Capital Gains Tax? Keep related posts in this thread, please.

[TheLiberalLeft]

No, that's not the point. I understand that in real terms, but I was talking flat rate % to emphasise the fundamental mistake when using this stmt:

10-12% of the earners pay 44% of tax.

Which may well be true. HOWEVER...

if the same 10-12% of earners earn, say, 50% of the total income (any value above 44%) then are they paying their fair share?

If they paid 44% of the tax but only earned 10% of the income then sure, they are paying more than their share.

Example:

10 men. 1 pays $44 in tax. 2-10 pay $7.33 each in tax. 10% of this population pays 44% of the total tax take.

But what if man 1 earns $1000 in that tax year (he has a good structure and a clever accountant). Men 2-10 each earn $50.

So man 1 has earned 68% of the total income, yet has only contributed 44% of tax. Men 2-10 have each earned 3.4% of the total income, yet have contributed 7.33% of the tax take.

Hence the reason why you need to be careful quoting facts such as the above stmt.

[drelly]

if the same 10-12% of earners earn, say, 50% of the total income (any value above 44%) then are they paying their fair share?

So you're saying we need to increase tax rates for higher income earners so they not only pay nominally more but actually approach zero return at some point? How do you define fair? Is it fair to contribute nothing to society and get paid for it?

[TheLiberalLeft]

No, I'm not saying that. I'm merely highlighting the danger of using what's almost become a platitude - the top x% pay y% of the taxes, when statistically it may be quite meaningless.

[drelly]

No, I'm not saying that. I'm merely highlighting the danger of using what's almost become a platitude - the top x% pay y% of the taxes, when statistically it may be quite meaningless.

The point is that if an individual pays a considerably higher proportion of their income in tax, then at some point, they're going to decide that earning more isn't worth the effort, that there is a way to avoid it, or that there is somewhere better to live. High taxes and easy benefits are a dis-incentive to achievement. Focussing on what is "fair" is not as useful as focussing on what works. "Fair" is too subjective. With massive levels of benefit payments and our best and brightest leaving the country, the system we have is not working.

[spaceman]

^^ So are you prepared to back the assertion that 83% of households only earn around 3% of the total income and thus are paying their fair share of the tax bill?????

Of course this means that since 17% of households are paying 97% of the tax for this to be their fair share they must be earning about 97% of the income ....... you really want to say that this statistic is meaningless ...... or you going to weasel out by saying you said "may"

Cheers
Spaceman

[TheLiberalLeft]

Once again, that was an example to show how that statistic could be interpreted in different ways. Saying (in isolation), 10% of people pay 44% of taxes to somehow imply they pay more than their share could be misleading DEPENDING ON WHAT THE ACTUALS ARE.

I don't know what the actuals are, so I'm not "asserting" anything. I am showing how that stmt is misleading.

I agree with you above drelly. Absolutely. Different issue though.

[drelly]

Once again, that was an example to show how that statistic could be interpreted in different ways. Saying (in isolation), 10% of people pay 44% of taxes to somehow imply they pay more than their share could be misleading DEPENDING ON WHAT THE ACTUALS ARE.

It's only misleading if you think the proportion of income they earn compared to the rest of the population is relevant. I don't. I'd rather have a large tax payment from a high income earner than no tax payment from an ex-pat in Australia.

[spaceman]

LOL

Statistics are numbers and numbers aren't really open to interpretation .....they are what they are, admittedly the numbers could be wrong. But that just means they're incorrect, not that you can interpret them.

You do know what the actuals are ..... they've been posted several times.

Let's assume the facts are correct and 97% of the tax is paid by 17% of the households ..... what is misleading about this statistic???..... how is it possible to be mislead by a fact????

What you're trying to say is that it might be fair that 10% pay 44% of the tax as the may well earn more than 44% of the income ....this is possible (but lets face it unlikely) ..... but when we go to the larger number of 17% of households paying 97% of tax it certainly takes somebody special to attempt to say that this is a reasonable situation.

Cheers
Spaceman

[drelly]

I think he's saying that if someone is earning $1million dollars a year but "only" pays $300k a year in tax, that is somehow unfair on the person earning $50k a year and paying $8,000 a year in tax. He's talking about nominal disposable income. Is that right TLL?

[WGN ex-property manager]

It's not "fair" as soon as a household pays more tax than the benefits they get from government spending. "Fair" is irrelevant.

It's far more cost effective to pay the long term unemployed a benefit (from the taxes on the middle class), than have them burgle the middle class out of desperation, and then have to fund the police to chase them, the courts to prosecute them and prisons to lock them up. Prisons alone cost $70000 per head per year.

Choosing a tax system is a juggling act trading off various least worst options. Simplistic value statements like "fair" really don't help the debate.

[drelly]

It's not "fair" as soon as a household pays more tax than the benefits they get from government spending. "Fair" is irrelevant.

It's far more cost effective to pay the long term unemployed a benefit (from the taxes on the middle class), than have them burgle the middle class out of desperation, and then have to fund the police to chase them, the courts to prosecute them and prisons to lock them up. Prisons alone cost $70000 per head per year. Choosing a tax system is a juggling act trading off various least worst options. Simplistic value statements like "fair" really don't help the debate.

I agree with most of that but disagree with the "cheaper to have them on a benefit" approach. What it doesn't take into account is the cumulative effect of that decision. These people have children... and they have children. This is why we now have multi-generational families who see the benefit as a career choice. Ultimately, it's not cheaper. It's a gradual slide into mediocrity and further into unaffordable and disastrous consequences.

[TheLiberalLeft]

Pretty much. But I hate the word fair/unfair in this context or any political context for that matter. Isn't this the reason why tax rates are higher as the income is higher in our current system, as opposed to a flat tax? Obviously the proponents for a flat-tax system have their own reasons but that's another story.

[WGN ex-property manager]

I agree with most of that but disagree with the "cheaper to have them on a benefit" approach. What it doesn't take into account is the cumulative effect of that decision. These people have children... and they have children. This is why we now have multi-generational families who see the benefit as a career choice. Ultimately, it's not cheaper. It's a gradual slide into mediocrity and further into unaffordable and disastrous consequences.

Agree with you there, but designing a welfare system that is both supportive and encourages progression up out of welfare is very hard, especially when you have an unmoderated single house parliament playing left wing / right wing games every 3 years. Few western countries have come up with a good solution.

[One]

You need to consider lifetime contributions vs costs too. At the moment I pay more tax than I use in services, as do most working professionals. It only takes one expensive disease to change that. Or one undamaged house in the ChCh red zone.

State services are a form of insurance. Like all insurances, there are winners and losers. Unlike other insurances, the premium calculations are a pig.

[WGN ex-property manager]

I suspect if you offered most high income households the chance to self insure for all health issues, unemployment issues and housing issues and pay less tax they'd take you up on the offer.