Let’s remember something

These are the recent words of New York Governor Andrew Cuomo:

A single percent of New York’s population pays half of the state’s taxes, and they’re the most mobile people on the globe.

Whilst the numbers are not the same in Australia, they are directionally similar.  The “rich” more than pay their share.  And in fact, given that before CoronaCrisis2020, more than 50% of Australian’s paid no net tax, Australia’s high earners paid more than their fair share.

But there is an important difference between Australia and the US.  In the US, a large proportion of their tax revenues come from property taxes, which while not perfect, have some correlation with wealth.  In Australia, we mainly tax high income earners who may not be particularly wealthy.

A 30 year old with limited assets who earns $200,000 a year pays a hell of a lot more tax than a 70 who lives in a multi-million house.

This is not a case for tax reform or a land tax.  This is trying to point out that Australia is not going to get out of its post-CoronaCrisis2020 fiscal hole through higher taxes.  To repeat the words of brother of Fredo:

they’re the most mobile people on the globe

More so now given that the odds are that this 30 year old with limited assets is either unemployed or if still working, working for the government.

Australia’s only path out of this hole is through supply side reform.  These have to be actual policies and not platitudes.  There needs to be wholesale scale back of the Australian Regulatory Taj Mahal, there need to be income and company tax cuts and there needs to be just less government.

We never really needed the Commonwealth taxing people in NSW to build sporting club toilet blocks in Queensland.  But now we can no longer afford it.

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24 Responses to Let’s remember something

  1. Watch Your Back

    Good, agreed. Cut taxes, abolish corporation tax, cut payroll taxes, slash red and green tape, cut electricity prices, cut the bureaucracy by 40%.

    In my industry, most people are wittering on about INFRASTRUCTURE and jobs in new Green industries. These won’t have much impact anytime soon, and will likely prove unnecessary and inefficient.

    I’d say the focus should be on growing as much of the existing economy back as possible, followed by an investment boom.

  2. Nob

    Chances of any level of government in Australia cutting itself back are somewhere between Buckley’s and none.

    Instead they’ll embark on vast spending, I mean “investment”, sprees.

  3. Nob

    It’s the invisible taxes of hyper regulation and also hyper compliance requirements enforced by big corporate clients that I’d like to see cut, really.

  4. Bruce of Newcastle

    And about 400,000 of them just left New York.
    Bwahahahahaha!

    Escape From New York: Wealthy Residents Flee In Droves As The City Degenerates Into A Hellhole (11 Aug)

    According to the New York Times, there was a mass exodus of 420,000 New Yorkers between March 1st and May 1st…

    Roughly 5 percent of residents — or about 420,000 people — left the city between March 1 and May 1. In the city’s very wealthiest blocks, in neighborhoods like the Upper East Side, the West Village, SoHo and Brooklyn Heights, residential population decreased by 40 percent or more, while the rest of the city saw comparably modest changes.

    And they ain’t coming back because all the nice things they like have gone. No restaurants, no bars, no tax deductions, and probably no Uber.

    In Historic Ultimatum, Uber Threatens To Shut Down California Business If Appeal Isn’t Approved (12 Aug)

    As we reported yesterday, Uber warned that it may need to hike prices by as much as 111% after a San Francisco judge ruled on Monday that the ride-sharing company, as well as its competitor Lyft, must classify its drivers as employees

    Good luck getting around San Francisco, and soon all other Dem cities I should think.

  5. Squirrel

    “We never really needed the Commonwealth taxing people in NSW to build sporting club toilet blocks in Queensland. But now we can no longer afford it.”

    Very well said.

    On the land tax (on principal place of residence) issue, I know that there are people who think it will have miraculous benefits – much like the people who thought that the GST would bring economic nirvana to Straya – but I have little doubt that if stamp duty is replaced with land tax, we will then eventually get an orchestrated push for capital gains tax on the family home.

    All of this would be to fund a bloated, grossly overpaid (at middle and upper levels) public sector. That’s where the hard work of reform needs to start – not with dreaming up new ways to feed the monster.

  6. Catcalling Inebriate

    Ironically we hit peak dependency in the Howard years when Costello and Howard expanded the “benefits” of various Government schemes. Essentially, votes bought with the comfort of tax levels that not only increased dependencies but filled up the overflow bucket that Costello now calls his job (the Future Fund).
    We can safely assume that the coming recession will be severe, that Government will be deeply involved (bailing out universities, the swathe of SMEs in tourism and related services and any number of others dislocated). We won’t see any scaling back, but the opposite. It would be nice to imagine that some of those handling public money take the job a bit seriously.

