Stage 3 Australian Tax Cuts

Given the current discussions in the media regarding the scheduled Stage 3 tax cuts this article from June 2021 is still very relevant. These are the final of 3 stages of cuts introduced in 2018. Stage 3 applies for the 2024-25 year onwards.

Some takeaways from the article are as follows:

On one side of politics, Labor leader Anthony Albanese says anyone earning $200,000 dollars a year “can’t be described as being in the top end of town”. He said that in 2019.

Only 2 per cent of those required to pay tax earned more than $211,365. Only 3 per cent earned more than $188,667.

Hardworking or not, Australians on more than $200,000 are rare. And an awful lot of them don’t work at all.

I’ve never quite understood why politicians were so keen to tell us such incomes are normal. It might be because they are on them. Each backbencher gets $211,250 plus a $32,000 electorate allowance (boosted by $19,500 if they turn down the use of a private-plated vehicle) plus home internet and travel allowances.

Everyone else — the other 97 per cent — earned less than $188,667, most of them a good deal less, and many more earned even less and weren’t required to pay tax.

https://www.abc.net.au/news/2021-06-09/typical-australian-wage-less-than-you-might-think-typical/100198488 (Data for 2018-19)

ATO links to these is https://www.ato.gov.au/…/Taxation-statistics-2018-19/

ATO link to 2018-19 and stats for other years is https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Taxation-statistics/

The latest is for 2019-20.

Some stats from the above ABC link:

•The typical taxable income (typical in the sense that half earned more than it, half less) was $59,538.

• Australians with a taxable income of greater than $350,134 number just 110,613 — 82,258 men and 28,355 women.

• Only 39,209 have taxable incomes of more than $500,000, and of these only 14,467 have taxable incomes of more than $1 million.

Stage 3 tax cuts currently being discussed in the media. These are due to apply from the 2024-25 year onwards.

From the following article

https://www.abc.net.au/news/2021-06-08/tax-stats-ato-millionaires-richest-poorest-postcodes/100197694

• Australians earning less than $90,000 per year will be worse off while those earning more than $200,000 will be more than $9,000 better off per year.

• Sixty-six millionaires paid no tax in 2018-19, Australia’s highest earners continue to live in Sydney’s harbourside suburbs, and the country’s lowest incomes have been recorded in drought-ravaged central NSW.

The above is as per the articles cited.

The following are my thoughts.

• Stage 3 cuts need to be targeted to those on lower incomes. As it is the final stage of the cuts will significantly disproportionately benefit those on incomes of nearly 5 times the minimum wage and more than twice the average wage!

• A very telling example of the effect of the Stage 3 tax cuts is that a politician, on a base salary of $211,250, will get a tax cut of $9,075. A registered nurse on $72,235 will get a tax cut of just $681.

• It should be noted that these tax cuts were introduced by the Morrison government in 2018 and are now supported by Labor although there is mounting pressure for Labor to scrap them. That is a gross overreaction. What should happen is a restructuring of the cuts to ensure that those on the lower levels of income get the largest slice in dollar terms, not percentage terms.

Are Albanese and Labor Backed Into a Corner?

So Albanese and his government are supposedly between a rock and a hard place with regard to the Stage 3 tax cuts due to apply from the 2024-25 year onwards.

Should these tax cuts be honoured in full? Keep in mind that it was the LNP in 2018 that was the architect of the cuts. Yes, Labor voted for them and said in the lead up to the 2022 election that they would honour them.

It is being bandied around the media that to back out of that commitment and make changes would be political suicide.

First some facts. No matter which way the media spins it, and they are trying, the Stage 3 cuts favour those on high incomes by a huge margin.

The following oft cited example, which is dead accurate, shows this in the most emphatic way.

Under Stage 3 cuts, a politician on a base salary of $211,250 will get a tax cut of $9,075. A registered nurse on $72,235 will get a tax cut of $681!

Hardly fair and hardly what a party which is supposedly the party of the working class should be associated with.

Following are some stats from 2018-19 Taxation statisics released by the ATO last year based on the tax returns of 14.3 million Australians.

