Abbott's 35% Flat Tax

[softmonkey]

So Abbott's talking about a Flat Tax. In reality, it's a $25k tax-free threshold, a 35% tax up to $180k, and 45% above.

This chart might help to visualise it. You can hover the mouse over it to see the numbers.

The worst-hit will be those on $80k, paying $1700 more in tax. The most benefit will go to those on $25k, who will pay $2,850 less - in fact $0 tax.

To be honest, I think this would rejuvenate the part-time job market, and provide more incentive for people to get off the welfare system and into productive work.

Sure, it's a rotten deal for the Aussie middle class, and the newspapers are gonna love that headline. But I think it's offset in most households by the mums (or dads) finding it much easier and more financially rewarding to go back to part-time work, and students earning a bit more of their own crust. Let's not forget as well the last decade of savings we got from all those Costello tax cuts.

Who knows, as more people get off welfare, the tax rate might even come down... (yeah, I'm dreaming a bit!)

So what do you think, middle class? Is an extra $1,700 in tax going to be the end of the world for you?

 

[buzzlightyear]

This was a recommendation of the Henry Review

Progressivity in the tax and transfer system should be delivered
through the personal income tax rates scale and transfer payments. A high tax-free threshold with a constant marginal rate for most people should be introduced to provide greater transparency and simplicity.

The issue I have with politicians wanting to expouse their reform credentials is don't pick one of a many out of the Henry Review. I doubt the intent of the review was to cherry pick recommendations in order to move us to a better tax system.

Given the diminishing credibility the Coalition has in economic policy in comparison to their opponents, this is a relatively lame attempt to stamp some authority in this space.

Maybe a greater focus on the all of the recommendations of the henry Review is in order. Although the ALP have effectively mothballed adoption of almost all of the recommendations.

As for this recommendation, if we looked at a broad adoption of many of what Henry has proposed, then the flattening of the tax scales makes sense.

Do we have a sufficiently mature and learned enough political and community leaders to have the public debate?..............(ok, don't answer)

 

[csc2]

Abbott is all show no go..He sure as hell wouldn't be proposing his agenda if he was in govt I am quite sure..

I dont rate him, his religious beliefs or his contempt for women....and thats just to start with...

People are quick to forget he was instrumental to get Pauline Hanson behind bars..I don't rate her personally but I rate him way lower...

Hes a wolf in sheeps clothing in my opinion.

I'm a swinging voter but Im happy to give the current PM and her Govt three years and see what she can do...

Having a mixture in Govt is already proving to be very interesting and generally productive which has surprised me greatly...

The Greens I dont like what the Greens stand for however...

I am 100% happy Abbott did not win the election.....

 

[bene313]

Abbott has been talking about this for a while. Simplicity is the pitch.

Now, how about the Socialist Alliance party's proposed budget with a 90% top marginal tax rate? haha.

 

[csc2]

ive said it before on here...the first party to tell australia that all overtime will be tax free this country will be way better off productively in my opinion...

overtime kills paypackets...

the country is way strong enough to handle this rather than the ridiculous baby bonus garbage or time off paid leave while pregnant..............that to me puts a lot of pressure on everything..

i dislike that idea but tax free overtime would be a real vote winner hands down..

 

[BV]

ive said it before on here...the first party to tell australia that all overtime will be tax free this country will be way better off productively in my opinion.....

Hmmm perhaps people's productivity will stop and will pick up after 5pm

 

[WinstonWolfe]

IMO, there should be less tax on allocation of capital to the means of production, and more on discretionary consumption.

Therefore, I'd rather see lower income tax across the board, and higher GST.

Income earners could then choose the level of tax they pay by how they allocate capital.

 

[softmonkey]

ive said it before on here...the first party to tell australia that all overtime will be tax free this country will be way better off productively in my opinion...

I'm all for thinking outside the square but I can't see that working. Everyone will suddenly be on a $25k wage, paying bugger all in tax and pulling $50k+ in overtime.

 

[FormerLurker]

I'm all for it - at least until I can become dictatorial overlord of Oz

 

[csc2]

Hmmm perhaps people's productivity will stop and will pick up after 5pm

i disagree, workers who do that will soon find themselves on the dole queue....decent workers will benefit greatly....

