Day 8 of a broken promise

Key ministers including Joe Hockey and Finance Minister Mathias Cormann have argued that a tax increase was one of the few ways to ensure those on high incomes bore some of the pain from the budget.

What Joe Hockey and Mathias Cormann aren’t saying is that high income Australians already bear much of the burden of financing Australia’s excessive public spending.

For several years I have been collecting data from the ATO and graphing the share of the net income tax paid by the top 25% on net income tax payers, the middle 50% and the bottom 25%. The latest ATO data came out last week. The graph is below – as can be seen the top 25% of income earners (those taxpayers with an income above $75,650) paid 67.4% of all net income tax in the 2011-12 financial year. Mind you, it isn’t all bad news, the top 25% share is down from 67.9% the year before.

Net tax share 2014

Update: Peter Costello tells it:

The Liberal Party could be caught out campaigning for a tax rise that will never pass into law. All on the grounds it has to be seen to do something to the middle and upper-middle wage earners who voted for it.

When Labor was handing out money like confetti to “stimulate” the economy with pension bonuses, tax bonuses, back to school bonuses, it wasn’t going to those people. They just kept working and paying their taxes and hoping for a better Government. Very few would have expected a Coalition Government to propose higher income taxes than the previous Labor government.

This entry was posted in 2013 election, Budget, Taxation. Bookmark the permalink.

61 Responses to Day 8 of a broken promise

  1. Notafan

    What about a graph of non taxpayers? You know like self funded retirees who only lodge tax returns to get back the franking credits.
    Do many people know how much the over 60s can make before paying tax?
    I saw an article from a country accountant once that said no farmer over 60 should be paying tax.

  2. Fisky

    No no, John Kwiggin says that the tax burden is “roughly proportional”, not progressive.

  3. Tel

    Proportional to what exactly?

  4. Fisky

    Kwiggin used to claim that the rich paid “roughly” the same income % as the poor.

  5. Senile Old Guy

    Liberals really say some stupid things:

    Queensland Liberal National Party federal MP Ewen Jones said he could support the tax change despite the political dangers as long as it was part of wider reforms to cut the deficit.

    “I don’t know anyone who has repaid a loan without making payments,” Mr Jones said. “I trust Joe Hockey on this implicitly. Joe would not do it lightly.”

    I repay money I have been loaned but I don’t borrow more than I can afford and then stick my hand into everyone else’s — wait, “well off, high income earners” — pockets for the difference.

    Andrew Bolt:

    The Government’s sales job is not good and I think some of what it’s proposing had better be dropped before worse happens than this Newspoll:

    SUPPORT for the Coalition has plunged to its lowest level in almost four years and voter dis¬satisfaction with Tony Abbott has jumped to the highest point since he became Prime Minister…

  6. johno

    Progressive income tax is grossly unfair. One quarter of taxpayers forced to carry two thirds of the burden is outrageous.

    Worse is that it encourages the majority to demand more and more of government in the belief that ‘the rich’ will be made to pay for their free stuff.

  7. Combine_Dave

    Worse is that it encourages the majority to demand more and more of government in the belief that ‘the rich’ will be made to pay for their free stuff.

    That’s exactly why it’s so hard for the Libs to give up on their poisonous big spending dreams; NBN, Gonski, NDIS while slugging us all with a big tax to pay for it.

    Labor and the MSM won’t give them credit for implementing Labor (initially) policies. And they’ll certainly make a lot of political gain from the broken “no new tax” promise.

  8. Fleeced

    Day 8 of insanity… politically clueless.

    And PPL and “Aboriginal Constitutional Recognition” issues to chew threw more political capital yet to come.

  9. Chris M

    Australians are normally politically apathetic so I think this backlash against the deficit tax and the carbon / mining taxes prior to that is fantastic.

    Any party that thinks it can raise taxes now must know they are finished.

  10. .

    I estimate an all up effective tax rate on the total wage bill of the rich to poor varies from 40-70% roughly.

    It is progressive. The rich pay too much. As do the poor.

  11. .

    Day 8 of a broken promise

    Brilliant stuff, Professor.

    Keep at it.

  12. Chris M

    “The Coalition government’s proposed deficit levy will have no economic benefit and is purely a political move, former treasurer Peter Costello says.

    And the man who headed up a review of government spending, Tony Shepherd, has also cautioned the government against introducing the levy because it could cause a shock to the system.”

