Time to overhaul the tax system?

[KambahOne]

Millionaires who paid no tax and the richest and poorest postcodes revealed - ABC News

Sixty-six millionaires paid no tax in 2018-19, Australia's highest earners continue to live in Sydney's harbourside suburbs, and the country's lowest incomes have been recorded in drought-ravaged central NSW.

The Australian Taxation Office's (ATO) latest taxation statistics are based on the tax returns of 14.7 million Australians for 2018-19.

Analysis of the data by the Australia Institute reveals there were 66 Australians who earned more than $1 million in that financial year who did not pay a cent of income tax, compared to 73 the year before.

There were a further 156 people who reported an income between $500,000 and a million but paid no tax.

"The Australian tax system is as complex as it is unfair," said the Australia Institute's chief economist Richard Denniss.

"While many middle income earners face marginal tax rates of nearly 100 per cent due to the combined impact of their income tax, [and losing] family tax benefits and child care benefits, there are people in Australia making more than $1 million who don't pay a cent in tax.

"There are always calls to simplify the tax system but few people realise that the complexity isn't an accident, its the cloak behind which an enormous amount of tax is avoided."

And therein lies the problem, the complexity of the tax system enables avoidance and when you have business lobby groups like the Tax Dodgers Council of Australia (BCA) continually lobbying for more and more complex concessions it's only going to get worse.

If we cannot rely on our tax system to make the rich pay their share, how do we do it?

 

[Alan79]

Millionaires who paid no tax and the richest and poorest postcodes revealed - ABC News

Sixty-six millionaires paid no tax in 2018-19, Australia's highest earners continue to live in Sydney's harbourside suburbs, and the country's lowest incomes have been recorded in drought-ravaged central NSW.

The Australian Taxation Office's (ATO) latest taxation statistics are based on the tax returns of 14.7 million Australians for 2018-19.

Analysis of the data by the Australia Institute reveals there were 66 Australians who earned more than $1 million in that financial year who did not pay a cent of income tax, compared to 73 the year before.

There were a further 156 people who reported an income between $500,000 and a million but paid no tax.

"The Australian tax system is as complex as it is unfair," said the Australia Institute's chief economist Richard Denniss.

"While many middle income earners face marginal tax rates of nearly 100 per cent due to the combined impact of their income tax, [and losing] family tax benefits and child care benefits, there are people in Australia making more than $1 million who don't pay a cent in tax.




And therein lies the problem, the complexity of the tax system enables avoidance and when you have business lobby groups like the Tax Dodgers Council of Australia (BCA) continually lobbying for more and more complex concessions it's only going to get worse.

If we cannot rely on our tax system to make the rich pay their share, how do we do it?

In the end when systems that are designed to make the rich richer hit the point where it pisses off enough people at the other end of the scale, lynch mobs with burning torches and pitchforks tends to set things straight pretty well. But I don't know if they'll happen here in Australia where middle income earners like to blame all their woes on the people below them such as Dole bludgers, Aboriginals and Immigrants like the media tells them to.

I know my sisters boyfriend for instance earns a decent living through running a fencing business. He seems to think that if it wasn't for "dole bludgers living it up" (in his words) that he'd be tax free and far better off, that he'd somehow be able to afford a house (because obviously it's the dole bludgers hogging the housing market and raising prices not millionaires).

Like good little sheep, Australians refuse to demand that our government make the wealthy pay their share because people these days are aspirationals and think that somehow they'll manage to pull themselves off the bottom few rungs of the wealth ladder even though income rates aren't growing as quickly as living costs and employees are seeing rising rates of casualization of jobs and under employment. And on top of all that the fact that superanuation companies have become a for profit business these days, there are even people who lost most of their super investments because ***** got in the drivers seat of those companies and operated them without a fleck of responsibility or wisdom.

In short I have very little hope that we'll ever see a taxation system where the masses don't hold up those at the top of the pyramid. We're well established in a greed cycle as humans and those with the power to change things are easily convinced not to because those with the money can easily buy them off.

 

[Hacky McAxe]

I'm always a bit cautious with this sort of thing. The main reason a millionaire doesn't pay tax is because they invest that money in business. That business ends up paying for the wages of employees that do pay tax. There are still loopholes that they use (like stocks and dump investments), but much of it is reporting without knowing the full extent.

It's like the fossil fuel subsidy thing. There were many reports last year about how fossil fuels receive billions in subsidies, but that was a bit of a false report as most of that was tax breaks, not subsidies. In the end it's effectively the same thing but semantics and all.

