Tax reform (1 Viewer)

[loquasagacious]

The Henry review of the tax system is meant to hand down it's recommendations at the end of the year. The review is interesting for a couple of reasons:

- The last comprehensive review was in 1985, so it is long overdue
- The scope of the review has been restricted to exclude GST and several other areas
- The results will likely be handed down just in time to be debated in the next election

If you were running the review (and weren't restricted by politics around GST/etc), what would you recommend?

- Progressive, regressive or flat tax?
- Welfare changes?
- GST - up, down, abolished?
- Negative Gearing?
- Tax on super?
- Inheritance tax?
- Company tax changes?
- Deductions?

What would an NCAP tax review look like?

http://www.smh.com.au/opinion/home-sweet-home-a-sacred-tax-shelter-20090818-ep0k.html?page=-1

 

[Garygaz]

More benefits for super, lower welfare (also make it A LOT harder to get), GST same, change to a flat tax rate, inheritance tax would make me F*&^ING spew with anger.

This is all.

 

[Planck]

Move to flat or purely consumption based taxation system. Crunch welfare down, serious reductions on cap gains.

 

[SashatheMan]

leave the tax progressive. Maybe even have higher brackets of tax for example people making over a million pay a higher tax.

 

[Garygaz]

leave the tax progressive. Maybe even have higher brackets of tax for example people making over a million pay a higher tax.

Nice way to support to brain drain, bro.

 

[loquasagacious]

Well I'm a bit more adventurous:

Tax:
- Flat 30% income, capital gains and fringe benefits tax inline with company tax rates
- $30,000 tax free threshold
- No tax deductions/offsets/etc (including no cgt discounts)
- Yearly tax-pack is completed automatically by ATO in a sort of account reconciliation which spits out refunds/bills as appropriate
- Remove GST exemptions
- Increase GST by 1% per year for 5 years to 15%

Welfare:
- No minimum wage
- Negative Income Tax replaces welfare to give a minimum income of $12,500
- No concept of single versus couple or at-home versus independent rates
- Reciepients of NIT are required to complete Mutual Obligation by looking for work and participating in Job Services Australia (Job Network)
- Scrap Centrelink because it is no longer required

Retirement:
- Phase out old age pension as the supered generation retires
- 15% tax on superannuation contributions up to $100k per year

Health:
- No medicare levy
- Medicare levy surcharge over $50,000

Education:
- Maintain HECS
- 'Youth allowance' type payment to be accessible through HECS (e.g. pay it back)
- NIT for students of parents earning less than $100k

 

[spyro14]

Well I'm a bit more adventurous:

Tax:
- Flat 30% income, capital gains and fringe benefits tax inline with company tax rates
- $30,000 tax free threshold
- No tax deductions/offsets/etc (including no cgt discounts)
- Yearly tax-pack is completed automatically by ATO in a sort of account reconciliation which spits out refunds/bills as appropriate
- Remove GST exemptions
- Increase GST by 1% per year for 5 years to 15%

Welfare:
- No minimum wage
- Negative Income Tax replaces welfare to give a minimum income of $12,500
- No concept of single versus couple or at-home versus independent rates
- Reciepients of NIT are required to complete Mutual Obligation by looking for work and participating in Job Services Australia (Job Network)
- Scrap Centrelink because it is no longer required

Retirement:
- Phase out old age pension as the supered generation retires
- 15% tax on superannuation contributions up to $100k per year

Health:
- No medicare levy
- Medicare levy surcharge over $50,000

Education:
- Maintain HECS
- 'Youth allowance' type payment to be accessible through HECS (e.g. pay it back)
- NIT for students of parents earning less than $100k

I would be slowly removing both business and capital gains tax, in my opinion it has an adverse effect on our productive capacity in the future and does nothing more than hinder Investment and Business growth in a time where the government has decided to make a rediculously large Budget deficit(which will end up being smaller anyway through unintentional economic outcomes) conflicted with a monetary policy which i'm told will soon be leading to an increasing cash rate and an epically lower m3. So why can't the government allow growth to occur where it is most efficient rather than tampering and constricting the powerful forces which could fuel our economy's growth quite well. They should remain focused on preventing market failure through externalities and less focused on making investment and/or growth unappealing.

 

[spartan31234]

the idea for higher taxes for people with higher incomes is simple... well this is how i reason it from a capitalistic perspective

People who are wealthy simply use more government infustructure for example if you have a business, while you operate you are using public roads and infustructure, communication ect.

