Okay Australia. Let’s talk about tax. I know it’s not the most exciting topic, but the past week has revealed an epidemic of economic illiteracy that has been frustrating to watch.
On Monday’s Q&A, Duncan Storrar apparently stole the show with the following question:
“I’ve got a disability and a low education, that means I’ve spent my whole life working for minimum wage. You’re gonna lift the tax-free threshold for rich people.
“If you lift my tax-free threshold, that changes my life. That means that I get to say to my little girls, ‘Daddy’s not broke this weekend. We can go to the pictures.’ Rich people don’t even notice their tax-free threshold lift. Why don’t I get it? Why do they get it?”
Of course it’s natural to empathise with Duncan, a man who only wants what is best for his daughters and who clearly works hard to provide for them. However, the avalanche of commentary treating Duncan as a symbol through which to critique the government’s so-called tax cuts to high income earners is over the top and misleading.
Sure, it feels good and it’s popular to complain about the rich and accuse them of riding on the shoulders of the poor working man, but is there any truth to this myth that gains so much traction?
The fact is, as I’ve written before, the rich pay the majority of tax in Australia, and men like Duncan benefit from their heavy lifting. It’s not popular, it sounds harsh, but it’s true. Look at the tax table:
Only 1% of the population earn over $265,000 a year, yet they pay 17% of tax. 2% earn between $164,000-$264,000, yet they pay 9.8% of tax. That means that 3% of taxpayers are paying 26.8% of the total income tax in Australia. If we factor in the next tier, the 7% on $101,000-$163,000 paying 18.4% of tax, then the harsh truth really kicks in. 10% of taxpayers are paying for 45.2% of income tax in this country.
So why do they get a tax cut and men like Duncan don’t? The answer: they’re paying enough tax already! They’re paying for the majority of our social security, our health, our defense.
In fact, according to Australian Bureau of Statistics data, the average Australian household received $2.70 in cash and services for every $1 it paid in tax. The same data reveals that taking into account social security payments, welfare, public education and public health, only 20 percent of households pay any net tax – the other 80 percent receive their tax back via a range of social programs mentioned (this is also taking into account GST payments). The Australian has already revealed that Duncan actually pays no net-tax once Aus-Study payments are taken into account.
Instead of grasping this reality and acknowledging the role the rich play in funding our lifestyles, Australians have embarked on a campaign of selective ignorance. It’s easier to throw mud at the rich and support the battler than engage in reality. This is dangerous.
The Labor Party is cunningly tapping into the fallacy, running advertisements exposing the government’s apparent tax cut towards high income earners. What’s left out of the ad is the fact that the top income earners are receiving a promised 1% cut after the top marginal rate was temporarily increased to help service the country’s spiraling debt. One can understand why Labor would be unwilling to talk about this fact, since they are largely responsible for the $12 Billion in interest payments we fork out to service our now $300 Million debt. A debt with Labor’s imprimatur on it.
Unfortunately, the rich vs. poor debate is too often conducted on the basis of simplistic falsehoods. These untruths need to be challenged, or we’re all poorer. The facts aren’t popular, but they need to be clear. Otherwise we descend into the mire of class-warfare against a class that did nothing but fund the majority of our lifestyle. Yet due to our unprecedented sense of entitlement, this class won’t be expecting a thank-you anytime soon.