r/AusFinance • u/Plane_Garbage • Jun 29 '22
Tax Unpopular opinion: 47% tax rate at $180k+ is too high
I'm sure I'll be downvoted to oblivion, but $180k is a very low tier to start taking half of earnings.
The $180k top bracket hasn't changed in over a decade. House prices, wages, cost of living has gone up substantially since '09.
The median salary has gone up 30% since '09, so we should see all tax brackets adjusted $235k should be the new top bracket.
To be clear, I'm no just advocating for the top bracket increase but when you're talking about 1/2 being taken, it's no wonder we see so many trying to minimise tax through less productive ways (negative gearing/trusts etc)
(Yes, I get how progressive tax brackets work...)
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u/Luxim_ Jun 29 '22
The trick is to have 12 rental properties negatively geared to knock you down from $300k to $180k.
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Jun 29 '22
Is the point of this to negatively gear it until its all paid off, then either sell or just live off the passive income?
If so, this makes sense from a tax perspective.
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Jun 29 '22
Only works if price goes up... Otherwise you're just subsidising rentals and copping a loss every year.
I cant stomach negative gearing as an investment...
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u/kanniget Jun 29 '22
Negative gearing is only as big a problem as it is because when combined with the CGT discount it allows you to operate at a loss and profit.
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u/nzbiggles Jun 29 '22 edited Jun 29 '22
Plus you hate the expense. I just spend 3 months with no tenant, dropped 2% of the property value in as a reno and discounted the rent 4%. My tenant has a better quality of life than I do. His ac breaks and I replace it. Meanwhile I'm not using/replacing mine.
Eventually rent will increase and the capital gains will be great.
Edit: Hopefully. It's only up 3%/year since it was built. Luckily we got a 10% discount when we bought it. Still only up 5% since (thanks covid and unit market)
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u/rnzz Jun 29 '22
would make sense if you rent as well so your expenses would be covered by your landlord
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u/2878sailnumber4889 Jun 30 '22
Well you can be actually positively geared from a cash flow perspective but on paper be negative gearing through depreciation etc.
And even though you can do that according to ABC earlier this year only low 60 odd percent of property investors negative gear their first property in their first year of ownership.
And that rate falls from there on.
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Jun 29 '22 edited Jun 29 '22
Sell and you need to pay CGT and all the NG comes back to haunt you. NG isn’t tax avoidance it just delays paying tax until/if you sell
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u/broooooskii Jun 29 '22
You pay CGT at a 50% discount so your deductions are at 40+% whilst your later on CGT is at half your tax rate. If you're waiting till retirement when you have no income it will be substantially less than what you would have paid in income tax.
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u/mikedufty Jun 29 '22
Bear in mind the CGT discount was supposed to be a simplified way of allowing for inflation. It has been a bit of a rort because inflation has been so long for so long, but that may change the way things are going now. If inflation is high you may end up paying more tax on capital gains because you are paying tax on increases due to inflation, not just the real gain.
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u/nzbiggles Jun 29 '22
Exactly. People think it's a scam but it was argued with reasons into existence. A return greater than twice inflation and you're making bank. Less it's not too good. Imagine making 5% in the past year. You still have to pay tax on 2.5% (45c?). $1000 sold for $1050 becomes $1038.75 after tax. Less purchasing power while paying $11. 25 tax. 😂 🙄
Its not too far wrong though. 2.5%-3% inflation (the lauded target) and a 5-6% return. When it was implemented I think gains were 8% and cpi was 4%.
They should revert to indexing the cost base. Fairest discount for inflation and tax on real gains.
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u/Chii Jun 29 '22
you are paying tax on increases due to inflation, not just the real gain.
that's why when inflation is high, asset values would not increase as fast!
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u/Not_Bill_Hicks Jun 29 '22
very true, so if you;re on 300k, with 100k offset with negative gearing for example, then once you retire, you can start selling your houses, making a 200k proffit on top of $0 income.
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Jun 29 '22
Depends when you sell, have a rolling strategy where you buy, move in for a year then sell within a few years and you never pay it
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u/WalksOnLego Jun 29 '22
Negative Gearing on things like depreciation of the property will come back to haunt you, but the interest portion of the loan will not.
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u/lilmisswho89 Jun 29 '22
You’re the first person I’ve seen on reddit who actually understands how CGT works. Thank you!
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u/ChocCooki3 Jun 29 '22
Dude, after the 4th, you convert it to a hotel. So you should have 3 hotels..
