Flat Tax Rate. (1 Viewer)

[rumour]

No, isn't GST is a flat tax on goods and services?
That is a regressive, where low income earners pay a greater precentgae of their incomes on tax, compared to higher income earners!!!!

Therefore I think a flat tax rate is a bad idea.

 

[Rorix]

No, isn't GST is a flat tax on goods and services?
That is a regressive, where low income earners pay a greater precentgae of their incomes on tax, compared to higher income earners!!!!

Therefore I think a flat tax rate is a bad idea.

Sigh. Rather than get into the logical problems with your 'argument', I'll simply point out that flat tax refers to a taxation system where each taxpayer pays an equal percentage of their income in tax. Just because a tax is expressed in a certain dollar amount/percent does not mean that it is 'flat', unless it is referring to income. Even if it is, one must clarify if the taxation system as a whole is being referred too, or simply that relating to income.

ITT people have seemingly largely ignored the effect that other taxes which are almost always regressive have on the progessive income tax system, acting to flatten it out somewhat, either because it has been assumed NTB means the entire tax system to be reformed or they just have not considered the issue on a level beyond omg progressive4eva.

 

[mr_shittles]

No, isn't GST is a flat tax on goods and services?
That is a regressive, where low income earners pay a greater precentgae of their incomes on tax, compared to higher income earners!!!!

Therefore I think a flat tax rate is a bad idea.

Most taxes in Australia are regressive: GST, stamp duty, land tax, parking fines, speeding tickets, import duties, fuel & tobacco excises, etc.

Hovever, the Commonwealth's two largest sources of revenue are not. Personal Income Tax is progressive and company income tax is proportional.

In assesing the merits of whether a tax is a good idea or a bad idea, we have to look at effectiveness vs. efficiency.

It is very efficient to have a flat sales tax like GST, bot not very effective. This is because necessities are taxed at the same rate as luxury goods (which is a bad idea). But at the same time, because the GST applies to just about every good, its fairly hard to evade as a tax (you have to stop consuming or shop at really dodgy places to evade it).

Hence there is no perfect system of taxation. Countries try very hard to find a proper balance. The reason that so many people are arguing for a flatter tax system in Australia is because the difference between the company tax rate (30%) and the top marginal tax rate (48.5%) allows many people to establish trusts and pay tax through companies, as opposed to paying the tax as individuals.

If the top tax rate falls to 30%, then high income individuals will not have to restructure their tax affairs to reduce their tax rate down to 30%.

So basically, they'll have to find an even more complicated loophole to get their tax down below 30%.

 

[line_backer]

having a flat tax rate would be unfair to poor people because they cant exploit negative gearing like the rich can, and so the rich pay less tax proportionally

 

[Shuter]

having a flat tax rate would be unfair to poor people because they cant exploit negative gearing like the rich can, and so the rich pay less tax proportionally

That already happens.

 

[Rorix]

This is because necessities are taxed at the same rate as luxury goods (which is a bad idea).

From what standpoint? Certainly not an economic one, the GST removes artifical distortions to consumption patterns that arise due to varying taxes for different goods promoting consumption of one over another.

Possibly there is an argument that the taxation on everyday expenses is unfairly harsh on the poor and the economic benefits from increased growth do not sufficiently overcome this downfall (i.e. that there is a net fall in living standards), but you cannot just immediately say that something is a 'BAD IDEA' without any consideration at all.

Well, you can, and it would slip by most people who think OMG MAKING THE POOR PAY TAX IS THE WORSEST IDEA EVER. But it's certainly not good form.

 

[mr_shittles]

From what standpoint? Certainly not an economic one, the GST removes artifical distortions to consumption patterns that arise due to varying taxes for different goods promoting consumption of one over another.

Possibly there is an argument that the taxation on everyday expenses is unfairly harsh on the poor and the economic benefits from increased growth do not sufficiently overcome this downfall (i.e. that there is a net fall in living standards), but you cannot just immediately say that something is a 'BAD IDEA' without any consideration at all.

I'd have to disagree with your statement that there is no economic argument for taxing luxury goods.

Taxing luxury goods allows the goverment to collect revenue without depriving individuals or households of their basic standard of living. Furthermore, the demand for luxury goods is relatively inelastic compared to normal goods. This means that a moderate increase in price will not affect demand significatly, so the consumers get what they want, the level of production is not affected and the government pockets a bit of money.

