19 October 2021

Our tax system is completely screwed up: “The tax on $100,000 goes to the heart of one of the problems. If you are on a salary of this amount, you will end up paying almost $23,000 a year in personal income tax. But if you happen to be in a small business partnership or trust that made $100,000, then you (and your partner) will pay $6717 in income tax – about $10,000 less than the salaried worker. Make $100,000 selling shares in a company that you’ve held for at least 12 months and you have the same tax liability as the small business partnership. If you make $100,000 selling the family home in the nation’s currently hot property market, you won’t pay a cent on the capital gain. Then there’s the shareholder who’ll pocket a $5000 cheque from the Tax Office if the Australian company they invest in pays out $100,000 in fully franked dividends.” It’s so bad that even Saul Eslake almost sounds like a radical: “We don’t honour wealth from toil because we tax it [income] so heavily. What we honour is wealth from sport, gambling and property speculation, all of which our tax system taxes much more lightly. What has worsened is inequality in the distribution of wealth.”