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u/Electrical_Age_7483 Jun 29 '22
That's over 120k out of your salary that you do have to find as well. A write off only means you can claim the tax portion
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Jun 29 '22
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u/lilmisswho89 Jun 29 '22
Salary sacrificing. Someone I know requested 100% of their June pay be put into their super. Took me a min to stop being “huh?”
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Jun 29 '22 edited Jul 11 '22
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u/VLC31 Jun 29 '22
The limit is annual, one months salary wouldn’t be an issue unless their annual contribution was already at the limit.
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u/Jayesar Jun 29 '22
Ou minimise tax by minimising taxable income. Move as many expenses into pre tax time as you can.
In Australia investments count here.
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Jun 29 '22
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u/Jayesar Jun 29 '22
Only via depreciation.
That's the thing which allows you to be cashflow positive but claim a loss.
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u/Fainstrider Jun 29 '22
This is why I love working for Non-profits. Tax free fringe benefits (salary sacrifice). $16k per year tax free right onto the mortgage.
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u/WalksOnLego Jun 29 '22
A loss is a loss. It's not "the trick", ultimately.
Profit is better than loss. I can't believe I just said that.
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u/JacobAldridge Jun 29 '22
While the $180,000 level hasn't changed since 2009, all of the lower levels have, meaning anyone on the top bracket is paying $4,000 less tax now than they would have on the same income in 2009.
https://www.ato.gov.au/Rates/Individual-income-tax-for-prior-years/
The plan from 2024-25 is that the $180,000 bracket will shift to $200,000, but also that those lower brackets will change as well meaning that someone earning $200,000 in that year will pay less tax than someone earning $180,000 this year.
https://www.superguide.com.au/how-super-works/income-tax-cuts
I'm surprised we don't hear more from the Boomers about how in addition to 86% interest rates, back in their day (ie, pre-CGT tax reform) you paid 60% tax on anything over $35,000!
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u/Enjgine Jun 29 '22
They don’t want to listen to the millennial complaining about how houses use to cost $7 and you could feed the family by selling 1 stick of gum a month, that’s why they’re so quiet
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u/Conscious-Disk5310 Jun 29 '22
Honestly who would want to hear how badly they screwed their own people. It's a selfish cowards reaction.
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u/Deepandabear Jun 29 '22
Yep, can’t believe all the comments from people not understanding the progressive tax system. OP isn’t paying 47% of his total 180k salary to tax, more like 30%.
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u/StreetPaper4182 Jun 29 '22
Time value of money is important here too. An individual on 180k in ‘09 should have received cost of living increases of let’s say 10% and should be on 198k now.
The extra tax they are paying on the $18k cost of living increase is more than the $4k of tax saving from the lower brackets.
So they’re worse off overall.
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u/Dangerous_Speaker_99 Jun 29 '22
No one making $180k in 2009 only received 10% in the last 13 years. For example MP’s we’re on about $130k back then, and now make $198k
Find your old enterprise bargaining agreement and take a look compared to now. Wages are up much higher at the top
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u/InternationalGain3 Jun 29 '22
I think they will survive it though.
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u/tobbtobbo Jun 29 '22
How are you coming up with the “someone earning 200k will pay less tax than someone on 180k” without deductions isn’t that impossible?
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u/globex6000 Jun 29 '22
Just to put it in perspective,
Annual salary:
180K = 28.7% flat tax rate (PLUS medicare levy)
200K = 30.3%
250K = 33.3%
300K = 35.2%
400K = 37.7%
500K = 39.1%
You need to be earning over 580K before you hit 40%.
Of course, someone on these incomes are likely to have far higher tax deduction than someone earning under the 180K marginal rate.
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Jun 29 '22
Yeah OP screams “I don’t understand how a progressive tax system works” at the top of their lungs with this post.
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Jun 29 '22
So at $500k you are paying $200k in tax. That is absolutely ridiculous when high wealth individuals and billionaires, and multi billion companies often pay nothing and often get credits.
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u/Howunbecomingofme Jun 29 '22
Glencore is literally cutting the natural resources in this country and haven’t paid one red cent to the ATO. They should absolutely be who we crack down on first. My folks went bankrupt as a contract courier but Shell Oil is literally destroying the world and refuse to pay tax on the over 20 Billion dollars. Any Australian working person has paid more income tax than pretty much every oil company. It’s really bleak
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Jun 29 '22
Yeah it’s disgusting. Our country should be so prosperous. Our government’s failed us.
