Tax Stats 2014-15

Every year the ATO put out their annual Tax Stats report. It is a treasure trove. I have – since the early noughties – been keeping track of the proportions on net income tax being paid by various income groups. I have data back to 1996-97 and can now update the 2014-15 data.

The top 25%, middle 50%, and bottom 25% shares of personal net income tax.

The top 5% – net income tax share and effective tax rate.

Distribution of net company tax – share and effective tax rates of the largest firms (firms with a taxable income of greater than $1000000).

Undermining, as always, the argument that “the rich” and the “big end of town” aren’t paying their “fair share” of tax.

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50 Responses to Tax Stats 2014-15

  1. Fisky

    So basically, John Howard engaged in massive redistribution, which stopped increasing after he lost power.

  2. Undermining, as always, the argument that “the rich” and the “big end of town” aren’t paying their “fair share” of tax.

    Until the top earners pay every cent they earn back in tax, the same cry will continue.

  3. Tim Neilson

    Fisky, these charts concern tax, but don’t address welfare. Howard gets criticised on this site (with monotonous regularity) for his alleged enormous expansion of “middle class welfare”, and perhaps rightly so. But to draw a conclusion about “redistribution” without taking welfare into account is unlikely to be illuminating.
    (Of course, I’d be happy to live under a regime where my wealth doubled even if other people’s trebled, and I don’t think that the middle class were losers economically from Howard’s tenure.)

  4. Leo G

    The top 25%, middle 50%, and bottom 25% shares of personal net income tax.

    Shouldn’t that be the shares of net income tax by the top 25%, middle 50%, and bottom 25% of income earners?

  5. jupes

    Imagine if there was a political party that could highlight these stats to the public whenever Labor banged on about ‘fairness’.

    It might even help them if they ever tried to do something in the national interest like, oh I don’t know, cut welfare or something.

  6. Motelier

    I am currently slumming in Nimbin for the afternoon.

    First observations are of lots of “cash” businesses doing a pretty good trade midweek.

    Any chance of tax receipts by location?

  7. What are you talking about!! Swanee told us that the fair share of da filthy rich is 110%

  8. Suburban Boy

    Sinc: Picking up the point made above by Leo G, I believe the stats you are providing are percentages of (income) taxpayers, not the whole population, so they actually overstate the size of the stratum which is paying the lion’s share of income tax.

    Could you recalculate the numbers as percentages of all adults, not just taxpayers? (If you can’t, I’ll do it and post the numbers here later today.)

  9. stackja

    ALP/MSM insist “the rich” and the “big end of town” aren’t paying their “fair share” of tax.

  10. The BigBlueCat

    Don;’t confuse facts with the left’s narrative … they just want the higher earners to be taxed more irrespective of whether or not in historical terms they’ve maintained or increased their tax contribution. To them, income redistribution is the reason they exist so that the taxation system can show their type of “fairness” and “justice”, and they can live off the hard work of others.

    Eventuslly, they will run out of other people’s money ….

  11. I’m finding it difficult to understand Suburban Boy’s point. It sounds like he is referring to the black market of people earning income but not paying tax. If so, how will the ATO stats uncover them?

  12. Pete of Perth

    What happens if you remove government “workers”?

  13. PeteD

    Isn’t suburban boy pointing out that say only 15% of adults pay 60+% of income tax.

    That’s a pretty significant change from 25% of tax returns, when you look at it more carefully. Especially now less people need to lodge anything when income is below the threshold and no Private Health Insurance.

  14. Sinclair Davidson

    Shouldn’t that be the shares of net income tax by the top 25%, middle 50%, and bottom 25% of income earners?

    No – that is is the share of net income tax paid by the top 25% of net income taxpayers, middle 50% of net income taxpayers, and bottom 25% of net income taxpayers.

    I believe the stats you are providing are percentages of (income) taxpayers, not the whole population, so they actually overstate the size of the stratum which is paying the lion’s share of income tax.

    Yes – that is correct. Just under 2.5 million taxpayers contributed 67% of personal net income tax. It is not clear to me how you would “recalculate the numbers as percentages of all adults” – apart from what I have just done. So as a rule of thumb is just about half of the population pays tax, and a quarter pay the lions share then just on 12% or so are paying the lion share as a percentage of the entire population.

  15. Sinclair Davidson

    Any chance of tax receipts by location?

    By postcode, yes.

  16. Confused Old Misfit

    What is *Net Income Tax* and conversely, what might #Gross Income Tax* be?
    (Asking for a friend :))

  17. Sinclair Davidson

    What is *Net Income Tax* and conversely, what might #Gross Income Tax* be?