The larger your company the more government resources you use, to see this imagine what would happen if all government infustructure and systems disappear, would your company survive? Larger companies make more transactions move things around more almost everything that they produce and buy would have to use some form off government infustructure.

Another analogy, if you are building large house all your material needs to be transported, the workers need to come to the construction sight on governments on roads and if they did not exist or were poor the cost of labor would increase dramatically, thus it is clear a larger house would require more use of public resource.

Therefore tax brackets make sense, but they should be balance and should not rip people off but rather encourage sustainable growth.

But i yea i am no expert i must admit my logic is kind of hand waving, however it illustrates my logic.

 

[loquasagacious]

Spartan your logic does not pass muster. Let us assume that there is a small business (or individual) who earns $100,000 and a larger business (or individual) who earns $1,000,000. Let us call them A and B respectively. Under a flat tax they both pay 30%. I must emphasise percent.

A pays $30,000 in tax.
B pays $300,000 in tax

This certainly seems to pass your test of the richer businesses/individuals paying more tax.

------------------

As for your idea of the richer businesses/individuals using more government services and thus needing to pay more there is a fundamental problem with this. They don't use more. Or at the very least there is no real way of knowing if they do.

Maybe a rich person choses not to use the public health system, is educated overseas and travels the roads less than the average person. Maybe a rich business is internet-based so isn't using infrastructure to function.

The only way to fairly attribute the cost based on usage is to charge for usage. Welcome to user-pays systems. Australia Post is an excellent example, toll-roads are another.

Personally I think that user-pays is an excellent model for services.

 

[SashatheMan]

I would be slowly removing both business and capital gains tax, in my opinion it has an adverse effect on our productive capacity in the future and does nothing more than hinder Investment and Business growth in a time where the government has decided to make a rediculously large Budget deficit(which will end up being smaller anyway through unintentional economic outcomes) conflicted with a monetary policy which i'm told will soon be leading to an increasing cash rate and an epically lower m3. So why can't the government allow growth to occur where it is most efficient rather than tampering and constricting the powerful forces which could fuel our economy's growth quite well. They should remain focused on preventing market failure through externalities and less focused on making investment and/or growth unappealing.

Yuo want to remove taxes to help reduce the deficit. What makes you think that the lost revenue from the removal of such taxes will be offset with the business growth?

 

[quik.]

Hopefully related question:

Have heard that the GST came in under the promise of abolishing other sales taxes etc and instead was just added to the pile.

Is this true?

As far as tax rates are concerned I consider 30% to be quite high, if I earn $150000 a year and don't see roughly 50k of that, what's the point :x

This is pretty much a wholly uneducated comment on the topic though, feel free to educate.

 

[spyro14]

Yuo want to remove taxes to help reduce the deficit. What makes you think that the lost revenue from the removal of such taxes will be offset with the business growth?

Between both increased investment and business growth I am confident that it would offset the lost revenue just not in the short term, even if it didn't, they shouldn't haven spent so much anyway.

 

[Freedom_]

Those who believe in freedom should be demanding 1 thing and 1 thing only; abolish all tax. There is no other solution.

 

[zombie omie jay]

Hopefully related question:

Have heard that the GST came in under the promise of abolishing other sales taxes etc and instead was just added to the pile.

Is this true?

As far as tax rates are concerned I consider 30% to be quite high, if I earn $150000 a year and don't see roughly 50k of that, what's the point :x

This is pretty much a wholly uneducated comment on the topic though, feel free to educate.

dude with the current system if ou earn $150k you not going to see like $60k of it. (something around that region i assume?)

 

[quik.]

Current system takes around ~50k as well iirc

Point still stands, whether its 60 or 50k

 

[zombie omie jay]

well actually the 30% system with a $30k tax free threshold would only tax that $150k ~$36k

 

[zombie omie jay]

30% flat with $30k threshold is great imo

on $50k you only pay $6k tax
$100k is only $21k
$200k is still only $51k

 

[quik.]

Ah yeah I didn't factor in the threshold part

 

[SashatheMan]

Those who believe in freedom should be demanding 1 thing and 1 thing only; abolish all tax. There is no other solution.

Is this guy serious?

 

[SashatheMan]

Nice way to support to brain drain, bro.

The way i see it, and from what i read, the income disparity between the people at the poverty threshhold and the 1% super rich keeps increasing.
Things like CEO salaries keep increasing way beyond what the other employees get. For example it use to Be that their salaries were 30 X greater then an average worker, now in places like the US you have salary packages that are like 300 times greater then the average worker gets.

Higher brackets with higher percentages of tax should mitigate that increasing disparity.