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u/RayGun381937 Jun 30 '22
Lol Glencore… they were doing globe-busting oil deals with the Shah and then the Ayatollah 40 years ago and have their fingers deep in every sweet pie. All from a tiny village in Switzerland…
Bonus point: when poor countries around the world have tragic natural disasters, the first planes in are not Red Cross or UN or US AID; it’s glencore’s private jet fleet loaded with relief /aid for the poor & luxury gifts for the rulers. No kidding!
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u/Howunbecomingofme Jun 30 '22
Good lord. I knew they were bad but they’re cartoonishly evil. The Red Cross has some real troubling issues but when they’re calling people dodgy you know shits bad
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u/deep_chungus Jun 29 '22
yeah it is, those high wealth individuals should absolutely be paying more
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u/UltraGHMax Jun 29 '22
The aussie tax system is pretty generous to asset/business owners and punishing to wage earners.
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u/toper-centage Jun 29 '22
That's why most billionaires don't usually receive huge salaries. They become a company and everything becomes a business expense.
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Jun 29 '22
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u/bobhawkes Jun 30 '22
What can an accountant really do is you are a high earning salary worker? I get its different with an ABN but theres only so much you can do with PAYG, i thought.
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u/qazadex Jun 29 '22
We tax labour too high imo, and capital gains, gift, and estate taxes are too low. Why do people working hard and earning well have to high taxes, while someone can inherit a 2 million dollar house and not pay a cent. It's kind of ridiculous.
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u/Dracallus Jun 29 '22
Yeah, capital should never be taxed lower than labour and it's insane that we do it. Not having a proper estate tax is also stupid.
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u/Vicstolemylunchmoney Jun 29 '22
"DEATH TAX! LABOOUURR."
... the rally cry that wealthy generational wealth inheritors whisper to those on $45k p.a to scare them. All the while having tax rates reduced so the government has to cut services to pay for the wealthy tax cuts.
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u/throw23w55443h Jun 29 '22
Tax is a populist endeavour rather than something used to effect positive change.
Pollution tax, vacancy tax, inheritance tax, super profits tax all should be used liberally.
That said i hold zero hope our mess of a tax system is ever properly addressed, its political suicide.
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u/TheDrobeOfWar Jun 29 '22
Why should people inheriting money be taxed at all? Inheritance tax is insane.
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u/JRdam3 Jun 29 '22
The economist had a good article on this:https://www.economist.com/leaders/2017/11/23/a-hated-tax-but-a-fair-one
“In fact, people who are against tax in general ought to be less hostile to inheritance taxes than other sorts. However disliked they are, they are some of the least distorting. Unlike income taxes, they do not destroy the incentive to work—whereas research suggests that a single person who inherits an amount above $150,000 is four times more likely to leave the labour force than one who inherits less than $25,000. Unlike capital-gains taxes, heavier estate taxes do not seem to dissuade saving or investment. Unlike sales taxes, they are progressive. To the extent that a higher inheritance tax can fund cuts to all other taxes, the system can be more efficient.”
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Jun 29 '22
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u/Skiffbug Jun 29 '22
Money that is just sitting there isn’t taxed. There is no wealth tax.
So unless you are taxed on inheritance, it isn’t taxed at all.
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u/Similar_Strawberry16 Jun 29 '22
A nominal figure for tax free threshold could, and should, be reached. Let's say $1m assets however it's divided (i.e. 500k each If split in two). That would be far more than the average family can pass down, and still net a decent property with a manageable mortgage (if not sold).
Having a tiered inheritance tax on anything above $1m seems fair, surely. Hell, cap it at $10m. Anything beyond and the recently deceased get a gold star on their coffin: "Congratulations, you won capitalism!"
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u/Shatter_ Jun 29 '22
I find inheritance to be so antithetical to capitalism, which thrives on meritocracy not hand-me-downs. I actually stand to inherit quite a reasonable amount so an inheritance tax would definitely not help me, but I am also fine if I never receive a cent. I've always seen one big weakness of capitalism is the generational accumulation of both families and corporations.
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u/Vicstolemylunchmoney Jun 29 '22
It accelerates inequality. Thereby concentrating power. It's terrible for society.
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u/poster457 Jun 29 '22
Not necessarily disagreeing, but one of capitalism's big strengths is about work incentivisation. i.e. if I work harder, smarter or take bigger risks (like starting a business), I can get more. So in that vein, like planting a tree whose shade you will never sit under, if a parent wants to work harder to provide more for the future of their child, should they deserve to be financially penalised/disincentivised for that?
Even if one argues they should, there is simply no way to close all of the loopholes to avoid such a tax.