    Definitions here.

  18. Kingsley

    What do you have to earn to crack the top 25%?

  19. Sinclair Davidson

    What do you have to earn to crack the top 25%?

    $82,000.
    Top 5% > $167,000.
    Top 1% > $326,000.

  20. dauf

    well done. beautiful but depressing.

    Where is our government in using this type of data instead of the endless…its not fair for people on low incomes to pay any more tax or take any cuts.

    Australia has a warped sense of fairness

  21. RobK

    Thanks Sinc,
    To follow from Kingsley’s query, what are the nett taxable incomes at the 25, 50 and 25 percentiles?

  22. RobK

    Don’t get me wrong, I’m all for lower taxes for everyone and I’ve spent most of today working outside so I might be interpreting the stats wrong, but, ..doesn’t this analysis merely show the top 25% pay 2/3 of the total tax take. Could that not simply mean the top 1% are heading off the edge of the graph and good luck to them but I’m not sure about how fairness is measured so it’s difficult to draw conclusions. To put it another way, if the bottom 25% paid the same amount as the top 25%, that would seem strange. Of coarse a more complete picture would include the welfare components paid.

  23. Tel

    So basically, John Howard engaged in massive redistribution, which stopped increasing after he lost power.

    No it’s worse than that… when it stopped increasing the economy hit the GFC and started to implode into debt.

    This would suggest some process has been going on for quite a while, but the problem was hidden by just dipping into the pockets of the wealthy. At some point that no longer became possible and government shifted their growing tax base over to debt (i.e. taxing the unborn) but still the process continues. We are staring down a Greece scenario and there won’t be any back and forth over bailouts.

  24. Tim Neilson

    It’s probably even more skewed than the graph makes out. From Sinc’s link, “net tax” is calculated net of “refundable tax credits”. So if you run your business through a company and pay yourself a dividend every now and then, the company tax you’ve generated doesn’t get into the stats above. Not sure whether that could be quantified, and I think that politically it’s too much of a complication to form part of any messaging, but the above graphs certainly aren’t overstating the refutation of the “progressive” falsehoods.

  25. Tel

    What do you have to earn to crack the top 25%?

    $82,000.
    Top 5% > $167,000.
    Top 1% > $326,000.

    What about for a family / household / politically-correct-economic-unit ?

  26. Suburban Boy

    Here are my calculations of income tax paid for the total adult population. The income tax figures are “net tax” (taken from Individual Table 16A of the 2014-15 Tax Stats). The population used is total resident population aged 18+ for FY2015 (calculated as half of the sum of the populations at 30 June 2014 and 30 June 2015, from figures in ABS Cat No 3101.0). Of course, some taxpayers are under 18 and some are not resident, but I assume that both categories are immaterial for the purposes of these figures.

    Top 1.1% of population paid 22.4% of income tax
    Top 5.4% of population paid 45.1% of income tax
    Top 10.3% of population paid 59.8% of income tax
    Top 20.0% of population paid 78.7% of income tax
    Top 50.2% of population paid 99.7% of income tax

    First 26.6% of income tax paid by 1.6% of population
    First 50.7% of income tax paid by 7.0% of population
    First 75.2% of income tax paid by 17.8% of population
    100% of income tax paid by 54.3% of population

  27. Sinclair Davidson

    What about for a family / household / politically-correct-economic-unit ?

    That data are not available from the ATO.

  28. Suburban Boy

    Non-resident taxpayers paid 0.35% of all income tax ($630m out of $177.6bn) (Individuals Table 11). Under-18 taxpayers paid 0.03% of all income tax ($49m out of $177.6bn) (Individuals Table 3A).

  29. Confused Old Misfit

    Thanks Professor D!

  30. Suburban Boy

    What about for a family / household / politically-correct-economic-unit ?

    ABS publishes figures for household income in Cat No 6523.0. Latest figures (for 2013-14) show that you needed $2600 pw ($135k pa, more or less) to be in the top 25.9% of households by income. For the top 5.4% of households it is $5000 pw ($260k pa). The ABS figures don’t have any breakdown of that $5000+ pw figure.

  31. Sinclair Davidson

    The ABS data are not the ATO data. They are survey data – the ATO data are actual tax data.

  32. Motelier

    Thanks Sinc,

    I will try to have a look at the stats by postcode.

    Nimbin really is an eye opener.

    Sure,it prolly has a huge number of social security benefits recievers, but there appears to be a fairly large cohort of very profitable businesses.

