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Millionaires should pay more tax (Read 1824 times)
Senexx
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Millionaires should pay more tax
Mar 24th, 2010 at 3:54pm
 
I am not sure if I have posted this here before or not.

Millionaires should pay more tax. Our tax system will remain progressive and be more equitable.

Now before you get in a huff, hear me out. Now this doesn't take into account the recent tax changes in the last year or two but the principle still applies.

Creating a new 50 per cent tax rate for incomes over $1 million per year would not only increase the equity of the Australian tax system, it would also significantly increase tax revenue.

Income and tax paid by those Australians earning over $1 million per year in 2005–06.

It shows that while only 5,605 people declared incomes in excess of $1 million, together their combined income was more than $10.7 billion ($10.76B), or an average of more than $1.9 million each. It also shows that the total tax payable by those earning over $1 million per year was just $2.15 billion, or just less than 20 per cent.

If each of these high-income earners had paid an additional five per cent of any income over $1 million per year in 2005–06, the total amount of additional tax collected would have been in excess of $250 million. If it is assumed that those earning over $1 million per year have enjoyed faster-than-average income increases of 10 per cent per annum, the amount of additional income raised from a five per cent tax increase would be more than $435 million in 2008–09.

It remains unclear why someone earning $180,000 per year should pay the same marginal tax rate as someone earning $1,800,000 per year or, as in the case of some CEOs, $18,000,000 per year.

The creation of an additional tax bracket with a tax rate of 50 per cent would enhance the equity, and progressivity, of the Australian tax system while, at the same time, raising a significant amount of revenue. Although in the current macroeconomic climate the contractionary effects of an increase in taxation are unwarranted, this could easily be overcome by increasing expenditure on a range of other measures, which would inject money into the communities that need it most.

The underlying principle of a progressive tax system is that those who have the greatest capacity to pay tax should pay both a higher amount and a higher rate of tax. The Australian income tax system has some progressive features, with the marginal tax rate paid by those earning over $180,000 per year significantly higher than the marginal tax rate paid by those earning $30,000 per year.
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Hlysnan
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Re: Millionaires should pay more tax
Reply #1 - Mar 24th, 2010 at 8:21pm
 
If you want to make tax more equitable, you can start by moving towards a proportional tax, not a progressive tax. What is unclear is why rich people are being penalised for being ambitious and hard working. An ability to pay, whereas others can't? What is the relationship between a person from the lower class and a person from the upper class? Are they friends or relatives? Why is there an obligation for the wealthy people in society to provide for those less fortunate (many of whom brought this misfortune upon themselves with their alcoholism, drug abuse and gambling problems anyway)? Any sort of "charity" would be more equitable if it were only voluntary and not forced by the government.
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Soren
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Re: Millionaires should pay more tax
Reply #2 - Mar 24th, 2010 at 9:03pm
 
You'd need much greater solidarity and social cohesion for the rich to volunteer for progressive taxation (noblesse oblige, in effect). You can force them to pay more but then they will take their business elsewhere.
Proportional taxations treats everyone as equal but this is the one instance when the poor do not want to be equal. They want the rich to be more equal and pay more.

Oh, and you need much smaller government so the taxes collected go on what everyone sees as essential services and social security. Then the rest can be organised locally or by private charity, creating local cohesion and solidarity.

To have an even more progressive tax would fuel an even larger and more incompetent government while social solidarity and cohesion would continue to diminish visibly - that way lies social breakdown.


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mozzaok
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Re: Millionaires should pay more tax
Reply #3 - Mar 24th, 2010 at 9:07pm
 
I agree with both of you.

Diametrically opposing views may not always be mutually exclusive.

I have long thought we need something to make our whole society fairer, a system that provides incentives to do the right thing, and punishment for doing the wrong thing, and as money is the single constant that everybody in the society shares, incorporating some "equalising" via taxation seems a valid option.

I call it a "Citizenship Quotient" when I think about it, and for brevity's sake will refer to it as "CQ", from now on.

Every time I hear people talking on the telly, or radio, about how people need to be made more accountable, I think of how my CQ idea could make that happen.
The basic principle is that anti-social behaviour earns you demerits off your CQ, and good behaviour earns you credits.

I figure it could kick in from about age fourteen, and teens who misbehave would lose points, and you have to have a certain number of points before you are allowed to drive, or go to pubs, and clubs, which would be a big incentive for teens to behave.

Now for society as a whole, your CQ would then be used to assess how much you pay for government services, and those with high points would get discounts on their rates, and rego and all that sort of stuff, as well as penalty percentage points added to your normal tax rate.