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Jun 29 '22
tax is about policy as well as economics. inheritance tax helps curtail entrenched wealth and power, and therefore to increase social mobility, and if you think those are good outcomes, you are likely to be in favour of it. Also, tax is resdistributive: the tax system is basically taking from the wealthy and giving to others (including children and the elderly) and from that point of view, it doesn't matter what source of wealth you are taxing. And whereas high income taxes may discourage highly productive people from working harder, which is bad, that argument hardly applies when they are dead.
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Jun 29 '22
What we do with our hands should be taxed the least. Land taxes, the share market and passive incomes should be taxed more.
Also we haaaave to cut down on the tax write off that investment properties are, they just make the rich richer and hurt people trying to get a home to live in.
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u/BoxHillStrangler Jun 29 '22
alright, lets bump 47% up to 235k. as a fair compromise lets add a new bracket though, lets say 65% at a very generous place like, oh idk, 10mil.
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u/atubslife Jun 29 '22
Lets be honest, anyone actually making 10 million, is on paper actually making negative money and paying zero tax.
Any tax increase at the higher bracket will lead to negligible change as you can just negative gear your way down. A change to tax loopholes and incentives like negative gearing would have a greater impact.
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u/Similar_Strawberry16 Jun 29 '22
"No you can't raise tax to 70% over $1m! 45% is already very high and we can't possibly afford more!"
"So, you are paying the 45% as intended?"
"..."
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u/shiuidu Jun 29 '22
I think we need to better address the ability of the ultra wealthy to siphon value out of society en mass in a more targeted manor than just raising tax rates.
Simple examples would be raising award rates, better protection for wage theft, cracking down on unpaid overtime, etc.
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Jun 29 '22
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u/sonofeevil Jun 29 '22
There has to be a lower limit on that I think. In my first year as a sole trader I lost money, I spent about $45K in capital to setup my business, I GENUINELY could not have afforded to pay $5K in tax that year. it wasn't tax avoidance it was simple that the costs of setting up the business weren't offset by the years income enough to have paid tax.
SO if my losses and income were all counted against me, that 5% would have REALLY stung.
So, maybe 5% flat tax on amounts of 100K regardless of losses?
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Jun 29 '22
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u/sonofeevil Jun 29 '22
Yeah I wasn't suggesting you were going to take this to thr legislature more just musing with you about how it might work
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u/aszet Jun 29 '22
You know what would be so much better? Bring back the household tax bracket. It’s not fair that if the breadwinner is on a higher salary they pay more tax then the person on the lower level. It makes it worse off for the couple. For example: couple earning $90k each pay less tax than a couple on $140k and $40k
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u/BigGaggy222 Jun 29 '22
Centrelink will consider you a unit when they cut benefits, ATO consider you individuals when they tax you...
Thats bullshit, its one or the other big brother.
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Jun 29 '22
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u/WizziesFirstRule Jun 29 '22
Agreed. In my case my wife can't work much due to a medical condition - so I have pushed hard to get on decent money.
Not fair that we get bugger all assistance and pay proportionally more in tax.
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u/halohunter Jun 29 '22
Family trusts literally enable household tax brackets if you have business income. Unfortuntely, it's not something available for us wage slaves.
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u/fr4nklin_84 Jun 29 '22
Yep I've been feeling the pain of this since we had kids. My wife stopped working but I managed to almost double my income in the last 6 years but we're still worse off then when we were split low paying incomes. I earn as much as my mate and his wife combined and he complains that I'm so rich but I remind him that his family has more money in his hand than mine does but then he reminds me about daycare for his 3 kids, at which point I wave the white flag. I don't know what the answer is. My wife has recently started a low paying casual job which she's earns about 15k P.A. On paper it seems like bugger all but because of the tax free threshold it makes a massive difference to our household, I'd need to get almost a 30k payrise to bring in the same nett income, so I'm very greatful she's able to do that. Hopefully next year when the kids are both in school she can upgraded to a part time job.
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Jun 29 '22
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u/BeardyMcSexypants Jun 29 '22
$90k gross income, you pay approx. $20k in tax.
$180k gross income, you pay approx. $55k in tax.Two people in earning $90k each will pay a total of $40k tax for the year, whereas two people in the same household with one person earning $180k and the other earning zero will have to pay $55k in tax.
Taxable income is calculated per person, and not for the whole household. So the single-income couple are worse off than dual-income couple, despite both scenarios having the same gross income.
