Voluntary tax

There seems to be quite a few billionaires who want to pay more tax, but for some reason cannot.

I once wrote of the importance of voluntary tax, which could be facilitated with an appropriate piece of legislation. Clearly recognition is important – just as donors to charities are applauded, so too should we recognise those who contribute to the Australian consolidated revenue fund beyond their statutory obligation.

Here are some quotes from some wealthy people wanting to pay more tax (courtesy of news.com.au).

Dick Smith

I like the idea of encouraging the wealthy to become philanthropists and if they don’t , charge them more tax.

(Doesn’t tax deductibility encourage philanthropy?)

Warren Buffett

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our Government to get serious about shared sacrifice.

(Isn’t sacrifice something voluntary?)

Liliane Bettencourt (L’Oreal heiress)

When the public finances deficit and the prospects of a worsening state debt threaten the future of France and Europe … it seems necessary for us to contribute.

(But when the public finances are sound, there is no need to contribute?)

Daniel Petre (Netus)

The reality in Australia is that many of our most wealthy don’t even pay the marginal tax rates, they don’t even pay the company tax rate, through the use of offshore trusts for example.

(yes, but they might be happy paying voluntary tax when there is sufficient recognition and shaming of those who choose not to pay voluntary tax)

Luca di Montezemolo (Chairman of Ferrari)

You have to begin by asking it of those who have most, because it is scandalous that it should be asked of the middle class.

(the voluntary tax would allow governments to ask nicely for some money)

Clive Palmer (mining magnate)

I’m happy to pay more personal tax.

(voluntary tax would allow Clive to pay more personal tax)

Clearly these people are crying out for a means to make a bigger contribution to the public purse. Indeed Australia could reap the benefits of voluntary tax contributions from Warren Buffett who must have been rebuffed when he tried to transfer more money to the US Treasury.

Voluntary tax – it’s time is now. It partly addresses the principal-agent problem as voluntary tax can be withdrawn if the government does not spend it wisely. Surely these wealthy people have enough aptitude and initiative to work out how much tax they should pay rather than the government telling them?

 

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36 Responses to Voluntary tax

  1. JamesK

    Good.

    And the recognition should include whether its by income, capital gains or both.

  2. wreckage

    I have it from a left-wing friend that this is a stupid, childish stunt (it was implemented in Denmark).

    Personally I think it’s great. I really don’t get why leftists are offended, like it’s immoral to allow people to pay more tax.

  3. murray

    Should be easy to do, just another section in the tax return for the acountant to handle.

  4. Infidel Tiger

    Why would you possibly want to pay more tax? If I was seriously minted I’d just traipse around the world visiting children’s hospitals and asking them what equipment they wanted me to buy for them that day. And I gamble a lot and bathe in Chateau d’Yquem.

  5. JC

    IT

    They’re the ones making the point, so they should perhaps asked to contribute more.

    I know Dick Smith is dying to. In fact I’m sure he would want to sell his helicopters to do so.

  6. John A

    I disagree entirely.

    If I want to do something voluntarily, I don’t need to be forced.

    And if I want to do something voluntarily, I will not pay the money into the government coffers, where a proportion will be skimmed off to cover administration, and then some residue MAY be pushed in the direction I desire.

    I prefer to donate directly, and as anonymously as possible.

  7. Siltstone

    it’s surprising that, given they think the Government can spend their money better than they themslves can, that they remain multi-millionaires/billionaires. Surely they ought to give the lot to the tax man?

  8. JamesK

    I prefer to donate directly, and as anonymously as possible.

    I gather the idea is that by formally offering a voluntary scheme with recognition, they’ll be forced to stop their onanistic bleating, John A.

    What they won’t do is increase the taxes they pay.

  9. Jeremiah

    I don’t really like the way this concept works, you’re introducing ethics and morality into something that should work purely through market forces.

    What’s the point of promoting the economically stimulating effect of cutting income taxes if you’re encouraging people to make voluntary tax payments anyway?

