Won’t somebody think of the wealthy?!

Won’t somebody think of the wealthy?!

I have always been amused at the rumblings of the wealthy with regard to tax cuts in the higher bracket. This article this morning highlights why I am concerned. Malcolm Turnbull, a pretty reasonable and intelligent bloke in many ways, can’t seriously believe that everyone (in fact many at all) on $95,000 plus pays 47% income tax. Even though, in the News Ltd world of “woe is me I’m a millionaire” journalism this may be true, it is just not as simple as that.

Sure, for your run-of-the-mill PAYG earner with unstable income it is certainly possible — if you have no idea how manage your money. Most people on a permanent salary, at the VERY least, salary package their car and their super. Many also package their HECS debts, health insurance, laptops, mortgage payments… and the list goes on. I am no financial wizz by any stretch of the imagination and I know about all this stuff. I also know of a couple of people that earn $100k plus and, with some creative accounting with trusts, get a HEALTH CARE CARD. The fact of the matter is, when you reach an income level where you can afford to pay an accountant (not saying that $95k is that much anymore, but its certainly comfortable enough), you can be pretty well guaranteed that you don’t pay much tax at all. Middle bracket max.

The people that DO get slugged with tax are low and middle income earners, who are too “rich” for Family Tax Benefit, Child Care Benefit or a Health Care Card, but cannot afford an accountant to optimise their tax and income, or cannot afford to package their car. The “Tax Pack” income earners are the ones that carry the largest burden of tax in this country — some research indicates an effective tax rate of 60–70% when you factor in GST and the loss of family payments and having to front the full cost of daycare.

Turnbull is clearly delusional and not thinking outside of his own interest here. Rather than looking at the 47% in black and white, how about looking at the body of research that clearly shows the burden of taxation to be firmly on PAYG middle income earners?

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