  7. gary

    GST should be collected by each state and the GST rate should be set by each state. Let Victoria have a 20% GST and Qld a 5% GST. Let there be competition between the states.

  8. Boambee John

    gary

    I would go the other way.

    Return income taxing power to the states, and force the Commonwealth to fund all of its activities from a 10% GST, and excise also set at that level (and get rid of the GST on excise, a tax on a tax).

  9. H B Bear

    Given my time again I would leave Australia for my working life. And be miles ahead for doing it. Spent about four or five months a year working for various governments. And it has not got any better.

    I would any young person with reasonable prospects to do the same. With Covid they are running out of private sector people to tax.

    It hurts to have to say this.

  10. H B Bear

    *I would advise any young person …

  11. Roger

    GST should be collected by each state and the GST rate should be set by each state. Let Victoria have a 20% GST and Qld a 5% GST. Let there be competition between the states.

    Income tax should be collected (and spent) by the states, as it was prior to 1942.

    The vertical fiscal imbalance we labour under is an absurdity.

    Let there be competition among the states.

  12. H B Bear

    The principal place of residence is about the last chance the PAYG worker has of accumulating any wealth free of the clutches of government. Superannuation isn’t it. If they are lucky it will fund a place in a moderately priced old persons home.

  13. Zulu Kilo Two Alpha

    Return income taxing power to the states, and force the Commonwealth to fund all of its activities from a 10% GST, and excise also set at that level (and get rid of the GST on excise, a tax on a tax).

    Reduce the role of the Commonwealth to defence, foreign policy, and trade – all else to the States (immigration might pose a few problems.) Return income tax powers to the States – the mendicant States can go bust as they please.

  14. H B Bear

    Tax equalisation and practically every Cth government program rewards inefficiency and State profligacy.

  15. H B Bear

    Australia’s Federation has never worked and is broken. The continual growth of the Commonwealth has been a one way street since it came to exist. And we are all worse off because of it.

  16. Roger

    Australia’s Federation has never worked and is broken. The continual growth of the Commonwealth has been a one way street since it came to exist. And we are all worse off because of it.

    +1

    But the two Acts of 1942 that strong armed taxation rights from the states were key.

  17. H B Bear

    The rich of New York have a choice to leave. An Australian citizen does not (unless they want to emigrate).

  18. H B Bear

    Roger – there is about half a dozen High Court cases that transfer powers to the Cth. Tasmanian Dams and the UN treaties effectively removed any practical limit or restrictions. Income tax gives them the means to pay for it.

    Canberra and everything in it is a blight on this country.

  19. Spurgeon Monkfish III

    The most recent and in many ways signal example of the ongoing destruction of the concept of competitive federalism in this country was the NDIS.

    It’s barely been existence for five years and already it is an unmitigated disaster.

  20. It’ll never happen, the bureaucracy won’t let it happen, they’re addicted to the $

  21. MACK

    High taxes are needed for important stuff:
    “If you want to know what is going wrong in Victoria, all you need do is look at a job being advertised on Seek by the state’s Department of Justice and Community Safety. The department wishes to hire a “director, inclusion and intersectionality”, for which it is offering a generous salary of $192,800-$249,700 plus superannuation.”
    https://ipa.org.au/publications-ipa/coronavirus-identity-politics-focus-diverts-attention-from-real-issues?fbclid=IwAR1tNFuJEJbQQfutuAEnxD7rCHcMag99upNKr-9sEgbguG71_WPjx8jKp1k

  22. duncanm

    Instead they’ll embark on vast spending, I mean “investment”, sprees.

    they have a new and shiny excuse, now. post-covid economy boosting.

  23. Steve

    Here’s a novel idea how about we all pay the same % of tax.

  24. Terry

    Steve
    #3547134, posted on August 14, 2020 at 8:20 am
    ‘Here’s a novel idea how about we all pay the same % of tax.’
    Absolutely. Any tax rate that is not exactly the same for all citizens is fundamentally unfair.
    Have a tax-free safety net and then a flat rate from there. Set company rate to match and make sure it is low (20% or less).

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