Taxing luxury goods is a very good idea, but the only problem is . . . What constitutes luxury good? People's ideas of what is a "luxury good" varies.

 

[Shuter]

I'd have to disagree with your statement that there is no economic argument for taxing luxury goods.

Taxing luxury goods allows the goverment to collect revenue without depriving individuals or households of their basic standard of living. Furthermore, the demand for luxury goods is relatively inelastic compared to normal goods. This means that a moderate increase in price will not affect demand significatly, so the consumers get what they want, the level of production is not affected and the government pockets a bit of money.

Taxing luxury goods is a very good idea, but the only problem is . . . What constitutes luxury good? People's ideas of what is a "luxury good" varies.

This is a normative arguemant though, who is to say that rich people deserve to have more tax taken out of their goods, simply because they can afford it? This is again redistributing income from the rich to the poor, similar to communism.

 

[Not-That-Bright]

umm miss_gtr, am i to take it that you support the flattening of the taxation system which i have proposed?

 

[Iron]

Yeah in a way its like communism! its not the rich peoples fault they are rich..maybe they should lower the rates for the poor people and have standarad rates for midway earners and rich ppl..
this is going to weaken the growth of the Australian wealth

Is it your fault you're from Lithgow?

 

[mr_shittles]

This is a normative arguemant though, who is to say that rich people deserve to have more tax taken out of their goods, simply because they can afford it? This is again redistributing income from the rich to the poor, similar to communism.

I'm not raising an argument for rich being taxed more than poor or vice-versa. I'm just saying that luxury goods are able to be taxed without significantly deteriorating the basic standards of living in a society.

In response to your comment that redistributing income from the rich to the poor, is a case of communism, that's not correct. Every capitalist nation, from Switzerland to the US to Japan redistributes income from the rich to the poor. It's designed to maintain some form of equity in society and ensure that basic standards of living are met.

Everyone knows that in practice communism is a dismal failure, so thats why we in the capitalist world use the systems that we use. And these are systems that we continually aim to improve.

 

[Iron]

EXCUSE ME, IS IT MY FALUT U TALK LIKE U EAT CUCUMBER SANDWICHES?

One should never speak when one's mouth is full. Maybe you shouldn't either.

 

[Iron]

u went to gateway!

I move a motion that the last comment be striken from the record.

 

[mr_shittles]

what was the thing you said?
not counting anyones opinion and i havent read half the threads, its just the taxation system is fine now..people struggle but they get though in the end, so y change it?

I think there is alot of merit in pusing the 30% from $58K (where it is now) out to around $85K. Now, that would really be an incentive for middle income earners to work a bit harder and move higher into that bracket.

I also think an indexation of all the income tax brackets would be a good idea.
Anyone agree or disagree?

 

[Iron]

why are you ashamed?

Madam you go too far. This is beneath you. The issue is tax, and no more shall we deviate from this titillating topic.
Six fingered discounts should never be allowed, no matter where you're from.

 

[Not-That-Bright]

I think there is alot of merit in pusing the 30% from $58K (where it is now) out to around $85K. Now, that would really be an incentive for middle income earners to work a bit harder and move higher into that bracket.

I also think an indexation of all the income tax brackets would be a good idea.
Anyone agree or disagree?

Anyone that is agreeing with a flatter taxation system obviously agrees with you..

 

[mr_shittles]

Yeah i agree, middle class earners are the majorities, they shouldnt have to work harder and pay more..is that wat you mean?

Thats exactly what I mean. Reward for hard work, the middle income earners deserve first priority.

 

[Not-That-Bright]

If our growth truely is slowly down.. I think we should push for a further 5% cut to marginal taxes.

 

[mr_shittles]

Oh yeah... now i get you, yeah i think middle class earners should be first priority because they earn and live modestly, and they shouldnt be in the middle of this tax war between the poor and the rich

Exactly, and they are the ones who need the incentive to work harder, do longer hours, etc. to increase productivity. And they usually hold good jobs, posess good skills and make a valuable contribution to society.

 

[mr_shittles]

If our growth truely is slowly down.. I think we should push for a further 5% cut to marginal taxes.

NTB, just out of interest, how long have you been in Australia?