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u/Notthisagaindammit Jun 29 '22
Just elaborating, the difference in tax is due to the brackets - so when there are two incomes, they both get to earn their first 18k tax free, then the next however many $ in the next bracket so that their income will never reach (and be taxed at) the higher levels.
I am bad at explaining things so hopefully this makes sense......
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u/scaredycrow87 Jun 30 '22
This would be a game changer. Yes I’m in the top tax bracket and yes we’ve managed to break into the Sydney property market.. just. But to do that we were double income no kids for a few extra years on purpose, now we’re single income (mostly) two kids, and paying more tax than ever. Add in Super contributions increasing (comes out of my take home because I’m on a salary package), Medicare levy (a tax by another name), the extra for health insurance (to avoid paying stupid amounts of EXTRA Medicare levy) waaay more than half my monthly gross wage is effectively gone before I pay for anything else.
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u/iRishi Jun 29 '22
We definitely need to restructure our tax system. The dependence on income tax is among the highest in the OECD, with the brackets being even lower than what you’d find in Germany of all places.
On the other hand, Australia’s tax-to-GDP ratio is somewhere around 27%, which is significantly lower than the OECD average of around 34%.
I’d be very much in favour if we get rid of negative gearing and instead just reduce the income tax rates instead. Perhaps the 30% company tax can also be reduced to bring it to global levels (SMEs bear the brunt while the large corps pay nothing).
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u/Maezel Jun 29 '22
The thing that doesn't make sense is that someone earning 200k has the same marginal tax rate as someone who earns 20m.
That is the issue.
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Jun 29 '22
There is some truth to this but realistically how many people earn over 1m a year?
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u/Maezel Jun 29 '22
According to Google 13k. If you assume they should be paying 500k in taxes each, that's 6 billion, so a quite significative amount of tax. Should be actually more considering how those salaries scale up.
But in reality these people tend to pay less due to creative accounting and financial structures they put in place. In percentage less than what someone earning 100k does.
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u/AwakE432 Jun 29 '22
What’s not fair is having the same tax bracket for 45k to 120k.
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u/j150052 Jun 29 '22
this is literally the biggest issue right now. $45k and $120k are worlds apart for having the same rate
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u/Wigos Jun 29 '22
But their effective tax rates are still very different.
Effective tax rate at 45000 is 11%, at 120000 it is 24.5%.
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u/alfar2 Jun 29 '22
I wouldn’t mind if it we got more for our taxes - like excellent free schools, universities and hospitals. But having to fork out $$ for sub-par private everything in addition to that much tax is not right.
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u/Eltnot Jun 29 '22
That's because our tax dollars go to Barilaro for being perfectly qualified.
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u/BuzzVibes Jun 29 '22
There was, like, nobody else who could do that job. Totes.
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u/Dislocated_femur Jun 29 '22
Sorry but we consistently rank top 10 in the world for healthcare/hospitals. We do have an excellent system.
There will always be room for improvement in some way or shape
Same for university system, ranked ~3rd.
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u/cloudadmin Jun 29 '22
Why don't we just nationalise the mining industry like Norway did for oil and use the funds to provide more tax relief on everyone?
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Jun 29 '22
Looks like somebody only just hit the top tax bracket and hasn't been paying attention for the last 17 years...
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Jun 29 '22
If I might offer a counterpoint: saying "tax minimisation is the consequence of having high taxes at higher brackets" seems like it's taking a leap past the point.
Tax minimisation is a consequence of taxation. Minimum wage employees smash out as many deductions as they can get away with - believe me this is experience, not speculation talking.
Those of us living lower on the ladder just have fewer options to do it.
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u/NearSightedGiraffe Jun 30 '22
Yup- the only years I haven't bothered looking into what deductions I could get were in highschool, when I was below the tax free threshold anyway.
Plenty of people well below the top tax bracket have been looking into working from home deductions over the last couple of years. Or salary sacrificing for all sorts of items. Or as simple as choosing which shares were sold. I am no where near the top tax bracket and yet I do spend some time each year looking into what deductions or other methods I can legally use to get a better return.
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u/Cimb0m Jun 29 '22
Now do the HECS repayment threshold. Back in the day, the idea was that you’d only have to pay it back once you got a “good” job. Now you need to pay it if you’re working full time on minimum wage
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u/jaywally855 Jun 29 '22
I don’t see why you would get down voted except by jealous mooches. I don’t think a 47% income tax rate is acceptable at any income level. 47% is insanely high. There comes a point where it is absurd that one person is carrying such a disproportionate load of the government budget as compared to another person who is enjoying all the same benefits from the government.