    People should pay the taxes they are legally obliged to pay, no more, no less that way economists and people in treasury can accurately determine whether their policies work in the first place. Take emotion out of the equation and provide incentives for people to act as reasonably as possible to best emulate the efficient market hypothesis from a taxation perspective.

  10. Jeremiah

    Bottom line is treasury should (and I really stress the word SHOULD) function like a well oiled machine. If its tax take every year is dependent on economic factors AND charity then there’ll be bugger all chance of them getting anything right and you’ll have the Treasurer out begging on the TV every time there’s an economic downturn.

    Bugger that!

    Although I honestly do think the tax take from such charitable donations would be bugger all anyway.

  11. wreckage

    The take would be relatively small and relatively consistent.

  12. John Comnenus

    Can I volunteer someone I dont like to pay more tax? Lets start with ALP Millionaires Garret and Rudd.

  13. No Worries

    you’ll have the Treasurer out begging on the TV every time

    Excallent ! A tax telethon !
    While they’re begging they might try justifying what they’ve blow the cash on. That would be long way from where we are now with a $50 billion spend currently occurring without even a cba.

    Here’s another idea :
    Each tax return would be eligible for a large cash prize (and many smaller prizes). I would call this scheme TaxLotto. Every mug punter in the country would want a piece of this, and you’d pick up every cash-only bogan in the place. Think about it.

  14. John A

    “I gather the idea is that by formally offering a voluntary scheme with recognition, they’ll be forced to stop their onanistic bleating, John A.”

    James, the answer to that is Matt 6:2

    “So when you give to the needy, do not announce it with trumpets, as the hypocrites do in the synagogues and on the streets, to be honored by men. I tell you the truth, they have received their reward in full.”

  15. Aqualung

    They might not be able to arrange to be taxed more, but they are free, surely, to cease claiming deductions thus leaving more with the Tax Office.

    Of course, they can only do that with their own taxes rather than dictating others’.

    (Isn’t sacrifice something voluntary?)

    Perhaps they are thinking of sacrifice in the manner of the ancients. No one asked the sacrificial ox for its opinion.

  16. Rococo Liberal

    The problem is that these idiots also want to increase the tax of those who earn $150K per year, and class such people as rich.

    So they get the Government to increase the tax on those earning $150K and continue themselves to use various wheezes to get out of paying more than 20% of their income in tax.

  17. No Worries

    …..but they are free, surely, to cease claiming deductions thus leaving more with the Tax Office.

    Yes that could be done, until they got selected for an audit. Then such unclaimed deductions would look very odd to the reptiles in the tax department. Then it would probably take years and a paper blizzard to sort out.

    I’ve finally got the ATO to admit that yes, they did receive my tax return payment for my SMSF. This took 10 months. Pretty good going, eh ?

  18. john malpas

    what is so special about tax –
    judging by the way our rulers spend the tax they already get is more tax a good idea.
    Sounds rather like voting – it only encourages them.

  19. Rococo Liberal

    We don’t need a tax review, we need a spending review

  20. Eyrie

    They aren’t spending it so well as to give them more than you need to.
    No Worries, I like the TV show idea. Just invite these wankers on or phone them to get pledges on air. Dick Smith has lost it. I supported his aviation reforms but for chissakes Dick, if it’s a nice day go flying and STFU.

  21. JamesK

    James, the answer to that is Matt 6:2

    Actually the admonish to that is Matt 6:2.

    Or is it a case of: “You say tomato, I say tomahto”?

  22. Bruce

    To quote:

    “If Warren Buffett wants to pay higher taxes, he can do so voluntarily by sending a check to:

    Gifts to the United States
    U.S. Department of the Treasury
    Credit Accounting Branch
    3700 East-West Highway, Room 622D
    Hyattsville, MD 20782

    The government has accepted donations since 1843.”

    Mr Buffett at least can to the right thing any time he wants.

  23. I think we are all missing the point here. These guys are gaming. They know if they pay a little more tax it won’t make a difference. But if they can get the government to force all the super-wealthy to pay more tax it will make a huge difference.