• 2 per cent of those required to pay tax earned more than $211,365. Only 3 per cent earned more than $188,667.
• 66 Australians who earned more than $1 million paid no tax in 2018-19. It was 73 for the previous financial year.
• 156 people reported an income between $500K and $1 million.
• 51.2% of tax revenue for 2018-19 came from individual income tax.
• 21.1% of tax revenue for 2018-19 came from company tax.
• 3.5 per cent of Australian taxpayers fall into the current top income tax bracket by earning more than $180,000.
• 41.7 per cent of taxpayers earned between $37,001 and $90,00.
• 40 per cent of people who filed tax returns earned less than $37,000.
• More than 80 per cent of people filing tax returns earned less than $90,000 in taxable incomes.
• The typical taxable income (typical in the sense that half earned more than it, half less) was $59,538.
• 110,613 had a taxable income greater than $350,134.
• 39,209 had a taxable income of more than $500,000. Of those 14,46 had an income greater than $1 million.

Under the Stage 3 cuts Australians earning less than $90,000 per year will be worse off while those earning more than $200,000 will be more than $9,000 better off per year!

Sources:
• https://www.abc.net.au/news/2021-06-09/typical-australian-wage-less-than-you-might-think-typical/100198488
• https://www.abc.net.au/news/2021-06-08/tax-stats-ato-millionaires-richest-poorest-postcodes/100197694
• https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Taxation-statistics/Taxation-statistics—previous-editions/

Enough of the facts!

The indisputable conclusion is that Stage 3 cuts need to be targeted to those on lower incomes yet the final stage of the cuts will significantly disproportionately benefit those on incomes of nearly 5 times the minimum wage and more than twice the average wage!

Political suicide to restructure the cuts? How so when the vast majority of Australians would get such a meagre share of the cuts as they stand now? Assuming those people were to get the vast majority of tax cuts under a Labor restructuring of the cuts would they not feel significantly inclined to re-elect Labor, other things being equal? I sure as hell think so. And don’t forget, they represent the vast majority of tax paying Australians as shown by the above ATO data.

Further, would it not be irresponsible of a government not to change a policy that is so clearly detrimental to the majority of Australians compared to the benefit these tax cuts would hand to the already well off given the changing economic circusmtances we have seen since the cuts were first proposed and since the election?

The spin against Labor that the vast majority of the mainstream media is trying to peddle is mind boggling in the extreme. Even once reliable and reputable current affairs and “news” programs seem to be descending into the abyss of center or centre right, if not straight out conservative, talking points. Not to mention the skewed platforming that is being given to the opposition. Thanks Murdoch!!

It is increasingly being left up to small independents and even comedians and citizen journalists to put forward objective facts and data.

UK Politics, Liz Truss & Conservative Ideology

Yesterday I came across the following YouTube video on the UK and its new Prime Minister, Liz Truss. Whilst we all need to be careful of content found on the Internet it does show and raise serious issues with the trends being seen there.

It is interesting to note that I have observed the same thing occurring in Australia since my return to my homeland in 2018 after living in the US from 2012 to 2018. It is also happening elsewhere throughout the world and is an extremely worrying trend. In my observations since I started more closely following US and global politics in 2012 , Conservatism has been moving more and more towards fascist, authoritarian regimes driven by more and more oligarch funding.

Conservative forces are much more organized, far better funded and more adept at spreading their net far and wide. And all their major figures, dare I say puppets, in government are so very well versed and schooled in delivering their narrative and rhetoric in a forceful and believable manner, at least on the surface. Not to mention playing on the fears of the ignorant and uninformed. However, when it is picked apart it fails miserably.

The mainstream media has been and still is complicit in this by not calling it out. The reasons the MSM do not do so is clearly due to the power, influence and control that is also wielded over them by conservative forces, not the least of which is the Rupert Murdoch “news” empire. More and more “news” outlets appear to be falling under the influence of people like Murdoch.

Sadly, far too many people on the outside looking in, that is, most of us, do not have the skills or even the inclination to objectively analyze the narratives and rhetoric advanced by conservative power brokers and they are skilled in playing this to the max.

As the presenter points out, the left in the UK languish far behind in terms of promoting their cause to appeal to the broadest audience and to effectively call out conservatives for their propaganda. It is the same here in Australia and is also seen even more clearly in the US where the Democrats have been their own worst enemy for a long time now. And we saw recently the rise to power of a far right leader in Italy! And there is little if any sign of this phenomenon changing.

People really need to become involved en masse to challenge these forces. Failure to do so will only see inequality, economic instability and human suffering rise. The longer that goes on for the harder it will be to rein it in let alone turn it around. I fear, though, that we are rapidly approaching a tipping point whereby it will be next to impossible to recover from.