Not breaking news: Many don’t pay net tax

The Daily Telegraph has a breathless headline this morning.

Welcome to the welfare nation: Half of Australia’s families pay no net tax

Then we read:

HALF of Australian families receive more in handouts than they pay in net income tax, new figures reveal.

As the Abbott government sharpens its budget razor on welfare, the figures reveal just how dependent we’ve become.

The exclusive modelling for The Daily Telegraph by the National Centre for Social and Economic Modelling at the University of Canberra reveals 48 per cent of Australia’s 12.2 million “income units” pay no net tax. Any tax they do contribute is offset by the welfare — pensions, family tax benefits or childcare rebates — they receive.

Except this isn’t news. Here is Peter Costello making the point in August 2007.

Cutting taxes has actually been a way of delivering benefits to families, particularly low-income families and bear this in mind – now, under the changes of this government, something like 60 per cent of Australian families are paying no net tax. That is, their family tax benefits are outweighing their tax liabilities and that’s something that’s actually really helped Australian families.

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44 Responses to Not breaking news: Many don’t pay net tax

  1. Uber

    Well it will be news for most people.

  2. ar

    Paying no tax is a good thing… as long as it isn’t achieved through handouts… governments love churn, it’s what they do…

  3. Infidel Tiger

    Half don’t pay net tax?

    Here’s a good idea: lets slug those that do! That’ll share the burden.

  4. Gab

    HALF of Australian families receive more in handouts than they pay in net income tax, new figures reveal.

    Geez Louise, better up the taxes on the half that do then.

  5. Tom

    Here is Peter Costello making the point in August 2007

    … when he was Federal Treasurer in a doomed government trying to pork-barrel its way back into power.

    that’s actually really helped Australian families.

    … and we’ll just ignore the fact that moochers who get money from the magic government money tree are now the majority in the voting population and any future government that tries to reel in this fiscal death spiral will simply milk the net-taxpaying minority ever harder and lie to them about its true intentions. Voila! Tony Abbott!

  6. manalive

    Not breaking news: Many don’t pay net tax …
    Welcome to the welfare nation: Half of Australia’s families pay no net tax …
    48 per cent of Australia’s 12.2 million “income units” pay no net tax …
    60 per cent of Australian families are paying no net tax …

    For pity’s sake are they talking about income tax or total tax?

  7. Chris M

    … and that’s a good thing.

    But this is only talking about income tax, there are hundreds of other hidden and not-so-hidden taxes, levies and fees that everyone gets to pay of course.

  8. roo

    Mitt Romney made a similar statement as presidential candidate which alienated voters.
    Mitt aquired his wealth as a financial engineer at Bain & Co. via slash and burn leverage buyouts- euphemistically called ‘private equity’.
    US Banks recieved trillions of TARP $$$ despite aggessively lobbying for tax rorts and using taxhavens. ( taking bailouts was the death neo-con ideology)

    Very few of the wealthly accumulate wealth through lassiez faire entrepreneurship in Australia. We have incredible amounts of rent seeking by big business, most notably the Big 4 banks & in retailing Wesfarmers/Woollies.

  9. H B Bear

    Governments on both sides don’t have any real incentive to stop the tax-welfare churn.

    Ask J W Howard.

  10. Fibro

    Wonder what favour Hockey had the promise the Daily Tellie for that headline today.

  11. .

    Welcome to the welfare nation: Half of Australia’s families pay no net tax

    Wrong.

    Everyone still pays too much tax.

    Someone who pays no net INCOME tax still faces an effective all-up tax rate between 30-40% on their disposable (same as taxable) income.

    Everyone pays too much tax, this country has pointless welfare and has the very successful pay for it many times over, under the pretense of defending law and order, defence or civilisation itself.

    The upshot of this inefficiency, high taxes and waste is that we are all impoverishing ourselves.

  12. Ant

    If it wasn’t for the “1%”, the 50% would be scratching around the dirt looking for grass roots to eat.

  13. manalive

    Direct and indirect taxes as percentage of income by quintiles of equivalised disposable income, Australia, 2009–10
    Source: Calculated from ABS, Government Benefits, Taxes and Household Income, Australia, 2009-10.

  14. .

    Don’t fucking trust Peter Whiteford.

    Once I dug up a Treasury paper on Federal taxation and he called me liar for citing the paper.

    I was too young and naive and relented from his condescending smart arsed BS.

    If I knew better I would have given him both barrels for being such an oleaginous dickhead.