But the main thing is that most of the tax breaks were things like vehicle tax breaks. For example, Adani mine received vehicle tax breaks for their trucks and work vehicles. The tax that was removed is the tax everyone gets for driving vehicles on government roads. These vehicles are never driven on government roads so it makes sense. Farmers get the exact same tax breaks.

That said, there's many other issues with the fossil fuel industry. The main one being that foreign countries are allowed to mine Australian resources with very little compensation for the Australian people apart from export taxes and employment.

 

[Caveman]

Quite often reduced tax bills come down to shrewd investments.

Investment in things that look like a loss due to negative cash flow, which overtime become positive cash flow.

Just because someone pays very little or no (income tax) does not mean they will not pay any tax at all, and certainly does not mean they will never pay income tax in the future.

 

[Hacky McAxe]

Interesting and semi-related story. A bloke I used to work with was telling me about a time when he worked for a bank. They had INXS come into the bank with plans to invest in pointless ventures as a tax write off. They decided to invest in an Aussie film that they believed would have no hope and would probably break even at best. That film was Crocodile Dundee.

 

[Natboy]

I agree the system needs a bit fairer but I also don’t want to punish people that work hard and invest in the economy either. It doesn’t even out as such but low and middle income earners also get a stack of hand outs the high income earners aren’t eligible for, particularly with children.

I don’t form my opinion on this issue due to the media and therefore don’t agree with Alan but I am sick of working so hard when others choose not to and then still complaint their unemployment payments are too low. Obviously people with genuine disabilities etc aren’t included

 

[Caveman]

We are very blessed to live in this country, and a lot of that has to do with the tax structure that is in place.

 

[Alan79]

I agree the system needs a bit fairer but I also don’t want to punish people that work hard and invest in the economy either. It doesn’t even out as such but low and middle income earners also get a stack of hand outs the high income earners aren’t eligible for, particularly with children.

I don’t form my opinion on this issue due to the media and therefore don’t agree with Alan but I am sick of working so hard when others choose not to and then still complaint their unemployment payments are too low. Obviously people with genuine disabilities etc aren’t included

I've pretty much worked my whole life since dropping Uni to focus on full time work (something I regret a bit nowadays). So while I'm not exactly in love with people that never try to work for a living, not every unemployed person has made a choice to be unemployed, there is genuinely a lack of jobs in Australia. A lot of people fail to make that distinction and assume that the majority of people relying on government payments are doing so because it's an easy life. It's even hit a point now where low income earners struggle even though they work.

I also look at places in the world where there is no support for people that can't find work and would much rather live where people don't have to resort to theft or other questionable means to survive.

 

[Nasheed]

Nasheed,
shouldnt tax businessman, they bring in investment and jobs
thats how ireland and estonia became hip hop rich despite small populations

 

[KambahOne]

I'm always a bit cautious with this sort of thing. The main reason a millionaire doesn't pay tax is because they invest that money in business. That business ends up paying for the wages of employees that do pay tax. There are still loopholes that they use (like stocks and dump investments), but much of it is reporting without knowing the full extent.

It's like the fossil fuel subsidy thing. There were many reports last year about how fossil fuels receive billions in subsidies, but that was a bit of a false report as most of that was tax breaks, not subsidies. In the end it's effectively the same thing but semantics and all.

But the main thing is that most of the tax breaks were things like vehicle tax breaks. For example, Adani mine received vehicle tax breaks for their trucks and work vehicles. The tax that was removed is the tax everyone gets for driving vehicles on government roads. These vehicles are never driven on government roads so it makes sense. Farmers get the exact same tax breaks.

That said, there's many other issues with the fossil fuel industry. The main one being that foreign countries are allowed to mine Australian resources with very little compensation for the Australian people apart from export taxes and employment.

That is a massive rort. I read a few years ago where Glencore were making something like 8bill profit, but to offset that profit, they borrowed money from themselves (another subsidiary) at a higher interest rate than they normally would and then claimed the difference as a tax right off against their profits. I think they ended up claiming 30 million back and kept all the profits. Those kinds of rorts need to be killed off for all businesses.

 

[KambahOne]

Quite often reduced tax bills come down to shrewd investments.

Investment in things that look like a loss due to negative cash flow, which overtime become positive cash flow.

Just because someone pays very little or no (income tax) does not mean they will not pay any tax at all, and certainly does not mean they will never pay income tax in the future.

