Tax in Australia

Discussion in 'All Things Boats & Boating' started by Landlubber, Dec 8, 2009.

  1. Landlubber
    Joined: Jun 2007
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    Landlubber Senior Member

    Just though that a few of you would like this article:
    A pre-Christmas / Election thought: HOW OUR TAX SYSTEM WORKS!
    Folks, I was having a chat recently to an employee I admire, and he happened to mention that he thought John Howard is out of touch with
    the people's needs. Now this is one of the very few true democracies in the world, and he is certainly free to have that opinion. However,
    there is an election coming up later this year, and most of us will have to decide who should be our Prime Minister.......a Labour Party PM or a
    Liberal Party PM.
    It is common knowledge that the Labour Party voters come from lower socio-economic groups, academics, union members and some greens.
    The Coalition led by the Libs are supported predominantly by small to medium business, mid to high-range income earners, and some large
    businesses.
    Basically, this is so because one group are 'givers' and the other group are 'takers', and before you decide which group you are in and who that
    group votes for, I thought you may like to read this explanation below on our tax code, which perhaps could assist you decide if John is out of
    step with you, or just out of step with the non-producing, winging other half.
    "Taxing the People" Explaining Taxation ...
    When explained like this, it is much easier to understand our current tax code and why the coalition is trying to reform it. Remember, a serious
    tax cut is proposed by the coalition in the next budget. Remember too that the State governments promised to abolish most state taxes
    including payroll tax, stamp duty and property tax in exchange for obtaining the GST revenue, but despite windfall amounts of GST and a
    booming property market, our Labour State Governments have not only not abolished those taxes, they have not invested these funds into
    our infrastructure either. Consequently, our roads are a shambles; law and order would be a laugh if it were not such a serious subject; water
    supply is in diabolical shape; our Hospitals are a disgrace; and our power supply is in crises.
    Sometimes politicians, journalists and the liberal left exclaim; "It's just a tax cut for the rich!" and it is just accepted to be fact. But what does
    that really mean? Just in case you are not completely clear on this issue, I hope the following will help. Please read it carefully. Let's put tax
    cuts in terms everyone can understand:
    Suppose that every day, ten men go out for dinner and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it
    would go something like this:
    * The first four men (the poorest) would pay nothing.
    * The fifth would pay $1
    * The sixth would pay $3
    * The seventh would pay $7
    * The eighth would pay $12
    * The ninth would pay $18
    * The tenth man (the richest) would pay $59
    So, that's what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement, until one
    day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20."
    Following the reduction, dinner for the ten would now cost just $80.
    The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still eat for free. But what
    about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his "fair share?" They
    realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each
    end up being paid to eat their meal. So, the restaurant owner suggested:
    * The fifth man, like the first four, now paid nothing (100% savings)
    * The sixth now paid $2 instead of $3 (33% savings)
    * The seventh now paid $5 instead of $7 (28% savings)
    * The eighth now paid $9 instead of $12 (25% savings)
    * The ninth now paid $14 instead of $18 (22% savings)
    * The tenth now paid $49 instead of $59 (16% savings... the least proportionate savings)
    Each of the six paying customers was better off than before. And the first four continued to eat for free.
    But once outside the restaurant, the men began to compare their savings:
    "I only got a dollar out of the $20," declared the sixth man. He pointed to the tenth man, "but he got $10!"
    "Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than me!"
    "That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two?
    The wealthy get all the breaks!"
    "Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"
    As a consequence, the first nine men surrounded the tenth and beat him up.
    The next night the tenth man didn't show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they
    discovered something important. They didn't have enough money among all of them for even half of the bill!
    And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most
    benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might
    start eating overseas where the atmosphere is somewhat friendlier.
    David R. Kamerschen, Ph.D
    Professor of Economics
     
  2. TollyWally
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    TollyWally Senior Member

    That's an old chestnut
     
  3. troy2000
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    troy2000 Senior Member

    I think the gentleman is not only promoting class warfare, he's trying to enlist the working class on the wrong side of the war.:)

    More and more of the world's wealth is getting concentrated into the hands of a smaller and smaller group....while the average workers who bust their tails providing the goods and services that create that wealth are seeing less and less of it.
     
  4. wardd
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    wardd Senior Member

    the rich never created a job unless they could sell the goods and services produced by that worker.

    its the masses with money to buy that create jobs

    all else is bs
     
  5. lewisboats
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    lewisboats Obsessed Member

    So who creates the companies that create the jobs?
     
  6. Kay9
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    Kay9 1600T Master

    The consumer creates the demands that create the companies that create the goods. If the consumer is broke then there is no need to create a company to create the goods.

    K9
     
  7. troy2000
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    troy2000 Senior Member

    Obviously labor, management and capital are all essential. But in the last few years, the productivity of the average worker has been increasing steadily, while his share of the wealth created has been shrinking.

    In other words, he's being paid less to produce more, and the difference is going into the pockets of the people that Professor Kamerschen thinks need to be protected from taxes.

    Let's look at what another professor has to say. According to Edward Wolff, professor of economics at New York University, "(y)ou have this fairly continuous downward trend from 1929, until just about the mid-1970s. Since then, things have really turned around, and the level of wealth inequality today is almost double what it was in the mid-1970s."