  15. Combine_Dave

    Not breaking news: Many don’t pay net tax …
    Welcome to the welfare nation: Half of Australia’s families pay no net tax …
    48 per cent of Australia’s 12.2 million “income units” pay no net tax …
    60 per cent of Australian families are paying no net tax …

    Did they include “benefits” such as receiving ABC broadcasts (their kids watching ABC2) , using public roads, public health and public education?

    In which case the ratio of benefits vs overall tax take may be even more skewed in favour of those lucky few, who pay little tax (relatively, given how high taxing Australia is becoming).

  16. hzhousewife

    governments love churn, it’s what they do…

    it is a way of keeping the population “occupied” ( I was going to say in work,
    but “work” implies productivity….)

  17. RodClarke

    Half of Australia’s families pay no net tax

    Alternative Headline

    “Half of Australia’s families have no incentive to earn more money because the’ll loose welfare handouts”

  18. Half of Australia’s families have no incentive to earn more money because the’ll loose welfare handouts

    Sounds fine to me.
    It reads better as thus:

    Half of Australia’s families have no incentive to earn more money because the’ll lose welfare handouts

    … which has the opposite meaning.

  19. RodClarke

    sorry…public education….”whole language” guessing spelling

  20. MemoryVault

    Sometimes you need to read more than the leader lines, folks. The story starts with this:

    The exclusive modelling for News Corp Australia by the National Centre for Social and Economic Modelling at the University of Canberra reveals 48 per cent of Australia’s 12.2 million “income units” pay no net tax.

    Which sounds terrible – half of society “aren’t paying their way”
    But then buried deep down, we read this:

    “I guess you have got to keep in mind that about 3.2 million of these 12.2 million families are not of working age, they’re either very young students or the vast majority would be aged pensioners and self-funded retirees — both those groups don’t pay tax,” Mr Phillips said.

    Well, who’d a thunk it.
    Schoolkids, aged pensioners and self-funded retirees are not paying their fair share.
    And which of these three groups can be taxed?

    I warned you lot three months ago “they” were out to get your super.
    I got bucketed by all and Sinc called labelled me a “fuckwit”.

    Now all that’s left is to think of a catchy name.
    “Fair Share Levy” – “Debt Contribution” p’raps?

    I just hope smug Ms MareeS from a previous thread is getting all this.

  21. Andrew

    It’s not a bug – it’s a feature. Which is fine – low income earners are effectively tax free, including most pensioners. (Which does NOT imply confiscation, MV.) Only becomes a problem if this 47% become greedy scumbags and demand ever increasing returns for their non tax, or worse – actively try to destroy the 53% by killing them with energy, mining, wealth taxes, green bans on 50% of the oceans and forests and occupation. What Howard6666 did was honourable to create a low tax society. It just couldn’t be trusted to the Regressives.

  22. brc

    Had an interesting conversation with an old friend last night. Going through a separation with his wife. The break came when she pocketed some centrelink payment and went on holiday to NZ with her family while the money was supposed to pay for other things.

    Anyway, he quit his job to be more flexible with children, and turns out she has been running her cash business off the books for years, so she hasn’t paid tax, and he has been woking a second job on a cash basis as well. So she can’t buy him out of the house because the bank won’t lend becaue no income history and they’ve both been sucking down all sorts of centrelink goodies in the meantime.

    Now you and I, the net-taxpayers, are funding two houses and the situation doesn’t look like resolving anytime soon. He would happily bunk down in a shared room but has been advised without his own place courts will likely restrict access for kids.

    Oh, ad the kids are in a private school by the way.

    All the while this sort of thing can go on via the taxpayer we are going to go nowhere. These people aren’t malicious welfare cheats, but they are rational people and the governemtn sends them the money, so they take it.

  23. manalive

    Don’t fucking trust Peter Whiteford …

    The graph looked a bit dodgy to me (a layman) particularly for the “richest’ quintile.
    In any case a similar visual representation showing how income and total tax is apportioned would be helpful in discussions like this.

  24. Alex Davidson

    One of the subheadings is typical statist misrepresentation:

    Disability support pensioners to be banned from long overseas holidays

    No-one is talking about banning them from taking long overseas holidays, just not at everyone else’s expense.

    What the figures show more than anything is the fatal flaw of unlimited democracy: allowing property rights to be violated through the ballot box always leads to voters voting themselves other people’s money.

  25. rickw

    So the whole Australian taxation system simply circulates money between Government and Middle to Low income earners whilst extracting money from Higher income earners? What a mess.

  26. .

