Government & Politics

Taxation

Government & Politics

Posted by: cabsy61

6th Nov 2008 11:46pm

It came to my attention some years ago through reading an article on taxation about the merit of lowering taxes to a flat 10%. Consider this: If our Federal Government had the courage to permanently lower income tax to a flat 10% across the board with no bracket creep applicable, they just might find that after the initial massive drop in revenue to actually sky-rocket past what they used to receive, because, (a) having a relatively huge increase in their take home pay packet enabling them to afford private health cover. (b) Purchase a new car sooner than expected., (c) Fill up their vehicles to a full tank every time at the bowser, therefore increasing the total volume of fuel excise Governments receive. (d) Being able to afford a home of their own instead of being forced to be tenants. The list is endless. The same should apply to Company profit tax. 10% of their gross profit margin is peanuts to them & I'm certain they would literally throw the money to the ATO & not bother too much about attempting tax avoidance. Shareholders would receive a higher dividend & any Company only paying 10% tax would have so much more to invest in better production, innovation & renewal. Craig Beasy.


Comments 13

Burnt Out Digger
  • 28th Oct 2016 05:21pm

This flat earth economics. Our current taxation system is fair and reasonable for it is based on capacity to pay and charges those who earn the most the highest taxes. This is the price we pay for an orderly civilised society. this method allows the government to provide assistance to those on lower incomes and, thus, make for a fairer society.

PukPuk
  • 26th Oct 2010 10:45am

A flat rate sounds good in theory but then reality kicks in. An economy survives on net disposable income. Those on a higher income still pay the same price as those less fortunate so under a flat rate system the poor get poorer and the rich get richer. I really wish shallow thinking could turn into reality but a flat rate taxation system works totally against the people it should be helping. And whatever equalisation scheme that could be dreamed up you can be assured the wealthy will find a way to exploit it. The existing system is not ideal but it does give the better outcome but needs to be properly administered and those caught cheating really given a dose of enimas to empty out those bowels of contempt.

passum
  • 18th Dec 2010 09:44pm
A flat rate sounds good in theory but then reality kicks in. An economy survives on net disposable income. Those on a higher income still pay the same price as those less fortunate so under a flat...

Hi, PUK PUK u know if people did the right thing and paid their due taxes they would automaticly be lower because income receipts would be higher think of that when you pay a friend cash to do a job and not receive a receipt. u are avoiding paying tax on their services. Its also true the high fliers dont pay enough tax because they spend a lot of money advoiding tax. where as were mortals are to dumb and get caught.because we dont have tax accountants to minimise our taxpayabe.Anyway they all will get caught in the end .

passum
  • 18th Dec 2010 09:41pm
A flat rate sounds good in theory but then reality kicks in. An economy survives on net disposable income. Those on a higher income still pay the same price as those less fortunate so under a flat...

Hi, PUK PUK u know if people did the right thing and paid their due taxes they would automaticly be lower because income receipts would be higher think of that when you pay a friend cash to do a job and not receive a receipt. u are avoiding paying tax on their services. Its also true the high fliers dont pay enough tax because they spend a lot of money advoiding tax. where as were mortals are to dumb and get caught.because we dont have tax accountants to minimise our taxpayabe.Anyway the all will get caught in the end .

cabsy61
  • 24th May 2010 11:19am

G,day & thank you to all who have replied to my thoughts on a fairer income & company tax system. To clarify some points of contention mentioned by those who put their in their valuable two cents worth.

The article I mentioned was in a Reader's Digest issue quite some years ago. It named the Countries involved, ( I don't recall which ones now); but, at the various times these countries had no choice but to drastically overhaul their taxation systems, they were previously very high taxing nations, had incredibly high foreign debt levels & a massive tax evasion problem too boot .