    Libertarians have heard of gaming before right? And coordination problems?

  24. JamesK

    But if …… all the super-wealthy to pay more tax it will make a huge difference.

    Are you for real?

    Take a deep breath.

    Try.

    Try to go from the first thought to the second stage of thinking.

    Now do you actually believe the premise you have written?

    Isn’t it more likely that calls from the suer wealthy have much more to do with narcissism and political allegiance than any real belief in your premise?

    In deference to your evident naievity I am not really interested in your answers.

    They’re rhetorical questions.

  25. boy on a bike

    I’ve got a better idea.

    Let’s get these clowns to hand over the management of all their business affairs to the government. I’m sure they’d love that idea. If government is so good at managing money, then government employees would do a great job managing businesses, and they’d become even richer than they are today.

    Not.

  26. Inhale….exhale….

    I’m not sure whether you agree or not there JamesK. Just because they have a political preference (like we all probably do) and are all narcissists (apparently), they can’t possibly be gaming?

    And given that in the US the top 400 incomes are about equal to 6% of the US budget, won’t that make a much more significant impact compared to acting alone?

    Are you saying you believe they would change their tune if such tax reform was enacted?

  27. JamesK

    can’t possibly be gaming?

    I’m sure they are ‘gaming’.

    My comments relate to the quote I took from your post.

    Are you just gaming by pretending to address my post?

    And what does this actually mean?:

    And given that in the US the top 400 incomes are about equal to 6% of the US budget, won’t that make a much more significant impact compared to acting alone?

  28. For the purpose of influencing policy in your own favour, voluntary taxes are obviously better than voluntary political donations: instead of rewarding or punishing a candidate or party that may or may not get into government, you can reward or punish the government.

    So of course the Right thinks it’s a great idea.

  29. F'legend

    What about a variable taxation scheme a bit like the above the line or below the line voting at elections?

    The government collects our taxes and allocates them on it’s sole discretion, but not all services are absolutely, fundamentally necessary. Some are like defense, many are not say like ballet.

    I would love to see the government take a fixed amount of tha tax for fundamental services, say 70% and leave the last 30% up to me with a few rules like you can’t put it all in one bucket. You could allocate to above the line simplified proxies such as ‘arts’ or could go under the line and specifically single out ballet for 15% and hairy-nosed wombat hospital for the reamining 15%.

    Sure it could be complex but qt least all the rent seekers would have to register to get into the distribution tree and you could see the weighted/default allocation up front. This would also means that all the special interest groups would have to effectively lobby the hearts and minds of all taxpayers rather than just a few pollies who seem to give out so much of my taxes to groups I have no desired to support. If I have tompay tax at least let me participate in the direction on funding allocation.

    If this is all too hard how a about a zero-based budget for public service departments every 5-7 years?

    /rantoff

    I’m not an economist, just thinking out loud

  30. There is no point in just giving money to the government to be squandered as usually. A better idea would be for the government o put out proposals for harbours or roads and rail, these then to be financed and implemented by private money on a recognition basis. That way we would have proper risk analysis, business cases analysed and the hand of government kept out.

  31. wreckage

    reward or punish the government.

    So of course the Right thinks it’s a great idea.

    Actually it’s much more indirect in terms of advancing ideology.

  32. wreckage

    Lutz; pretty much what I think.

  33. Jeremiah

    What about a variable taxation scheme a bit like the above the line or below the line voting at elections?

    I like it! Arts and indigenous funding would take a massive cut Australia wide I reckon. Two of the most rorted areas of funding ever. Show me your programs are delivering or I’ll turn off the tap. You can campaign and protest against individual ministers or Governments to make them look evil, but good luck doing the same thing with the common taxpayer.

  34. F'legend

    You picked it one Jeremiah 🙂

    I can think of plenty of areas that would receive zero. If I have to forcibly pay tax at least I would have a much more vested interest in the use of those hard earned taxes.

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