    No kidding. the only way Abbott can claw back now is to chuck the thing into reverse and dump the clutch. On budget night “Heh, we were only messing with the media…. tonight I announce income tax cuts as a means to stimulate the Australian economy….”

  13. egg_

    Day 8 of insanity… politically clueless.

    In the political wilderness with Kokoda Joe and a busted@rse compass…

  14. Bear Necessities

    Hello my name is Joe Hockey.
    People call me Forrest Gump.

  15. Senile Old Guy

    The interesting thing with the News Poll just out is that there has been no increase for the ALP; the change has gone to the minor parties.

    So the Liberals have very successfully…p*ssed off their supporters and swinging voters. And the rusted on ALP/Green voters still won’t vote Coalition.

    Well done!

  16. Chris M (above) has hit the nail fair smack centre:

    …the only way Abbott can claw back now is to chuck the thing into reverse and dump the clutch. On budget night “Heh, we were only messing with the media…. tonight I announce income tax cuts as a means to stimulate the Australian economy….”

  17. Dr Faustus

    “Worse is that it encourages the majority to demand more and more of government in the belief that ‘the rich’ will be made to pay for their free stuff.”
    +1

    Look right around the world at the social dominance of First World welfarism. Governments of all stripes are hostage to voting publics conditioned to expect free stuff as though the State provides it. It’s my human rights, innit?

  18. Chris M

    So the Liberals have very successfully…p*ssed off their supporters and swinging voters. And the rusted on ALP/Green voters still won’t vote Coalition.

    Yes should be a boost for Family First. Many of them have been economic Luddites but I like Bob Day, he seems very good.

  19. Anne

    Time for the LDP to step up and start spruiking Classical Liberal Values.

  20. Infidel Tiger

    The long national nightmare of Abbott will soon be over.

  21. Andrew

    If they back down now all their stupid comments defending it will be thrown in their face too.

    Anyhow, what Costello said. I didn’t cause this. I copped a tax increase with the carbon tax – no compensation. I got a tax increase with the healthcare rebate. I have been flagged for an FBT increase under Bowen’s policy. I got an NDIS tax, after paying for the flood reconstruction through a levy. And I paid the top rate (on more income due to bracket creep) while saving enough in super to never claim on the age pension in return – or the dole. Exactly how the fuck is it my job to clean up after the RGR atrocity let alone the other new thought bubbles?

    Here’s whose job it is: all the scum who campaigned for Rudd to lower the shields and draw 51,000 welfare seekers. We can levy all of them to put enough money in the Future Fund for their future welfare (net of the tax they are actuarially calculated to pay). Then the scum who barracked for the WBCT which saw 100,000 peles added to the dole queue while the rest of the world recovered. Again, a fund to care for those people until they all return to new jobs.

    Then the people who got $900 after the GFC was over.

    Then the corrupt builders who overcharged the BER. Let’s be kind and use private schools as the benchmark, assuming no gouging there. So. Just the 37% repaid please.

    Then the set top box installers at $719 per pensioner. Buy each of them a digital TV from your fraud.

    Then the Senior Labor Figures who took their wives and/or girlfriends on $70k study tours of Europe.

    Then Gillard repay the AWU fraud with a lien on her homes and professorial emolument.

    Then if you’re still short, come and see me.

  22. Bear Necessities

    I just sent Peter Costello’s quote above to my local Liberal MHR. I think it sums it up in a nutshell.

  23. Joe Goodacre

    Anne,

    Time for the LDP to step up and start spruiking Classical Liberal Values.

    Exactly – maybe David Leyonhjelm could write another article about making weed illegal.

  24. Joe Goodacre

    Perhaps we underestimate Tony Abbott. I remember wondering why Abbott would disclose the border incursions to Indonesia (something that Indonesia didn’t know they had done), only for Indonesia to send patrol boats to their area in response to monitor the Australians. It came out later that actually the Indonesian boats were helping turn back illegal immigrants.

    If politics is the art of the possible – how do you make spending cuts possible.

    You get Labor and Greens to play their hand and indicate that they won’t support a tax increase.

    Labor and Greens would have been better to agree to a proposed tax increase – to indicate that it was right that the rich pay ‘their share’. Can anyone think of a better strategy in fixing the spending side of the budget without increasing taxes than the Liberals turning up on budget night and declaring that their is no debt levy, because they agree with Labor and the Greens and there is bi-partisan support for no increase in taxes. They can then argue that since the mandate was to fix the budget, they’ll do it through spending cuts.