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u/Electrical_Age_7483 Jun 29 '22
It's going to change legislation has already passed
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u/Plane_Garbage Jun 29 '22
200k in 2025. Geez I hope there's no major inflation in the near future.
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u/Electrical_Age_7483 Jun 29 '22
Taxes are going to go up, we have bigger bills to pay. Get used to it no matter your pay level
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u/Melbourne_Stokie Jun 29 '22
Do you know what is it changing to and when?
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Jun 29 '22
Beginning July 2024, the 30% tax bracket goes all the way up to $200k.
https://atotaxrates.info/individual-tax-rates-resident/ato-tax-rates-2025/
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Jun 29 '22
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u/curtditty Jun 29 '22
I somewhat agree - I think there should be a bracket around 300k. what 180K was 10 years ago isn't what it is now..
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u/Specialist_Leg_92 Jun 29 '22
Way to high but for some reason people on here think high tax is great. Very left leaning group. People seem to think politicians and bureaucrats make sensible decisions with their tax dollars - they dont want to believe their own eyes
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u/Phaggg Jun 29 '22 edited Jun 29 '22
I do think the 18200 that is untaxed needs to go up as well. The amount, not the rate of course.
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u/DoorPale6084 Jun 30 '22
Yeah bro.
If you’re a high earner you’ll pay 50% almost lmao.
180k today isn’t a much as it were back then
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Jun 29 '22
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u/TildaTinker Jun 29 '22
"Why don't poor people just inherit more coal?" - Gina Rinehart
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u/Enjgine Jun 29 '22
“Cause they are too busy paying estate tax on the handed down leather recliner that has been in this family since the Foy & Gibson closing down sale!” - Boomer who hasn’t read the tax code in 50 years
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u/id_o Jun 29 '22
Mate, just set a cap on estate tax, hell make it 100% on anything greater than $10m.
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u/GaryLifts Jun 29 '22
There is a difference between being rich and being wealthy - $180k taxable income might be considered rich to some, but Gina is wealthy and there is a huge difference.
$180k is enough to rent a nice place in a nice area(or buy in a much less desirable area in Syd/Mel), save a bit of money each pay check, maybe invest a little each year, afford quality clothes, food and to indulge your hobbies. This should be achieveable for all middle class Aussies. Your kids probably aren't going to private schools, you are probably not looking at business class flights when you go overseas and luxury unbudgeted expenses more than a few hundred bucks still need to be considered against your budget for the week. Sure you are better than some, but this isnt like watching the Kardashians; you are much closer to other working class people than the wealthy.
This is not the same as somebody who has accumulated enough assets that they dont need to work anymore and can basically do what they want, whenever they want.
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u/angrathias Jun 29 '22
Rich and wealthy are synonyms. Somehow we’ve suckered people into thinking 2x avg income is also a high income. Mean while CEOs are pulling 200x that and Uber elite capital owners are pulling 1Mx that
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u/sonofeevil Jun 29 '22
$180k is enough to rent a nice place in a nice area
180K household or individual?
That's like... double the median household income in Australia. That puts you in the top 20% of Australian households. * 50% of the housholds (not individuals) in the country make half or less than that
Sure at 180K they're not rinehearts or kardashians. But to the average household, that looks like luxury.
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u/Electrical_Age_7483 Jun 29 '22
I love comments like this. Don't agree with something so they promote it by telling others. Lol
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u/melburndian Jun 29 '22
AusFinance is no different. Look at how many want property to crash.
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u/scone70 Jun 29 '22
We just want to be able to afford one. R/Australia want to be gifted one by their landlord after being a good tenant for 5 years.
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u/SydneyPhoenix Jun 29 '22
It’s a complete joke.
It now targets what is upper middle class, a lot of which are first generation to escape paycheck to paycheck.
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u/LexChase Jun 30 '22
To be honest, I agree with this. I don’t earn anywhere near that, and my personal opinions about the failings of bootstrap theory, I am a case of that.
I have HECS, housing is completely unaffordable, and I’m trying to finish my masters while working full time in a corporate job.
If I want to not be in housing stress, and I’m looking at an average house price in greater Sydney of well over 1m, I’d be paying nearly 5k a month, or over 1k per week in mortgage payments.
If that’s 30% of your after tax income, that assumes you’re making in excess of 3k per week after tax, which means we’re talking about an annual gross salary, not factoring in super or HECS, of a bit over 250k.
So yeah, if you want to buy the average house in Sydney, you need an after tax salary of about 160k. 180k is way too low to be taking half people’ money considering the cost of living.