    The café we had lunch at had two cooks*, three front counter servers, two baristas, and, 3 wait staff, all of whom fitted the image uniform(dreadlocks, piercings, tatootoos and counter culture apparrel).

    Yes, eftpos was available and I suspect due to a number of coach tours in the area, payment by direct deposit, however we were encouraged to pay by cash.

    I am sort of guessing here, but I get the feeling that not all is being accounted for.

    If pollies want to beat the drum of companies and high net worth individuals not paying their fair share, then a root and review of all income should take place, including whether an electorate is either a net taxpayer or not.

    If electorates are not net taxpayers, then, the pollies that have been elected on a jobs and growth platform should be held accountable for underperformance of duty.

    A safe Easter to you and yours Sinclair.

  33. Top 20.0% of population paid 78.7% of income tax

    The 80:20 rule. How strange it pops up here.

  34. hzhousewife

    I am sort of guessing here, but I get the feeling that not all is being accounted for.

    roflmao -you don’t say !!!!!!!!!!!!!!!

  35. John Angelico

    Motelier #2353697, posted on April 13, 2017, at 9:19 pm

    Thanks Sinc,

    I am sort of guessing here, but I get the feeling that not all is being accounted for.

    I am sort of guessing that your sort of guessing by understatement is sort of trite, n’est pas?

  36. .

    Is there a top 20% of welfare recipients who get 80% of the benefits?

  37. Motelier

    I am serious guys.

    I will have to do more research.

    BTW, the food (chicken parmiagana) was pretty low rent, so my guess is the cooks had little experience in the kitchen.

    There were lots of stalls, again cash only.

    We have been audited twice by the ATO, how many times do the ATO go for a walk through in Nimbin.

  38. .

    Real businesses are yucky and dirty, y’see.

  39. Snoopy

    BTW, the food (chicken parmiagana) was pretty low rent, so my guess is the cooks had little experience in the kitchen.

    You should have gone with the special mushroom risotto.

  40. RobK

    Thanks Sinc and Suburban Boy. A good read.

  41. RobK

    Tel,
    I share your view expressed at 7pm.

  42. struth

    Thanks Sinclair.

    It may have already been asked above, but to me it is always the same question.
    Are Public servants tax taken into account.?
    I bet they are.
    Of course they do not pay tax.
    It looks to them as if they do.
    Their gross wage is paid by the private sector and therefore the public sector, being so huge in Australia, needs to be discounted from figures.
    I can’t see how we can get a clear picture otherwise.

  43. The Pugilist

    The café we had lunch at had two cooks*, three front counter servers, two baristas, and, 3 wait staff, all of whom fitted the image uniform(dreadlocks, piercings, tatootoos and counter culture apparrel).

    Yes, eftpos was available and I suspect due to a number of coach tours in the area, payment by direct deposit, however we were encouraged to pay by cash.

    I am sort of guessing here, but I get the feeling that not all is being accounted for.

    Send in the black economy taskforce! That’Lloyd fix their little red commie wagons!

  44. The Pugilist

    Damn auto correct…
    *that’ll

  45. Motelier

    If Billy wants to see higher taxes on tbe corporate sector because “fairness”, then by all means go after the tax avoiding places like Nimbin.

    Fair is fair*.

    *Too much tax kills the economy.

  46. Mother Lode

    There are a lot of envious curs out there who believe tax should be increased on the rich until they take home about the same income as a factory worker.

  47. Pingback: Tax Stats 2014-15 | Catallaxy Files | Cranky Old Crow

  48. classical_hero

    Mote, I think some places are avoiding paying taxes because the burden of pay is so high it’s better for the to be on the black market, otherwise they would have to close since they would be unprofitable. The joys of penalty rates.

  49. Sydney Boy

    Struth – of course public servants pay tax. All three tiers (federal, state, council), and even politicians, have a salary paid and then an amount withdrawn as PAYG tax. Whether the actual money goes from say, the Department of Housing to the ATO, I don’t know. But my guess is yes, for accounting purposes.

    Suburban Boy – good work with the stats. But as Sinclair points out, ABS data is only derived from surveys. They are pretty good as far as statistic sampling goes, and you can use it on a population level, but the tighter you draw down to segments of the population, the less reliable it becomes. For example, ABS will tell us that there have been 20,000 serious workplace injuries in Australia this year. This is based on a survey of about 3,000 people. To get an accurate figure and by industry group, age group of injured people, mechanism of injury etc. your only reliable source is going to be the various state safe work regulators (Workcover, etc.). For your purposes and the information you have presented, the data are perfectly fine.

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