    It seems too silly to be true, that Liberals would push a tax increase that they can’t pass in the Senate. When something’s too silly to be true, unless we think that it was a fluke that the ‘unelectable’ Abbott was elected, there may be a strategy going on here that we aren’t giving credit to.

  25. Senile Old Guy

    It seems too silly to be true, that Liberals would push a tax increase that they can’t pass in the Senate. When something’s too silly to be true, unless we think that it was a fluke that the ‘unelectable’ Abbott was elected, there may be a strategy going on here that we aren’t giving credit to.

    Given the off and on the record remarks from various Liberal politicians, this idea won’t fly. If it were true — and I don’t believe it for a second — then the Liberals would be guilty of some very cynical politics and that it itself would be a bad look.

  26. MemoryVault

    there may be a strategy going on here that we aren’t giving credit to.

    Yes. Earth may be under attack from a cloaked Klingon Warbird, and the shenanigans of the past week may just be a smokescreen to prevent panic amongst the civilian population.
    . . . or . . .
    Maybe our politicians are just all hopeless fuckwits.

    Time will tell. Meanwhile, I know which way I’m betting.

  27. Senile Old Guy

    Yes. Earth may be under attack from a cloaked Klingon Warbird, and the shenanigans of the past week may just be a smokescreen to prevent panic amongst the civilian population.

    This is more likely than a genius level strategy from the Liberals.

  28. stackja

    Liberty Quotes
    When people get used to preferential treatment, equal treatment seems like discrimination.
    — Thomas Sowell

    ALP legacy persists.
    As Australia sinks there is an argument over the deck chairs.

  29. calli

    Yes. Earth may be under attack from a cloaked Klingon Warbird, and the shenanigans of the past week may just be a smokescreen to prevent panic amongst the civilian population.

    This is more likely than a genius level strategy from the Liberals.

    Or…it could be the Kobayashi Maru scenario…a game of exquisite bluff.

    Who am I kidding?

  30. Joe Goodacre

    Senile Old Guy,

    If it were true — and I don’t believe it for a second — then the Liberals would be guilty of some very cynical politics and that it itself would be a bad look.

    Why would it look bad? No one from the Liberals has declared that a deficit tax is a certainty – they have been careful only to say that if one were introduced, it wouldn’t be a broken promise. Instead Labor and the Greens will have been trapped stating that tax increases should be off the table. I see very little downside and much upside if the budget night unfolds this way.

    Of course it’s all speculation – however many on here are quick to judge Abbott and say that he is a lying idiot. I’ve been surprised by him before – my pick is that it’s all a red herring to reaffirm that the mandate was for spending cuts – ‘see, even Labor and the Greens recognise taxes shouldn’t increase themselves’.

  31. Senile Old Guy

    Why would it look bad?

    It would look bad because, if they admitted to this, then they have been playing games of an even more underhanded kind than is common in politics.

    They would quite literally have been trying to manipulate the public; this includes messing with people’s livelihoods.

    Ask Calli how many inquiries have come in since the deficit tax idea was floated.

  32. MemoryVault

    I see very little downside and much upside if the budget night unfolds this way.

    Labor have already made and released a very effective and damning video ad about it.
    What, precisely, constitutes a”downside” to you?
    A massive drop in support in the polls?

    Oh, wait . . .

  33. stackja

    Senile Old Guy
    #1294332, posted on May 6, 2014 at 1:03 pm

    ALP messing with people’s livelihoods. And not being held responsible

  34. Senile Old Guy

    stackja, you’re a broken record. You’re stuck on one line you repeat over and over: you’re helping the ALP. Don’t do it. Exactly why you bother, and what you thin you are accomplishing, I have no idea.

  35. Joe Goodacre

    Senile Old Guy,

    It would look bad because, if they admitted to this, then they have been playing games of an even more underhanded kind than is common in politics.

    They would quite literally have been trying to manipulate the public; this includes messing with people’s livelihoods.

    So you think that Tony Abbott should bring in the tax so people aren’t messed about?

    If not – what are you arguing? What can Tony Abbott do to catch a break in your book.

    Smashed because he’s going to bring in a tax or smashed because he makes spending cuts politically possible.

  36. stackja

    Senile Old Guy
    #1294342, posted on May 6, 2014 at 1:09 pm
    stackja, you’re a broken record. You’re stuck on one line you repeat over and over: you’re helping the ALP. Don’t do it. Exactly why you bother, and what you thin you are accomplishing, I have no idea.

