It’s called a progressive tax system for a reason

Shock horror! Fairfax is reporting that higher income earners pay the most tax, with Australia’s “Budget reliance on high and middle income earners” reportedly growing:

  • The report draws on data from the Australian Tax Office (ATO) showing that nearly 14.7 million individuals paid a combined $213 billion worth of income tax during the 2018-19 financial year (an average of around $14,500).
  • Some 80% of Australian taxpayers had taxable income of less than $100,000 in 2018-19, compared with 90% in 2012-13, while about 9% had taxable income of between $50,000 and $60,000.
  • People in the highest tax bracket (earning above $180,000) paid nearly $70 billion worth of income tax, which accounts for one third of Australia’s income tax bill.
  • Men pay more tax than women.
  • To be a member of the top 1% of taxpayers requires a taxable income of at least $350,000 in Australia versus needing to earn at least $700,000 in the US.

It is true that Australia has one of the most progressive tax systems in the world. It has been designed that way over generations to not only recognise people’s differing capacities to pay, but also to reduce the churn involved in taxing low income earners more highly, only to return their money to them as welfare.

This progressive tax system should be defended as it’s a key reason why Australia’s income inequality is lower than average. I’d hate to see Australia go the way of the US and create a yawning gap between rich and poor, with people living off food stamps, pervasive homelessness, and crime, just so we can increase after tax incomes at the top.

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