600 to $750 per year. Further, the threshold at which this offset begins to reduce increases from $25 000 to $30 000 p.a. The gross yearly income at which this offset no longer applies will be $48 750 p.a. from 1 July 2007, up from $40 000 p.a. If a person is eligible for the full low income tax offset they will not pay tax until their annual income exceeds $11 000 p.a.[1] Dependent Spouse Rebate From 1 July 2007 the maximum Dependent Spouse rebate will increase from $1 655 to $2 100 per year. This rebate is available to a taxpayer where the dependent spouses’ separate net income is less than $282 per year. The rebate is reduced by $1 for every $4 that the dependent spouse’s income increases. Thus, the threshold at which the dependent spouse’s net income leads to this rebate no longer being available to a married taxpayer rises from $6 901 to $8 681 from 1 July 2007.[2] Increasing Medicare levy low income thresholds Each year the Medicare levy low income thresholds increase in response to increases in inflation, as measured by the Consumer Price Index (CPI). If either an individual’s or family’s income is below these thresholds they are not required to pay the Medicare levy for that financial year. From 1 July 2007 these thresholds will be $16 740 for an individual and $28 247 for a family. They will apply to the 2006–07 financial year.[3] Other changes This budget contained some minor additional concessions for some Australian Defence Force (ADF) personnel deployed overseas during the evacuation of Australian citizens from Lebanon and will make the Defence Force Income Support Allowance tax free in limited circumstances. Impact of these changes The following table shows the amount of tax paid, at various income levels, including the estimated impact of the altered shade-in rates for the Medicare Levy and Medicare Surcharge at various income levels, compared to the net tax paid in earlier years. The Medicare levy shade in rates for low income earners have been estimated for the years 2006–07 to 2008–09 and thus the total amount paid at the $20 000 p.a. category may be slightly different than will actually be the case. These uncertainties, however, do not cause a significant difference in the following figures. [Table removed due to formatting - see attachment.] Source: Parliamentary Library As can be seen, the lower income earners gain the greatest advantage in the coming financial year, however, higher income earners gain the greatest proportional advantage in the 2008–09 financial year. The major impact of these changes, particularly the increase in the low income tax offset from $600 to $750 p.a. for the coming tax year is that those with ordinary income below $11 000 p.a. will receive this amount tax free.[4] Further, these changes mean that those taxpayers eligible for the Senior Australians’ Tax Offset (SATO) pay no tax if their income is below $25 867 (single) or $43 360 (couple) in the 2007–08 financial year. Under current tax rates these income levels are $24 867 (single) and $41 360 (couple).[5] Comments Media reaction to these changes has been mixed. On one hand some commentators suggest that the $6 000 tax free threshold that each taxpayer receives is now meaningless. Further, any additional reductions in the personal income tax rates simply provide additional cuts to high income earners. However, other commentators suggest that the comparatively small scale of the changes continues the government policy of incremental change in the tax system and is a responsible approach to the reform of the personal income tax system given the current economic circumstances of full employment (for practical intents and purposes) and continued strong economic growth.[6] Finally, some commentators suggest that the raising of the 30 per cent marginal tax rate threshold and the increase in the low income tax offset will increase the supply of labour into the economy and therefore, in the current economic circumstances, is a very commendable measure.[7] [...]

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What possible socio-economic justification was there, for doling out annual tax cuts to middle-high income earners that, since the turn of the century, have exceeded the total annual welfare benefits paid to aged pensioners, the disabled, single parent households and the unemployed!?

http://www.ozpolitic.com/yabbfiles/Attachments/Individual_Tax_Paid_2003-04_to_2008-09_by_Annual_Income.JPG

What kind of society have we become, where the excesses of capitalism are reinforced and exacerbated to cause exponential polarisation of income, Superannuation, wealth, opportunity, power - and debt!?

Surely, there is a pressing need, to restore a semblance of progressive equity to our taxation and transfer systems!?

so much space between your ears there equatwts

Bet they could put in a rollercoaster or two!

tickfen wrote on Oct 30^th, 2010 at 10:26am:

so much space between your ears there equatwts Bet they could put in a rollercoaster or two!

Bend over, tickfen, whilst I reposition that rollercoaster or two...

Now, is anyone else prepared to discuss the pressing socio-economic equity issues!?

No prizes for sloppy seconds there equatwts


bwaaahaaaa