    The ALP is the problem. Their deficit created this mess. How my mentioned the ALP as the first and last cause of the crisis we are facing, is helping the ALP. I have no idea.

  37. Senile Old Guy

    So you think that Tony Abbott should bring in the tax so people aren’t messed about?

    I’m arguing the same thing since this started: the deficit tax should never have been contemplated but, having raised the issue, they should now kill it. The one thing Abbott said repeatedly was “no new taxes; no raised taxes”.

    What can Tony Abbott do to catch a break in your book. Smashed because he’s going to bring in a tax or smashed because he makes spending cuts politically possible.

    He hasn’t made cuts politically possible. Have you actually been following the issue?

    Support for Abbott and the Coalition has dropped significantly, with voters going to the minor parties. Support for Shorten is up but support for the ALP has not changed.

    All Abbott has done is p*ss off Coalition supporters and swinging voters.

    His “pay their fair share” gambit has done nothing for ALP supporters and Greens because they think the “well off” (anyone on $80,000) should pay off all the deficit.

  38. Joe Goodacre

    MemoryVault,

    Labor have already made and released a very effective and damning video ad about it.

    If Labor agreed with Abbott that the tax increase was necessary, he would be stuck bringing in a tax.

    A highly effective and damning video about how wrong it would be for Abbott to bring in a tax, becomes an asset if he doesn’t bring in the tax. On what grounds could Labor criticse him?

    What, precisely, constitutes a”downside” to you?
    A massive drop in support in the polls?

    The election is years away – a tough budget is now. Rudd nailed the polls when he was leader first time around at this point. Fat lot of good it did him – kicked out before finishing a term. Government is a marathon not a sprint. In a couple of years time, Abbott can run those same Labor ads and say he kept his word on tax increases – see even Labor agree. If Liberal don’t bring a tax in on budget night, I for one will take my hat off to them on how they’ve played it.

  39. stackja

    Liberty Quotes
    The heart of the matter is the way public debt allows the current generation of voters to live at the expense of those as yet too young to vote or as yet unborn. In this regard, the statistics commonly cited as government debt are themselves deeply misleading, for they encompass only the sums owed by governments in the form of bonds.
    — Niall Ferguson

    ALP does not need to worry. The suckers keep forgetting and voting them back in, about every ten years.

  40. Fisky

    So do we get a victory thread? :)

  41. brc

    I’m pleased that Peter Costello has come out and said what the Cat has been saying for a week. Higher taxes are economically wrong, and make no difference. Its done for political purposes, and it won’t work.

    If promises must be broken – then break the promises on stuff yet to come. People are more risk averse to a known loss than a possible gain. Therefore if you take away promised future goodies they will be less upset than taking away their existing income.

    I think I will also forward an excerpt from Costello to my MP.

    If you haven’t already, or haven’t done so twice, anyone reading this should do the same :

    http://www.aph.gov.au/Senators_and_Members/Guidelines_for_Contacting_Senators_and_Members

  42. Fisky

    If promises must be broken – then break the promises on stuff yet to come. People are more risk averse to a known loss than a possible gain. Therefore if you take away promised future goodies they will be less upset than taking away their existing income.

    That’s very true. Abbott could scrap NBN, NDIS and the other stuff and no one will care.

  43. .

    Joe Goodacre
    #1294259, posted on May 6, 2014 at 12:19 pm
    Anne,

    Time for the LDP to step up and start spruiking Classical Liberal Values.

    Exactly – maybe David Leyonhjelm could write another article about making weed illegal. legal

    .

    Bloody good idea – the costs of prohibition are enormous.

    We regain our civil rights and couple with tax cuts, we starve the beast from doing it once more.

  44. calli

    So do we get a victory thread?

    So maybe my Kobayashi Maru scenario wasn’t too far off the money? Magnificent bluff!

    Nah…who am I kidding? I got nuffink.

  45. stackja

    Greens will allow pot but not cuts in the budget. The Greens like pot but also like using other peoples money.

  46. .

    Andrew
    #1294083, posted on May 6, 2014 at 9:44 am
    Exactly how the fuck is it my job to clean up after the RGR atrocity let alone the other new thought bubbles?

    I agree wholeheartedly, Andrew. I will double my efforts to legally minimise my level of taxation until Commonwealth debt returns to $0 or there is a pot of surpluses.