    I warned you lot three months ago “they” were out to get your super.
    I got bucketed by all and Sinc called labelled me a “fuckwit”.

    I agree with you, see my guest post on 25 May 2102.

    http://catallaxyfiles.com/2012/05/15/guest-post-is-superannuation-a-socialist-plot/

  27. sabrina

    Many of those who pay, pay too much tax in several ways.

    I am curious, what about the companies? is there any readily available data? What proportion of tax revenues in this country comes from companies?

  28. Simon

    Surely this is a good thing, without this churn you would have to pay these people much higher wages so that they could survive and work. Unless you want it look like Zambia, with people living in mud huts and walking to work barefoot. Think how many companies posing as public utilities would lose their bread and butter and how many conveniences utilized by all classes would lose their ability to stay open. Face the fact that if it made economic sense someone at some time would have made low income earners tax exempt in exchange for no government largess. I’m calling BS on this one as it wilfully dismisses to many intangible benefits of these welfare schemes (no I don’t endorse the welfare state). Most of these payments are just indirect subsidies to certain industries anyway, note that the rise of this household payment regime occurred at about the same time protectionism became internationally unfashionable.

  29. Splatacrobat

    So the whole Australian taxation system simply circulates money between Government and Middle to Low income earners whilst extracting money from Higher income earners? What a mess.

    Dissolve State government.
    Set up local government aligned to current Federal electorates.
    10% GST. No exemptions
    GST dispersed to 150 Councils based on GST raised within Council postcode.
    Council responsible for usual local government services including hospital and school boards adhering to Federal guidelines
    20% Income tax. No exemptions
    Federal responsibility towards defence, emergency services, law enforcement, social services
    30% Company tax. No exemptions
    Federal responsibility towards Infrastructure, trade and investment, Communications, industry, employment, agriculture etc.

    All other state and federal taxes, excises, royalties and levies to be funnelled into a reserve fund with the sole intention of paying off the debt. After this has been achieved most of these taxes can be repealed and those kept and reduced can be channelled into the future fund.

  30. Notafan

    No long overseas holidays for DSP, all payments to welfare recipients except age pensioners should cease the moment they step on a plane, they should then have to reapply on their return to Australia and get grilled about how the trip was funded. It they do that they can stay overseas as long as they like.
    Anyone who has arrived as a refugee should immediately lose their status if the return to the country from which they sought refuge, unless the country has undergone a significant regime change.

  31. brc

    Surely this is a good thing, without this churn you would have to pay these people much higher wages so that they could survive and work

    Wow, just wow. Cycling through redundant layer s of public servants is better otherwise you’d have to pay people more money?

    Maybe if people could keep more of what they earnt, and the public service was downsized, then gross pay wouldn’t need to be that high?

    Income tax is the largest expense for most people above a certain pay level, which isn’t that high. The next highest expense is paying rent or mortgage, which includes at least 40% tax as well.

    In other words, for most people, the cost of government is the most expensive thing they have. A large majority of this spending is for things the average person will never benefit from.

    The fastest way to make them better off is to remove this unnecessary cost impost from their life. People wouldn’t care so much if they had to pay for schools or doctors if they got back a substantial proportion of their income to spend as they chose. And thats before we start on foreign aid largesse or arts grants or industry subsidies or a hundred other useless things.

  32. .

    Simon
    #1298630, posted on May 9, 2014 at 12:12 pm
    Surely this is a good thing, without this churn you would have to pay these people much higher wages so that they could survive and work.

    No.

    You make it hard for us not to target you with blistering precision guided invective.

    They get paid wages. We tax them. We give it back.

    The solution would be to not tax them and not subsidise them.

    If you do two wasteful and equally opposite counterproductive actions – the best course of action is to stop doing both of them as soon as possible.

  33. Combine_Dave

    No long overseas holidays for DSP, all payments to welfare recipients except age pensioners should cease the moment they step on a plane, they should then have to reapply on their return to Australia and get grilled about how the trip was funded. It they do that they can stay overseas as long as they like.

    Why not include pensioners on this as well?

  34. Derp

    No, we’re low taxed and doing just fine and swimming in OECD gravy.
    The latest Australia Institute graphic my GetUp! addicted Facebook friends tells me so.

  35. Dave Wane

    The old Tom T Hall song applies to this revelation, but also to the sad and sorry state of our “gimee, gimee, gimee”, hand-out mentality state.

