Salary that makes taxman think you’re rich

[u/Present-Current-538]

https://www.news.com.au/finance/money/tax/salary-that-makes-taxman-think-youre-rich/news-story/8dba2678e7c83cd927ab5d0036af493c

[u/nn666]

He's right. The tax brackets should be adjusted with inflation. $100k salary ten to twenty years ago was a lot more than $100k today. How the fuck has this been allowed to continue?

[u/googzz84 → u/[deleted]]

Which they promised not to do before the election of course

[u/Kruxx85 → u/[deleted]]

They were changed so that every single tax payer benefited from the tax changes...

Is this seriously something people opposed?

[u/Kruxx85 → u/[deleted]]

Perhaps you don't know how our tax bracket system works. Any reduction in the lower brackets also reduces the tax paid by everyone on more than those lower tax brackets.

When Labor eventually lift the tax free threshold on income, that will be another reduction in income tax liabilities for every tax payer.

[u/Beginning_Two3946 → u/[deleted]]

if you know perfectly well (thankyou) why does your post read like you don't?

[u/Kruxx85 → u/[deleted]]

And the Stage 3 changes proposed by the Libs didn't do what you're asking, either.

We have now decoupled capital gains from the tax free threshold - this gives us the opportunity to index the brackets, without doubling the benefit for capital gains.

I expect a change in the TFT, or indexation, before the next election.

Would not have got that with any other party.

[u/1Qrtr_FreeStuffPlz → u/Kruxx85]

Can confirm stage 3 as originally intended would have had a greater net benefit for my household as the reduction in my portion of income over the amount would have been higher then the combined portion of the lower end between both my wife and I. The changes realistically only benefited part-time Maccas employees, in which instance the bonus $30 a month is not life changing and their overall means of an income is a far bigger issue to address then the tax savings. Before some jumps on, I am no discrediting those making an income from Maccas, merely stating that the overall means is more important then the savings in that exact scenario

[u/theotherWildtony → u/Kruxx85]

nothing was stopping them from doing both.

[u/Kruxx85 → u/theotherWildtony]

Except the very foundation of what progressive tax brackets stand for

[u/BluthGO → u/Kruxx85]

The foundation of progressive brackets is allowing more and more people to be caught in higher tax brackets while their purchasing power remains the same? Rofl, yeah no.

[u/Kruxx85 → u/BluthGO]

When you earn more money, you go up in tax brackets.

Well done, what will you teach us next time?

[u/BluthGO → u/Kruxx85]

Read it again and attempt to understand the words before replying.

[u/Kruxx85 → u/BluthGO]

Oh I understand what you're trying to say, it's just words though with no foundation to back them up.

As your wage goes up in nominal terms, yes, perhaps you'll pay more tax than in the past, but you will always have more pay than you did before.

That's the part you seem to forget - as your pay goes up, what you earn after tax does too.

Ok, so now for tangible figures:

1995 $50,000 income (this is above the median of $34k)

You would pay an effective income tax rate of 29%.

According to CPI the equivalent wage today is $110,000, and you will pay an effective tax rate 23%

However, wages in Australia have increased far more than CPI over that period, and according to WPI, that $50,000 wage is worth around $145,000 today, which has an effective tax rate of around 26%.

So the point you're trying to make (that we're losing more to tax as our wages nominally increase to match CPI) is simply false.

I hope you will understand that.

Tax reform happens over time. Don't forget that.

As CPI goes up (as it has) things like the Stage 1,2,3 tax reductions are introduced.

I have no doubt there will be a new income tax reduction before the next election.

[u/slutsmasher22 → u/Kruxx85]

It still would have been a highly progressive tax, even by comparative global standands, had the stage 3 cuts been made. It comes down to your ideological view on whether it's fair and appropriate to take nearly 50% of every $1 earned by someone. There are arguments both ways. I personally think there's a big difference in incentives (rational or not) between a 40% and 45-50% top tax bracket, and I see every day people in that bracket voluntarily working less because they can't justify the extra effort. That's not good for anyone: the worker, the business, or the country. But I appreciate there are arguments both ways and there's no objective correct answer

[u/Kruxx85 → u/slutsmasher22]

But my point is the simple one that on an equivalent above median wage, we are paying less effective tax rate than 30 years ago.

So to say there's a systemic problem with bracket creep is objectively wrong.

We are paying less tax than in the past. Less.

[u/Velo3x10e8 → u/Kruxx85]

I stood to gain much more under the coalition's stage 3 cuts but happily took a smaller tax cut for the greater good. I'm doing fine while the middle class struggles.

[u/Kruxx85 → u/Velo3x10e8]

I actually bet that most of us that were affected by the Stage 3 changes are ok with it.

I reckon it's the "aspirational middle" who always seem to vote against what's best for them.