    He was speaking in 2003, and the trend has only accelerated since then. I personally have no problem at all with the concept that the people who own most of the wealth and have the highest incomes should pay most of the taxes.

    The problem with the analogy of the group of diners is that the ten men aren't really just sitting at the table waiting to be served. Seven or eight of them are busy delivering and cooking the food, washing dishes, busing tables and mopping the floors. They'll be lucky if they find time to sit and eat.
     
  8. Kay9
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    Kay9 1600T Master

    Have to agree Troy.

    K9
     
  9. lewisboats
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    lewisboats Obsessed Member

    So....the Ipod came about because someone thought they needed to have a gizmo like that? That doesn't make sense...Companies invent stuff to sell and through smart marketing create a demand. If they are lucky...they create a fad that rockets their product to main stream. Betamax is a product that didn't make it...although the idea continued on through vhs. Bill Gates didn't start in a garage because he was rich...so why is he vilified now because he is? Just how many jobs did he create over the years...how much have his ideas garnered the world in taxes from sales, jobs, manufacturing companies etc? Rich people (and I certainly am not one of them...I work 80 hrs/wk, 7 days/wk between 2 jobs for around 60k US.) use much of that money to invest...to make more money. BUT...those investments create jobs as a consequence and those jobs generate far more tax revenue than what the rich person pays...even though a far greater percentage of his earnings are taken from him than from "poorer folks". This does not mean that I condone the "golden parachutes" of hired CEOs or the outrageous bonuses...and I also am rather disgusted with sports figures and tv celebs too. I don't blame the rich for being rich if they worked for it, got lucky and it payed off. I certainly don't expect someone who is rich to be financially broken so I can save $100 in taxes. That person would not be able to create any more jobs through investments and as I realize that I am not a person capable of creating jobs then I have just caused damage to the system rather than "equalizing" it.
     
  10. Kay9
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    Kay9 1600T Master

    Lewisboats. If I dont have $1.00 in my pocket and you invent a way for me to go to Paris for the cost of $0.25. Im not going. Your not getting your $0.25 and no one is going to be employed. Its that simple.

    Now if we lived in a world were nothing as yet had been invented I would say your right. We need to let the guys with all the money invent something for us poor slobs to buy. However the world is full of useless junk (ipod included) and our ability to purchase the useless junk has steadily diminished.

    How many can remember a house costing what a new car costs today?

    I can.

    K9
     
  11. lewisboats
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    lewisboats Obsessed Member

    Nope...don't remember...but how much were you making at the time...surely not as much as you are now...a few hundred a month?
    Look...there will always be poor, there will always be rich...there will always be poor who get rich and vise versa. There are far more people who are rich now than 200 years ago and in 200 years I expect there will be far more than there are now. Communism was/is an experiment where everyone is equal...except that there were those who were/are far more equal than others. EXCEPT...there were/are a vastly fewer of the more equal than the less equal. Frankly...I really would like to be one of those of whom you can ***** about...still hope to if I can. If not then I hope I can be content with what I have and I will hold no grudge against those with more. I made many choices that I am pretty sure impeded my rise to the financial stratosphere...20+ yrs in the military for one and massive CC debt that I and my wife racked up...for no good reason. So if I were to blame anyone for my situation...it would be myself and my choices.
     
  12. Kay9
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    Kay9 1600T Master

    We used to purchase things with the money we had in our pockets. As the greed level rose, manufactures realised that they could "finance" our purchases useing our future income. As a result what once cost the average consumer 1 year to purchase (car) now costs the average consumer 4-5 years.

    That should make it a bit simpler to understand.
    House in the 1930-1940 was financed 5-15 years
    House today 20-40 years
    Car in 1930-1940 1 Year max
    Car today Average is 5 years with some to 10 years.
    Food in 1930's purchased with disposable income
    Food today avg financed 6 months

    But no lets not do anything to protect the consumer/worker. Lets make sure we dont tax buisness, keep incetives for them to move jobs offshore, and destroy unions.

    You remember unions dont you? You know, the guys that brought you the WEEKEND.

    K9
     
  13. boat fan
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    boat fan Senior Member

    Need we say more ?
     
  14. troy2000
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    troy2000 Senior Member

    No one in this thread has "vilified" Bill Gates. That's a red herring. The subject is whether or not the people who are making most of the money should be paying most of the taxes.

    A few numbers for you (from 2000).

    Percentage of wealth held by the Top 10% of the adult population in various Western countries

    country.........wealth owned by top 10%
    Switzerland... 71.3%
    United States 69.8%
    Denmark....... 65.0%
    France......... 61.0%
    Sweden....... 58.6%
    UK.............. 56.0%
    Canada........ 53.0%
    Norway........ 50.5%
    Germany...... 44.4%
    Finland........ 42.3%

    I have no problem at all with the idea that the people who own 71.3 % of the wealth in this country should pay as much percentage-wise in taxes as I do. They can certainly afford it.

    Instead, it's set up so the guy who's out there breaking a sweat and busting his hump (or sitting at a desk working) pays income taxes on his paycheck, but the guy who lets his capital do the work doesn't have to pay income taxes on his dividends. Why is the money going into his pocket not considered income?
     

  15. boat fan
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    boat fan Senior Member

    Switzerland... 71.3%

    No surprises here...." old " money to be sure....;)
     
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