Investments back into your company that create better products and more jobs is not the problem, it's the loopholes and the complexity around those that need refining and closing.

 

[Natboy]

I've pretty much worked my whole life since dropping Uni to focus on full time work (something I regret a bit nowadays). So while I'm not exactly in love with people that never try to work for a living, not every unemployed person has made a choice to be unemployed, there is genuinely a lack of jobs in Australia. A lot of people fail to make that distinction and assume that the majority of people relying on government payments are doing so because it's an easy life. It's even hit a point now where low income earners struggle even though they work.

I also look at places in the world where there is no support for people that can't find work and would much rather live where people don't have to resort to theft or other questionable means to survive.

I understand mate. At least if you go back to uni you don’t far to travel

I’ve been a student, employee and employer. I know some people have their difficulties finding jobs due to lack of education, experience (but how do you get experience?!?) & can just be a bit slow or not present well etc.

I also think there is those who will tell you they can’t find work but may have just finished a science degree and won’t settle for a job that isn’t in the CSIRO for example. I think some people need to suck it up and settle for A job because they can’t find their desired job yet, particularly as we recover from co

We’ll never know but I’d love to know the actual statistics of genuine job seekers and those who just do what they need to do to get the boxes ticked for their dole. It’s frustrating how many people turn up to job interviews with zero intention of ever working and that’s if they bother turning up

 

[KambahOne]

We are very blessed to live in this country, and a lot of that has to do with the tax structure that is in place.

That is true, our tax system pays for Medicare, the PBS, Supperannuation, NDIS etc and they are all beneficial to our society. But I believe the system can be even better if we close some very big loopholes that allow for tax avoidance.

 

[wendog33]

Controversial but....

Imagine the profits Australia would have benefited from if the Govt in 1972-75 had been successful in finding the funding for buying back the farm of our natural resources. We, Australia and it's people, would own those mining ventures, or at least have majority ownership.

Norway eat your heart out.

 

[Natboy]

That is true, our tax system pays for Medicare, the PBS, Supperannuation, NDIS etc and they are all beneficial to our society. But I believe the system can be even better if we close some very big loopholes that allow for tax avoidance.

We need to do it in a way where we avoid companies basing themselves overseas and we don’t lose jobs and economic benefits here

 

[KambahOne]

We need to do it in a way where we avoid companies basing themselves overseas and we don’t lose jobs and economic benefits here

100%. We don't want to end up like the US.

 

[EzyB]

tax is one thing and tax return is another, people rather buy things and claim it on tax instead of paying tax like cars, houses, property and so on it’s a loophole that all the rich use.

 

[Caveman]

Investments back into your company that create better products and more jobs is not the problem, it's the loopholes and the complexity around those that need refining and closing.

I think the article is talking more about personal income tax not business tax.

We had 66 millionaires last year who reinvested more of their personal income then they profited.

I'm not so worried about that because eventually they will have to pay tax on their profits.

My bigger immediate concern is cash, I have friends who own takeaway shops that pocket thousands per week off the books.

Any business that does not hand out a tax invoice after serving you is probably pocketing the cash and duping our tax system big time.

 

[wendog33]

THAT'S A BIT RICH
Finally, because it’s a big club and none of us are in it, analysis of secret Internal Revenue Service data by ProPublica has revealed the 25 richest Americans, including Jeff Bezos, Michael Bloomberg, and Elon Musk, paid either very little or exactly nothing in federal income taxes between 2014 and 2018.

As Guardian Australia’s Greg Jericho explained yesterday, it’s not too different here in Australia; 55 Australian millionaires earned more than $1 million in the 2018-19 financial year but paid no net tax, primarily due to big donations and hiring accountants and tax lawyers.

 

[Caveman]

THAT'S A BIT RICH
Finally, because it’s a big club and none of us are in it, analysis of secret Internal Revenue Service data by ProPublica has revealed the 25 richest Americans, including Jeff Bezos, Michael Bloomberg, and Elon Musk, paid either very little or exactly nothing in federal income taxes between 2014 and 2018.

As Guardian Australia’s Greg Jericho explained yesterday, it’s not too different here in Australia; 55 Australian millionaires earned more than $1 million in the 2018-19 financial year but paid no net tax, primarily due to big donations and hiring accountants and tax lawyers.

Donations to non profits can be a concern.

Again I've got a very wealthy mate who set up a non profit to do his part to help out the community with food vans and such.

Whilst he is not the sort to exploit such a thing, it could be very easily exploited for tax exemption.