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
• 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.
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