    I urge all others to do the same, and where legal, tax resist.

  47. egg_

    Earth may be under attack from a cloaked Klingon Warbird, and the shenanigans of the past week may just be a smokescreen to prevent panic amongst the civilian population.

    Nah, getting nothing on my tinfoil hat – the Libs are just tards.

  48. Senile Old Guy

    From Token on the other thread:

    Paul Sheehan‏@Paul_Sheehan
    #auspol The Abbott government will NOT be introducing a special deficit tax in next week’s budget. That balloon went up and it burst.

    I’m guessing Paul Sheehan has heard this from insiders…

  49. egg_

    The Abbott government will NOT be introducing a special deficit tax in next week’s budget. That balloon went up and it burst.

    False alarm.
    The Libs only shot themselves in the foot with a rubber bullet.

  50. Rabz

    So do we get a victory thread?

    Bit too soon to be gloating, good Sir.

    I won’t believe it until I’ve seen the budget papers.

  51. Senile Old Guy

    Bit too soon to be gloating, good Sir.

    I won’t believe it until I’ve seen the budget papers.

    Agreed. This could be yet another part of the fiendishly cunning plan that Joe has the Liberals executing, step by methodical step.

  52. stackja

    egg_
    #1294537, posted on May 6, 2014 at 3:28 pm
    The Abbott government will NOT be introducing a special deficit tax in next week’s budget. That balloon went up and it burst.
    False alarm.
    The Libs only shot themselves in the foot with a rubber bullet.

    Rubber Bullets
    http://www.youtube.com/watch?v=ZdHI3LrAYiE

  53. Senile Old Guy

    From Essential:

    34% of Australian’s support the deficit tax, while 34% oppose it. 24% neither support nor oppose.

    Lib/Nat voters (46%) are more likely to support the tax, but 24% do oppose it.

    Labor (43%) and Greens (39%) voters are more likely to oppose the tax, however 30% of Labor voters, and 20% of Greens voters support it.

    Those aged 65+ were the age group most likely to support the tax, with 52% indicating that they support it. Those aged 55-64 also had higher levels of support (40%).

    48% of Australian’s would consider a new ‘deficit’ tax to be a broken promise by the Abbott Government.

    33% believe it is more important to reduce the deficit than stick to pre-election promises.

    Labor (71%) and Green (70%) voters were more likely to consider the deficit tax a broken promise. Lib/Nat voters were more likely to think that it is more important to reduce the deficit than stick to pre-election promises (61%).

    I’ll leave the analysis to you.

  54. Rabz

    Lib/Nat voters (46%) are more likely to support the tax

    WTF? :?

  55. Senile Old Guy

    Lib/Nat voters (46%) are more likely to support the tax

    WTF? :?

    Rabz, remember that a certain Cat has been repeatedly telling us not to bag TA. And remember that the Cat demography and political views may be a bit atypical of Lib/Nat.

  56. Rococo Liberal

    I find it really inteeresting that the Government’s stock has fallen sharply for this ALP-type policy (which the ALP wouldn’t have the balls to implement). I suspect that the drop has come mostly from people like me who would vote for independents or the LDP instead.

    I don’t think anyone would vote for the squalid ALP over this. After all, would Labor repeal the levy if Labor won in 2016? I bet you they wouldn’t.

  57. Rococo Liberal

    BTW I suspect that now Costello has come out against the levy it will not go ahead.

  58. .

    I don’t think anyone would vote for the squalid ALP over this.

    Of course not. They might be suffering Stockholm Syndrome, but this doesn’t mean they’re brain dead.

  59. tomix

    Abbott could scrap NBN, NDIS and the other stuff and no one will care.

    True. But the screaming by News Corp. papers will eclipse anything seen since it got Whitlam elected.

  60. The Pugilist

    Andrew
    #1294083, posted on May 6, 2014 at 9:44 am
    Exactly how the fuck is it my job to clean up after the RGR atrocity let alone the other new thought bubbles?

    I agree wholeheartedly, Andrew. I will double my efforts to legally minimise my level of taxation until Commonwealth debt returns to $0 or there is a pot of surpluses.

    I urge all others to do the same, and where legal, tax resist.

    Damn straight. Bout time I salary sacrifice a new car I reckon…

  61. Sean

    Given public servants pay tax merely as an accounting exercise. It would be interesting to see the numbers with their salaries removed.

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