Look who pays the most tax

Did you know the  the top 2 per cent of taxpayers pay 26 per cent of this nation’s income tax.Bernard Salt

I’ve previously written a blog asking if you’re paying more than your fair share of tax.

Recently in an article in The Australian demographer Bernard Salt wrote about what he called the inconvenient truth about income tax: the rich carry the burden in Australia.

In fact, the rich pay income tax that is 13 times more than their proportionate share by population, and which most Australians would probably say is fair enough.

Here’s part of what he said:

The most recent figures available relate to the financial year ending June 2012.coins  tax money

In that year, 12.7 million Australians collectively paid $145 billion in income tax to the federal government, which converts to an average of about $11,000 per taxpayer.

Of course, with a progressive tax system, low-income earners pay less and high-income earners pay more.

Just under a million taxpayers paid a collective $16 million in tax or an average of $16 each for the year. However, this group of part-time low-income workers earned less than $6000 in taxable income for the year.

Another five million taxpayers earning less than $37,000 for the year paid $5bn in tax or an average of $1100 each for the year.

This means that six million out of 12.7 million — close to half the nation’s income-tax payers — paid about $21 a week in tax in this year.

At the other end of the scale, there are 294,000 taxpayers in the top tax bracket earning more than $180,000 a year. This group was targeted in 2014 to pay an extra 2 per cent of their income as a temporary deficit levy.

This group also contributed to a levy after the Brisbane floods of 2011. This group of high-income earners paid a collective $38bn in income tax or an average of $129,000 each in the 2012 financial year.

Put another way, the top 2 per cent of taxpayers pay 26 per cent of this nation’s income tax.

property investment Land taxThis information has been well known for some time, even if it hasn’t been well publicised.

The new data set takes the analysis one step further.

It shows the collective taxable income of this nation’s highest income earners. For example, it shows how many people earned a taxable income of more than $1m in the 2012 financial year.

There are 8500 people who earn $1m a year, according to the ATO.

My guess is that maybe 6000 of these would be based in the financial centres of Sydney and Melbourne.

The total taxable income of this group was $17bn, meaning their average income was, in fact, $2m per person.

The total amount of income tax paid by this group was $7.9bn or 45 per cent of their income.

Super High Income Earners

This group of super high-income earners comprise 0.07 per cent of taxpayers; they garner 2.6 per cent of this nation’s taxable income; and they pay 5.4 per cent of this nation’s income tax.

The same logic applies to the second highest-income earning group: people earning between $500,000 and $1m a year.

[sam id=54 codes=’true’]

There are 24,000 workers in this category; their average income is $670,000; their average tax bill is $273,000 or 41 per cent.

This group comprise 0.2 per cent of taxpayers; they command 2.4 per cent of taxable income; and they pay 4.6 per cent of this nation’s income tax.

At the lower end of the high-income bracket, there are 103,500 people earning between $250,000 and $500,000 a year.

Their average income is $331,000; they pay an average of $122,000 in income tax, which is 37 per cent of taxable income.

At the lowest end of the high-income bracket, there are 157,000 people earning between $180,000 and $250,000 a year.

This lot earns an average annual income of $207,000, on which they pay $67,000 income tax or 32 per cent.

Ours is a progressive tax system, so it is considered right and proper that those on higher incomes pay more tax.

And clearly they do.

The top 2 per cent of taxpayers pay 26 per cent of this nation’s income tax from just 15 per cent of this nation’s taxable income.

The confronting, unpalatable and inconvenient truth that flows from the income and income-tax data published by the ATO is that the rich do indeed pay tax.

In fact, the rich pay income tax that is 13 times more than their proportionate share by population, and which most Australians would probably say is fair enough.

But now we also know that the top 2 per cent of income earners, contributing 26 per cent of the income tax take, do so from a pool of just 15 per cent of the national income.

We have a tax issue in Australia.

tax_return_360_18s4kr3-18s4ksiThere’s not enough of it to support our spending and our social justice agenda.

The convenient whipping boy in this argument is often “the rich”.

These figures suggest that the rich are making a contribution over-and above their proportion in terms of their number and in terms of their share of income.

This is an extremely difficult matter for politicians to raise, largely because any debate about spreading the load seems to sidestep the difficult issue of asking all Australians, regardless of income, to make a contribution.

The inconvenient truth in all of this is that the rich can and do carry a substantial burden, but we cannot ask the rich to carry the whole burden.

Read more at The Australian.



Want more of this type of information?


About

Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's been once agin been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'Look who pays the most tax' have 2 comments

  1. March 1, 2015 @ 6:13 pm gilstamp

    The debate is not about the individuals who do pay their assessed tax. It is about corporations which avoid just taxation of their profits which the nation has created for them. It is also about the other revenue sources which the government has spurned and an unwise and unnecessary series of tax reductions which governments have enacted. It is a revenue problem. Australia’s national debt is small by any measure and does not justify actions which can only remove supports for the disadvantaged and concentrate commercial wealth.

    Reply

  2. March 1, 2015 @ 11:22 pm John

    I don’t think people have a problem with most rich people and the fact they pay tax. The difficulty is with tax dodging major corporations and legal tax breaks for rich industries that don’t need them. The first thing our Liberal federal government did was hamstring the ATO from going after tax dodging corporations, and a few tax dodging individuals. Why? There can be only one explanation.

    Reply


Would you like to share your thoughts?

Your email address will not be published.
CAPTCHA Image

*

0
0

Michael's Daily Insights

Join Michael Yardney's inner circle of daily subscribers.

NOTE: this daily service is a different subscription to our weekly newsletter so...

REGISTER NOW

Subscribe!