Where this kicks in as relevant to Sennex and Jaemi's posts is that millionaires who just take take take from society, would have a lower CQ than those who are active contributors, and may be generous to charity, or employ special needs, people, or anything that is seen as providing a good outcome to our society as a whole.

With a system like that we would see an active incentive, and deterrent system which could make a difference to how people actually live their lives.

Criminals, when they get out of jail, would need to do volunteer work, and display a positive attitude to society to get their CQ up, and the miilionaire who doesn't give two hoots about a $200 speeding fine may think twice if it meant say .5% extra tax he has to pay, so the deterrents and rewards would be relative, and relevant, across all spectrums in our society.

It is just something I have been thinking about lately, so what do you guys reckon?

Do you think it is a good idea, or do you see pitfalls that would make it unworkable?

I really think it could be a massive positive for our society as a whole, and I think individuals would start to benefit as well when they see the rewards of a cohesive functioning society working together towards the commom goal of making this a better, more peaceful society for all.
Of course it would take a lot of tweaking to find appropriaste CQ's for every situstion, , but that is just mecdhanics, I really think the principle is sound.

Anyone have any similiar, or better ideas ?
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Paella
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Re: Millionaires should pay more tax
Reply #4 - Mar 24th, 2010 at 9:58pm
 
The rich have never been taxed in this country before. Why would you want to start now?

What a preposterous idea! Taxing the rich. Phphpht.
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Soren
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Re: Millionaires should pay more tax
Reply #5 - Mar 24th, 2010 at 10:32pm
 
Mozz, I think it's a great idea. It used to be called civility and virtue, way back when it didn't need accountants.

It used to work because people did care about their reputation and, horrible to realise today, had shared norms. They had such concepts as shame, seemliness (or dignity), respectability(!), obligation and even duty. How quaint they sound?

I don't think a complex sysem of financial penalties and bonuses can achieve civility and virtue. These are social goods that are worth having for themselves, out of one's sense of their value in themselves. A virtuse for the sake of reward or because of fear of penalty is not really virtue at all.

But I agree, it would be good to have a more obviously shared society. But how, if not by CQ?

My blunt and obviously hateful first step would be zero tolerance for petty crimes. This would catch all the ususal suspects who bleat about their victimhood or marginalisation or how they are really not responsible their loutish, destructive lives.

The second step would be devising a system of public naming rights and recognition for rich individuals who contribute beyond their taxes.

And I would devolve hospitals, schools and lawenforcement to the local town halls. People would get involved in their own lives. They would talk to their nighbours about what matters to them and woul kick in the money as they see fit.

In short, virtue starts with the local responsibility, not a centrally administered calculus.




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NorthOfNorth
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Re: Millionaires should pay more tax
Reply #6 - Mar 24th, 2010 at 10:49pm
 
Sounds great, although freakishly paternal if not big brother.

I remember when we were kids and dad was overseas, he tried an idea where we'd get $100 each if we were good with mum while he was away. Everytime we screwed up we'd lose some of the money... $2, $5 etc depending on the severity of the crime.

Of course by the time he got back, we'd all blown the lot... except for my youngest brother, of course... But he always was a blued-eyed kiss-arse.
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mozzaok
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Re: Millionaires should pay more tax
Reply #7 - Mar 24th, 2010 at 11:51pm
 
Another aspect I thought of with the CQ, was all the ill feeling we see towards migrants, now I would envisage a CQ starting from a below even startting point for people when they first apply for their CQ, so they would need to actively participate in local community projects, on a volunteer basis, to get their CQ up.
This I would hope would engender a feeling of positive attitudes towards migrants, by the local communities seeing them getting involved in local projects, (an excellent point made by Soren, because local IS our community when we get down to it), and if they did not, then people could take comfort in knowing that they are contributing to the general revenue for schools and hospitals at a higher rate, so they are still contributing.

At the end of the day, it would be the CQ's relationship to someboby'e general tax rate that would be the greatest incentive.
Now we have the problematic area of those whom we consider as nothing but a burden on society, and for preople who never actually work, or are at least viewed as not contributing now, we could see their CQ used to determine just how much government assistance they can receive, because anyone can sweep a school, or wash windows at an old people's home, or contribute in some way, and if they don't then they will always be at the back of every queue, because something needs to change to try and stop this belief in entitlement that so many seem to have developed, totally falsely, as they are entitled to nothing, they are gifted a livelihood, and people need to start to value and appreciate that.

The fact is that too many live their life with no thought for the consequences of their behaviour, because they expect someone else to carry their share of the load, and it is high time we tried to change that attitude.

