When we read that there are none too few millionaires paying no tax it rightly makes us stinking mad. Of course it is possible to earn an enormous amount and have heaps of deductions. People, like companies, can have years when their expenses exceed their income. In a company's case it's called making a loss.
Ditto for individuals, although it's quite a bit harder to imagine the circumstances. The front bar of the pub just will not swallow it. I don't want to live in a country where the front bar runs the show and neither do you. Thank heavens for the rule of law; it's a great protector of the innocent.
Sadly black hearts also get the advantage. A legislative response may be in order. Perhaps tougher auditing by tax officials. Find a way to close any loopholes. Whatever the answer we also need to focus on the broader issues. Whipping ourselves into a "let's hate the rich" because of the very poor behaviour of a few millionaires won't change much.
In rough figures, for the sake of simplicity, in 2014/15 we had a population of around 24 million. Just over 13 million of them paid tax. The other 11 million didn't. They might be children or pensioners ... it just doesn't matter. The simple point is that 13 million are paying tax to keep the show on the road for all 24 million of us. All those earning under $37,000 (more than 5½ million of us) – that is, about 42 per cent of people who did pay some tax – contributed together just 2.5 per cent of the personal tax revenue.
The nearly 5 million earning between $37,000 and $80,000, about 37 per cent of taxpayers, pay just over 28 per cent of the tax. A quick adding of these two and you can see that about 10½ million taxpayers, about 80 per cent of taxpayers, who each earn less than $80,000, pay about 30 per cent of the personal income tax take. That's right: 80 per cent of taxpayers pay 30 per cent of the tax.
That leaves the remaining 20 per cent of taxpayers to pay 70 per cent of all personal income tax. That's a decent contribution in anyone's language. The 17 per cent of taxpayers who earn between $80,000 and $180,000 pay about 39 per cent. If you're a sole income earner with a few kids and earning $80,000 or thereabouts you don't feel rich. Tax transfers and welfare would be a great help.
That leaves the 3 per cent of taxpayers who earn more than $180,000 and they pay a whopping 30 per cent of the tax bill. In raw numbers there were just under 400,000 of them – paying 30 per cent of the income tax bill in a country of 24 million, with 13 million taxpayers.
Personal income tax made up about 51 per cent of revenue, followed by company tax at nearly 20 per cent. That's why Bill Shorten's ideas are just so yesterday. We need more companies to come here to provide jobs and pay tax, not fewer. Instead of working to make the rich poorer, Shorten should develop policies that will allow many, many more people to get jobs, get ahead and pay tax.
That doesn't happen by making the rich poorer. We actually want more millionaires so that we have more revenue to spend on health, education and other good things. Think about it. If we had pulled 100,000 people out of the very little or no tax group and got them into the $37,000 to $80,000 group they would be better off by miles. More self-sufficient, more independent and probably using less welfare.
Here's the problem – it wouldn't make much of a ripple in the tax take. To get a big hike in that we'd be better to add 100,000 to those earning over $180,000. We need more millionaires not fewer.
Where we spend our money is another interesting story. They key point for this issue is that we spend about 35 per cent on social security and welfare. That's right, over a third of our spending is on social security and welfare. So those rich people who are forking out for 70 per cent of the personal tax bill and see a third of it go to welfare are entitled to be miffed when people say they're not sharing the load.
The politics of hate are easy to stir up. The politics of division equally so. Whoever said "divide and conquer" was on the money. That's why it's just so unattractive to hear people who by dint of both hard work and luck are doing well get labelled as the rich with the intent of portraying them all as selfish, greedy, rotten people. We are right to be stinking mad about millionaires who pay no tax; it just doesn't seem right. But to go from there to assuming all rich people are cheats is just crazy.
To assume bad things about people because they happen to be wealthy is as stupid as assuming that all people down on their luck economically are thieves. Just stupid. The better path is to treat people as people. The good as good, the kind as kind, and the crooks as crooks.
Pauline Hanson does us no service at all when she gets stuck in to all Muslims. Most of us see that as her playing on the politics of fear. She just refuses to see the difference between good, decent, peace-loving Muslims and the crazy radicals. Perhaps she should look up the history of Noor Inayat Khan or put her feet up one weekend and watch Enemy of the Reich.
Labor doesn't seem to get it, that playing on the politics of envy is no different. It is just as base and ugly as the politics of division and hate. Sure there are some rich people who don't do their fair share. But the vast majority do. They pay the bulk of income tax and step up in the philanthropy stakes. The politics of envy are cheap and so are the people who peddle it.
Amanda Vanstone is a Fairfax Media columnist and a former Liberal government minister.
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