    We got too many do-goods
    And not enough hard working men
    We got too many hands out
    And not enough lendin’ a hand

    We got too many thinkers
    Looking for the answer in the wind
    Hey, we got too many do-goods
    And not enough hard working men

    We got poets and prophets
    And some folks are readin’ the stars
    If we’d look a little closer to home
    We might find who we are

    We got all kinds of sermons
    In booklets and pamphlets on sin
    Hey, we got too many do-goods
    And not enough hard working men

    We got too many do-goods
    And not enough hard working men
    We got too many hands out
    And not enough lendin’ a hand

    We got clubs and committees
    Who know all about wrong and right
    Oh, but I’ve seen some children
    Who starved plumb to death on advice

    I appreciate your sympathy
    And I believe in missionary work
    But a little bit of bendin’ down
    And pickin’ up your brother wouldn’t hurt

    We got too many do-goods
    And not enough hard working men
    We got too many hands out
    And not enough lendin’ a hand
    .

    Songwriters
    HALL

    Published by
    Lyrics © Sony/ATV Music Publishing LLC

    Read more: Tom T. Hall – Too Many Do-Goods Lyrics | MetroLyrics

  36. Notafan

    Combine Dave I would but I was a bit too chicken to suggest it, the part age pension entitled are so numerous and can have quite a high amounts of assets quite a few could afford to go overseas.

  37. Leo G

    HALF of Australian families receive more in handouts than they pay in net income tax, new figures reveal.

    The revealing figures are nonsense. They appear to be derived from a process of ordering equivalised households by statistical income group (or tax on income) and comparing with the cash value of social assistance benefits for the same statistical groups.
    A statistical group for which the average value of social assistance exceeds the average of income tax for the group does NOT imply that the same situation applies for every household in the statistical group.

  38. Disillusioned

    Sometimes it seems that taxpayers are treated like smokers. The more smokers that give up causes the tax base to erode so the government increases the tobacco excise to top up the tax pool. Looks to me to be the same approach with taxpayers but they are bought off with middle class welfare to lessen the pain but make them more addicted to big government. Petrol will become the new tobacco when enough people cease smoking along with an attack on the alcohol interests. What will they do when we don’t smoke, drive or drink? Levy cyclists and pedestrians?

  39. Monkey's Uncle

    It’s not a bug – it’s a feature. Which is fine – low income earners are effectively tax free, including most pensioners. (Which does NOT imply confiscation, MV.) Only becomes a problem if this 47% become greedy scumbags and demand ever increasing returns for their non tax, or worse – actively try to destroy the 53% by killing them with energy, mining, wealth taxes, green bans on 50% of the oceans and forests and occupation

    I agree with this sentiment. Up to a point I support progressive taxation. However, if it means that the section of the population that are not net payers start becoming greedy and mercenary, and demand more and more goodies in the belief that the cost can be passed on to the net payers, it becomes perverse and needs to be reigned in.

    If all government expenditure was funded by a flat tax (either on income, households or consumption), and there was a balanced budget rule that required all government expenditure to lead to an immediate increase in the tax, people would be less likely to support more new government programs or spending like the NBN, Gonski, NDIS, PPL, more money for pensioners etc. if everyone saw the immediate increase in their tax bills. The only reason people support such things is that they asssume the costs can be deferred or passed on to someone else.

  40. Monkey's Uncle

    But this is only talking about income tax, there are hundreds of other hidden and not-so-hidden taxes, levies and fees that everyone gets to pay of course.

    Against that is the fact that direct cash payments or income support only represents one kind of benefit people receive from the government. People also typically derive benefit, either directly or indirectly, from public expenditure on roads, schools, hospitals, defence etc. So you could say the other indirect taxes are to pay for those other things.

    It remains an interesting and meaningful comparison as to what proportion of the population pay less in income tax compared to what they receive in direct cash assistance.

  41. Leo G

    Against that is the fact that direct cash payments or income support only represents one kind of benefit people receive from the government. People also typically derive benefit, either directly or indirectly, from public expenditure on roads, schools, hospitals, defence etc

    People can directly or indirectly benefit from public or private expenditure on anything. People benefit indirectly from social assistance to their neighbours or their employees.
    Parts of government expenditure supports corporate business, defence of property, development of property interests etc. How do we assign an appropriate proportion of that expenditure as a benefit to households? According to household wealth?

  42. roo

    Mitt Romney’s 47% video which cost him US presidency.

    It’s called political economy for good reason wealth elites still need to manipulate the ignorance of the middle class to rule.

    ‘ I have a Packer in my clacker’ is the first Telegraph headline I’ve read in years. Who gives a f@%k what their readership think!
    Romney video article.

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