Two edged sword i agree but many workers these days are lazy bunch anyway, want days off when their pet cat dies etc...

The real workers will shine through I guarantee....I actually tried it 16 years years ago for three months at work...went very well...Shame I sold that business....it will work for many manufacturing businesses, even the housing industry....

People do get tired so we limited to a max of 90 miniutes per day when applicable..makes a huge difference over a week..

 

[Indifference]

Who knows, as more people get off welfare, the tax rate might even come down... (yeah, I'm dreaming a bit!)

Indeed you are... This is one of the biggest drains on our taxation $'s...apathetic people who believe the country owes them something. Please!

So what do you think, middle class? Is an extra $1,700 in tax going to be the end of the world for you?

Not if they raise the tax free threshold to $30k

Actually, I would like to see the mid to long term projections of the distribution of income taxation per person, to see where they are really going with this. So what do they think the income demographic charts will look like in 5, 10 or 20 yrs? mmm.....

 

[Intrinsic_Value]

i have a better idea, not 35%, but 30% same as company tax rate.
Low income earners get a 'better' rate.

By the way i respect abbott as an individual, i think his heart is in the right place, but he has no idea when it comes to anything business.

 

[Intrinsic_Value]

ive said it before on here...the first party to tell australia that all overtime will be tax free this country will be way better off productively in my opinion...

..

to create something 'similar', you dont need tax free (otherwise trust me this will be one massive tax rort, start with me, yes your honour, to create my overtime profit i worked x hours).
You just need a massive widening of the tax scales.
Something like Singapore (potentially my destination country, apparently PR can be confirmed with $2.5 million per person, two people $5 million, my investment target)

Even better opperating out of Singapore capital gains on australian shares will be potentially tax free both in australia and Singapore (where there is no capital gains on shares).

 

[BV]

i disagree, workers who do that will soon find themselves on the dole queue....decent workers will benefit greatly...

I think there should be a balance between spending time at work and with family. Currently people spend too much time at work. This needs to change.

IMO Overtime should be taxed at a higher rate and probably as much as 80% so it is a dissinsentive for people to work overtime.

At the same time there should be incentives for companies to employ more people

 

[Peter Parker]

I think there should be a balance between spending time at work and with family. Currently people spend too much time at work. This needs to change.

A lot of overtime is unpaid, so a 10% change to marginal tax rates (either way) would make little difference. Although this seems to be more a blue collar/white collar thing - paid overtime is more common in the former.

IMO Overtime should be taxed at a higher rate and probably as much as 80% so it is a dissinsentive for people to work overtime.

That breaks the nexus between effort and reward.

Why should taxes on shares or rental income be half that of labour?

Oddly an 80% rate might have the perverse effect of encouraging unpaid overtime.

Which, if you take the view that people should spend less time working, you would probably not regard as desirable!

Also in a knowledge industry employing more people does not necessarily boost productivity. Since more time must be spent communicating and less time doing. Not to mention more HR and management overheads.

 

[Born&Bred]

I think there should be a balance between spending time at work and with family. Currently people spend too much time at work. This needs to change.

Who are you referring to? yourself? What about young people without a family who would like to work extra to set up their financial future, is 38-40 hours a week to much?

IMO Overtime should be taxed at a higher rate and probably as much as 80% so it is a dissinsentive for people to work overtime.

One way to circumnavigate this plan is to pay a higher hourly rate but have mandatory unpaid overtime. All the places I have worked its been a personal choice to do overtime, this would take away this choice.

At the same time there should be incentives for companies to employ more people

Quality is what we need. People who are productive at work will always have jobs.

 

[BV]

Who are you referring to? yourself?.

hehe I knew when I posted my comment that I'll receive criticism from workaholics. I'm one of them (not by choice) and I'm sick of work.

Last time I checked (20 or so years ago) Sweden had something similar. I was going to work on a Saturday but I was only keeping a small % of my pay.

It seemed unusual at the time but in hindsight the idea has Merritt and is worth considering.
IMHO