And while it very much is Big Brotherish in many ways, as Helian noted, I could really envisage people coming to view it as a positive, especially those who have never really engaged themselves with their local communities, it could see their own self perception, and other's perceptions of them, change for the better.
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NorthOfNorth
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Re: Millionaires should pay more tax
Reply #8 - Mar 25th, 2010 at 12:04am
 
mozzaok wrote on Mar 24th, 2010 at 11:51pm:
Another aspect I thought of with the CQ, was all the ill feeling we see towards migrants, now I would envisage a CQ starting from a below even startting point for people when they first apply for their CQ, so they would need to actively participate in local community projects, on a volunteer basis, to get their CQ up.

Now its starting to get sinister. Could we call these below-zeroes be untermenschen? or in a newspeak subcitizenry?

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mozzaok
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Re: Millionaires should pay more tax
Reply #9 - Mar 25th, 2010 at 12:40am
 
lol, no everyone starts below zero, the 14 year old aussies, who want to start driving asap, well if they are super sucks, they could probably get their license by the time they are sixteen or seventeen, the hooligans would be 72 before they could get one. Grin
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Senexx
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Re: Millionaires should pay more tax
Reply #10 - Mar 26th, 2010 at 8:33am
 
Hlysnan wrote on Mar 24th, 2010 at 8:21pm:
If you want to make tax more equitable, you can start by moving towards a proportional tax, not a progressive tax. What is unclear is why rich people are being penalised for being ambitious and hard working. An ability to pay, whereas others can't? What is the relationship between a person from the lower class and a person from the upper class? Are they friends or relatives? Why is there an obligation for the wealthy people in society to provide for those less fortunate (many of whom brought this misfortune upon themselves with their alcoholism, drug abuse and gambling problems anyway)? Any sort of "charity" would be more equitable if it were only voluntary and not forced by the government.


That's a complete rewrite of the current system and a wholesale change.  The OP was more about working within the current system.  Whether you want a proportional tax aka flat tax or a progressive tax depends on whom you want to have less purchasing power.  The answer is ideological.
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Hlysnan
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Re: Millionaires should pay more tax
Reply #11 - Mar 26th, 2010 at 9:17am
 
Senexx wrote on Mar 26th, 2010 at 8:33am:
That's a complete rewrite of the current system and a wholesale change.  


Not necessarily. The current tax brackets could be shifted towards a particular percentage, or the number of tax brackets could decrease so that it is relatively closer to a proportional tax system but still within a progressive tax system.
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muso
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Re: Millionaires should pay more tax
Reply #12 - Mar 26th, 2010 at 9:28am
 
It sounds so altruistic and you'd probably earn an extra red star for suggesting it, comrade  Grin

If we look at the facts, rich people are already being taxed enough. Our tax system is already geared to penalise the richer section of society. Besides - if you look at the cost benefit, there are not  that many millionaires compared to the rest of society. Let's say 150,000 out of a population of 22 million (or about 0.7% of the population), and they are taxed on earnings, not worth. How much extra are you going to tax them anyway? Even if you make it ten times the current amount they are currently being taxed, it would still amount to an insignificant increase in revenue taken nationwide, and you'd have to weigh that benefit over the fact that they might be majorly pissed off and decide to take off overseas, where they could run their value adding enterprises more effectively, thereby diminishing the overall wealth of Australia and having exactly the opposite overall effect that you wanted.

If you apply socialism with too heavy a hand, the empirical result is poverty.  I've seen it in African countries such as Guinea. Dangerous past liaisons with communism have left a legacy of poverty, instability and the corruption that automatically comes with it. (which is even worse than the residual effects of being a past French colony)
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Soren
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Re: Millionaires should pay more tax
Reply #13 - Mar 26th, 2010 at 9:42am
 
muso wrote on Mar 26th, 2010 at 9:28am:
(which is even worse than the residual effects of being a past French colony)

Lucky buggers - coulda been Belgium...
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hawil
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Re: Millionaires should pay more tax
Reply #14 - Apr 3rd, 2010 at 5:01pm
 
the CQ system would be very difficult to implement and even more difficult to maintain. citizens should have some intrinsic decency value to improve society.as far tax rates are concerned maximum now is less tha 50% it used to be 70% and if it would be applied globally where would all the rich run to.
As some people are paid millions of dollars per annum, we as the society should ask them why do they think they are worth that much to the society. the russian communist leaders were more of capitalists than the western capitalists. how come that some russian ex.kgb agents become billionaires in a decade and now own firms and football clubs all over the world. the mentality of the people would have to change greatly if communism could work.as the communist motto was supposed to be "contribute to society according to your ability and take from society according to you needs"
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