Comments on Miranda Stewart "Ideas for Australia: Five ideas to help fix Australia’s tax system", 11/04/2016
While many points in the post are probably valid and good, some points are debatable.Firstly, in terms of income tax, why not consider a flat or much flatter tax structure to simplify the current income tax?
This is particularly in the context where the author also argued for broadening the GST base to cover everything and to increase the rate to 12.5%. To do that with the GST is not too different to have a flat income tax.Secondly, company income tax rate, there should be a debate what is best in terms of the tax rate.
I personally have significant doubt on the often argued benefits of lowering company tax rate, notwithstanding the capital mobility argument.The argument on tax on superannuation contribution is highly questionable and dubious, particularly in terms of using individual’s marginal tax rate.
The argument on negative gearing is also questionable. So much for now and may comment further down the track.
For the universal paid parental leave of 6 months and universal childcare for those who working, what would be the pay rate for the mothers or fathers for that matter, and what level of assistance for universal childcare from the government using taxpayers' money? The rates are the key and without appropriate rates such talks are pointless.
Further, the equal share in both personal income tax and the GST between the federal and state governments may give too much revenue to the states. And yes, any increase from the current federal revenue to the states should definitely contingent on the states to abolish some the most inefficient taxes.
The states have not delivered the promise or requirement as specified in the inter-governmental agreement for the GST. As a result, the public is justified to be suspicious of promise to abolish taxes without actions undertaken.
The relative shares of income tax and the GST should be based on some objective measures in terms of services and other obligations of each levels of government and should not left to the politicians alone. There should be an independent body to decide that, or to have referendums to decide.
Income tax should be indexed to the total income level, so the the ratio of total tax revenue to the income is virtually fixed. Again, if there is a need to increase tax, let referendum, that is, the voters to decide.
PS: in reply to comments on the first part of my comments by Robert:
"Lincoln, I don’t know about you, but for the last 50 years my taxation has been calculated by a computer, and automatically deducted and passed on to the ATO - again by a computer.
I have never once been fussed by a regressive or progressive tax calculation. Computers can handle any of them. The real issue is whether you think taxes should be paid by those who can afford them, or by those who cannot.
As to the GST, yes, it is a flat tax applied to pretty much whatever you chose to spend your after-tax income - unless you are rich, of course, in which case the tax you pay is pretty much voluntary.
You need to be more specific in your comments."
Robert, please see more comments from me below that may clear some of your questions. Progressive taxes are more than for high income earners to pay more taxes, they are paying proportionately more from their income. A flat tax means the more one earns the more tax they would pay.