Millionaires should pay more tax

[Senexx]

Millionaires should pay more tax. Our tax system will remain progressive and be more equitable.

Now before you get in a huff, hear me out. Now this doesn't take into account the recent tax changes in the last year or two but the principle still applies.

Creating a new 50 per cent tax rate for incomes over $1 million per year would not only increase the equity of the Australian tax system, it would also significantly increase tax revenue.

Income and tax paid by those Australians earning over $1 million per year in 2005–06.

It shows that while only 5,605 people declared incomes in excess of $1 million, together their combined income was more than $10.7 billion ($10.76B), or an average of more than $1.9 million each. It also shows that the total tax payable by those earning over $1 million per year was just $2.15 billion, or just less than 20 per cent.

If each of these high-income earners had paid an additional five per cent of any income over $1 million per year in 2005–06, the total amount of additional tax collected would have been in excess of $250 million. If it is assumed that those earning over $1 million per year have enjoyed faster-than-average income increases of 10 per cent per annum, the amount of additional income raised from a five per cent tax increase would be more than $435 million in 2008–09.

It remains unclear why someone earning $180,000 per year should pay the same marginal tax rate as someone earning $1,800,000 per year or, as in the case of some CEOs, $18,000,000 per year.

The creation of an additional tax bracket with a tax rate of 50 per cent would enhance the equity, and progressivity, of the Australian tax system while, at the same time, raising a significant amount of revenue. Although in the current macroeconomic climate the contractionary effects of an increase in taxation are unwarranted, this could easily be overcome by increasing expenditure on a range of other measures, which would inject money into the communities that need it most.

The underlying principle of a progressive tax system is that those who have the greatest capacity to pay tax should pay both a higher amount and a higher rate of tax. The Australian income tax system has some progressive features, with the marginal tax rate paid by those earning over $180,000 per year significantly higher than the marginal tax rate paid by those earning $30,000 per year.

[Hebe]

It remains unclear why someone earning $180,000 per year should pay the same marginal tax rate as someone earning $1,800,000 per year or, as in the case of some CEOs, $18,000,000 per year.

Yes - why don't we? I know nothing about global tax rates, though I did look in Wikipedia and their graph is based on 2005.

Any tax experts here? I bet cynik would have an opinion.

In 1880, Tasmania was the first state to introduce an income tax.

I'm surprised anyone had any income.

And how come the corporate rate is a flat 30%?