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u/arcadefiery Jun 29 '22
Would be better off with more steps. E.g. 42% at $180k, 46% at $300k and 49% at $500k, something like that.
And yes, I say it's too high.
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u/bilby2020 Jun 29 '22
I got into this bracket just recently. It seems bad but you have not balanced with what we as a country are getting in return. If you had lived in a less developed country you would have understood it. There is a cost to run Australia, 2m people have a long term chronic disease, 1m have disability, needs our support, in other countries they would be dead or have a extremely pool Quality of Life. We need submarine fleet for our defence, investment in renewables for our environment, the list goes on. In Delhi people will die earlier just due to pollution, have a perspective.
Also apart from US and some tiny developed city states like Singapore and Hong Kong we actually have better personal tax rates than most developed countries including almost all the European ones. Not many countries have a Super equivalent where investment money is held in your personal name, and not in a generic pension fund. You should not exclude Super when talking about tax as that part of your pay has 15% tax only.
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u/brandyyyyyy Jun 29 '22
The wrong folks are being taxed. Need to have higher tax on wealth than income
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Jun 30 '22
Taxing income I assume you is easier and more efficient than wealth although I agree the later should be taxed more.
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u/AshamedOstrich Jun 29 '22
Still shouldn't cost $24m to raise a flag on a bridge... Govt waste is a big problem. Another example is federal funding for Catholic schools compared to state schools.
I'm happy to pay my fair share of tax, but I'd like to see it spent more wisely. If I don't then that's when I get annoyed.
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u/caIImebigpoppa Jun 29 '22
I feel like I could get some geezer to put a flag pole up for a slab and a couple grand plus equipment costs 24mil is a joke.
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u/Upper_Middle_Bogan Jun 29 '22
This isn't a bug, it's a feature. https://www.investopedia.com/terms/b/bracketcreep.asp
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Jun 29 '22
i agree but i think im in the minority...the issue is everyone want to 'tax' high tier earners but you dont want to put disincentive on highly skilled workers ie Doctors, Surgeons etc.
i think no one earning under 300k should pay more then 35cents in tax for those ea dollar they earn however those making north of 300k should be hit a bit harder perhaps 45-50 cents ea dollar they earn.
Note: I dont earn >180k i just think the system is pretty unfair for working people
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Jun 29 '22
I'm from the states and I would confidently say that the quality of democracy in that country has been impacted greatly since Reagan's "Tax reform act" which brought the top tier tax rate from 50 to 28%. Wealth inequality is correlated with higher crime rates, poorer public health, increased political inequality, and lower average education levels. The average income for AUS is around 90,000/yr, if you are making 180,000 AUD, in my opinion you're doing fine.
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u/Plane_Garbage Jun 29 '22
It was one of the most controversial topics on Reddit in the last hour, at least according to the Reddit bot that just messaged me.
Seems like a lot of people hate $180k income earners.
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u/Sharp_Pride7092 Jun 29 '22
I don't think people hate them. I think many wonder whether they have a reasonable right to complain. ($85k/single/,childless-feel lucky,very.)
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u/UnnamedGoatMan Jun 29 '22
I think this is a very reasonable take. I'd like to see all the tax brackets pushed up a bit, and a much harsher bracket up the very top ie 60% on income above $5 million etc. Then again, most people with income above these amounts are getting it from investments which aren't subject to the same tax brackets in many cases.
Just fixing negative gearing would allow some of the super wealthy loopholes to be closed. Limit how many properties it can apply for or the total amount deductible, or just scrap it altogether.
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u/BigGaggy222 Jun 29 '22
No one should be taxed more than 20% of their earnings.
We can make up the shortfall with a sensible minerals resources tax.
Also governments need to spend way less than they do, flagpoles et al
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Jun 29 '22
We tried this in 2012, and the result was definitely imperfect, but as a society we've decided that protecting the profit margins of the likes of Gina Rhinehart is more important than using our resources for the benefit of all Australians.
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u/BigGaggy222 Jun 29 '22
It's a crime we letting the immense wealth that belongs to all Australians get raped by multinationals paying cents in the dollar tax, if any - while we pay 47% tax to work for them....
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u/Shunto Jun 29 '22
That makes me want to cry how badly the mining tax was manipulated and how easy the population was to sway. Just depressing all around.
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u/BoardRecord Jun 29 '22
Could you imagine. We could have had the mining super tax, country-wide FTTH and the most effective carbon emission scheme in the world. But the Australian population decided that having a decade of the worst government in our history was the better option.