In cooperation with the IMF, these countries chose to lower their taxation in two areas to a flat 10% income & company tax. The article went on to describe how in less than a decade, "all" of these countries found their economies were hugely in the black, simply because business's big & small became very willing, (even happy), to pay such low taxes to the Governments of the day because having such low taxation on their books, enabled them to invest in projects they wanted to, but couldn't before.
This resulted in a gradual boost in employment which rapidly increased over time, enabled individual households to have much greater discretionary spending. Of course there were other taxes on goods, etc, which also boosted Treasury coffers. Tax evasion declined markedly because Companies & individuals began to understand there was little reason to go to such expense & inconvenience in setting up tax haven accounts.

These Governments were able to then invest in better quality health care, roads, infrastructure; the list could go on but I won't bore you to tears.

Pie in the sky dreaming? Not so much if anyone really put their mind to it with the goal of making society better for everyone.

Cheers;

Craig B.

bond
  • 24th May 2010 10:16am

Hay cabsy61 i agree with you. I'm from new zealand and we had the same taxation system that ausie has now but our government found that big companys wer'nt investing back into the nz economy so they went from around 50 diffrent taxes to three inside two years. Now people have more to spend and the big companys invest in nz witch also keeps a lot of products cheeper.

shachah7
  • 10th May 2010 01:28pm

awesome idea

jimijones
  • 25th Mar 2010 01:08pm

I'd rather see a shift off income tax and onto land values. There's no point increasing disposable income if it just quickly gets swallowed up by increased rent and land prices. We need to reduce the rampant speculation out of the land market which is already out of reach of the majority of young Australians. Now being held ransom for somewhere to live by their parents and grandparents.

frilly
  • 17th Nov 2010 12:05am
I'd rather see a shift off income tax and onto land values. There's no point increasing disposable income if it just quickly gets swallowed up by increased rent and land prices. We need to reduce...

Jim Jones I do not see what you mean by "being held to ransom by their parents and grandparents"?
Are you waiting for them all to die so you can walk into their money? If this is so, what right have you to expect anything from either group. My children aren't. It would be too bad if they were, if I knew that was the case I would give it away.
My children and grandchildren are all getting their acts together. My grandson at the age of 19 almost 20 bought himself a house. Not a big one but enough to start off with. He was an apprentice electrician at the time.
You do not say what you do?
I have 3 granddaughters, doing years 11 & 12 but at the same time working anything upto 20 hours in a fast food place. It is not easy but they are very organised They manage their school work, work work, even manage a couple of hours social life.

this idea was brought in years ago, it was 20 % do not know why it did not take off. There certainly would an incentive to working long hours then, also going for that Promotion that unfortunately takes you into the next Tax Bracket

frilly

Get to it Jim Jim, I never had anything handed to me on a plate, in fact nothing hand to me at all

Stekel
  • 1st Feb 2010 09:52pm

In other words no Trust or bottom of the harbour schemes, as most poeple know the rich do not pay tax, they pay Lawyers, also don't forget we already have a GST. and that is the only Tax the rich pay, there is no-way that a flat 10% tax would be possible and forget all the other taxes, such as petrol taxes etc and there are several dozen of them.

boags
  • 27th Feb 2009 12:21pm

It seemed to work in Canada.

People did as expected ........ They had more disposable income, so they spent it, creating jobs as they went

Anonymous
  • 7th Feb 2009 11:09am

Craig, you haven't explained how the total tax intake would recover from the fall in tax rates. (a) may result in more people taking up private health cover but they would have to - Medicare would have to shut down. No increase in tax revenue here. (b) More people would purchase new cars but no great impact on tax revenue here. (c) people would only use more petrol if they drove more and I don't see why they should suddenly decide to do this. (d) If people have more money, house prices go up. Thus the percentage of people able to buy a house does not change. This is the only measure that results in any significant offsetting tax revenue rise and it is minor.
The idea of businesses literally throwing money at the ATO is too bizarre for comment. It would not result in reduced tax avoidance except in that they would have much less tax to avoid.
Mathematical modelling reveals that the type of model you suggest is only good for those over $920,000 in annual income - not many people.

Adi
  • 10th Nov 2008 12:22pm

What a great idea lets hope that the gov sees the light we can only hope!!

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