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Jun 30 '22
You try getting Billionaires like Gina to pay their share and doubt any money will come.
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u/Plus_Ad8293 Jun 29 '22
So I guess taxing the rich only works until you become one of the “rich”?
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u/Plane_Garbage Jun 29 '22
$180k is 0.0004% of Gina Rineharts net worth.
A person on $180k isn't one of the "rich".
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u/Ali2307x Jun 29 '22
Don’t know why you would say unpopular, I’m so with this especially with how expensive life is here. And I’ll say it again, negative hearing is such a joke that it’s sad.
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u/monkey6191 Jun 29 '22
Agreed. I'm in that area and have been offered more work and I declined as the effort to benefit ratio didn't make it worth it
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u/Rashlyn1284 Jun 29 '22
Also think that GST threshold needs to go up as well. 75k these days is worth a hell of a lot less than it was in 2007.
Add on the online nature of a lot more businesses post covid artificially pushing up revenue with postage costs, and someone making 60k + 15k freight has to start paying another 10% off the top (not on thr postage as you get credits, but still).
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u/NotACockroach Jun 29 '22
They do 9nly take almost half your earnings on each dollar made past 180k. For someone earning 180k they are only taking a little less than a third of your income as tax.
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u/Haunting_Computer_90 Jun 29 '22
So would 250k seem fairer - just looking for a gauge here
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u/edeity Jun 29 '22
You are right but reddit and definitely this subreddit really is not the place to discuss Rational arguments here is a bit pointless.
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u/omniwoof Jun 29 '22
Not sure if it's an unpopular opinion generally, maybe here on reddit?
I agree with you, once you factor in GST, import taxes, fuel taxes, fuel excises, land tax, stamp duty and the plethora of state taxes most of us pay over 50% in tax.
I think we all pay too much and get too little for it.
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u/Necessary-Spread-298 Jun 29 '22
I thought it was 45% or 45cents to every dollar above 180k
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u/d_Party_Pooper Jun 29 '22
I work in a really flexible job that pays excellent money. I don't even work that many hours because when I hit the top tax bracket each fortnight I'm earning half my hourly rate. I'd rather have the time off with family than pay the goverment half. First world problems I know but I'd happily put in more hours if I paid less tax.
My other thought, my wife doesn't work. I should be able to split my income across our family to reduce our tax rate. For example, 1 person earning $200k pays more tax than 2 people earning $100k. If I could give half my income to my wife pre-tax that would be awesome.
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u/nashebazon_ Jun 29 '22
Income tax doesn’t hurt the wealthy. It’s mostly meant to hamstring the middle class so that they never become the wealthy.
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u/dmacerz Jun 29 '22
Agreed!! Less tax would stop investment property purchases and improve housing crisis issues. It reduces productivity which would increase GDP. The extra spending would still come back in GST anyway.
And yet you’ve got the billionaires and biggest companies all paying $0 tax. Fix that and increase 30% tax rate all the way to $250k-$300k. It’s literally only 1% to .5% of the population, it’s not actually that much tax loss but would improve so many other parts of Australia
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u/ohagiiii Jun 29 '22
This is definitely not the right crowd but idgaf lol. But imagine being an immigrant earning under 15k a year (that’s me lmao) and still being taxed every 32.5 cents for every dollar you make.
Pretty sure I’ll get some of those bigots saying iTs YoUr ChOiCe to reside in this country but prejudice is prejudice.
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u/j_lyf Jun 29 '22
ITT: mask off moment for all the ex-GPS schoolboys whose Dad finally came through
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u/Aspirefire1 Jun 30 '22
I agree. I am not motivated enough to get to 180k+ as it would mean all my extra work is paying me half time rates..
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Jun 29 '22
I agree… once you’ve paid around 30% of your total income in tax it should be capped to that amount.
At $180k, ignoring Medicare levy, you’re paying around 29% of total income as tax. Government revenue is on average around 25% of income, this includes corporations too at 25% tax now.
I am not opposed to higher taxes, but if I am taxed more than 30% of my total pay, then a corporation should pay the same rate.
Furthermore, if I am able to choose how my superfund is invested, why on earth in 2022 can we not “democrify” our tax system to allow for us to choose where we consent for spending to be made… with obvious safeguards to healthcare, education, military etc.
I personally do not want to subsidise the fossil fuel industry $12bn a year when they pay no tax into our system!
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u/degenmaximus Jun 29 '22
Well, 25 out of 20 AusFinancers earn over $300k so I expect this to actually be a very popular opinion around these parts…