100 Aussies: seven charts on who earns, pays, and owns

I think in Australia we need to have a conversation around taxing income versus taxing assets. The reality is I pay 47% tax on my income, and this only leaves me 53% of my income to save and create assets/savings. Compared to the person who will inherit properties and other assets tax free, this creates a social divide between those who inherit and those who don't.
Further, I have clients who are retired who generated tax free income last year of $500,000 paying no tax at all, with an asset base of $7m in property, shares and super. The same individual would pay $200,000 in tax. This inequity will only get worse as the population ages. I know many people reading this will have paid lots of tax to generate their savings and will fill hard done by my comments, but the current system doesn't work - we need to suck it up and make changes, but I fear we will just target high income workers, which will inevitably mean inheritance is the onlyw ay to prosperity in this country.

"I think in Australia we need to have a conversation around taxing income versus taxing assets"

Yes, but an unbiased, non-partisan, non-cherry picked conversation thanks Mr Chalmers! Funny, Ken Henry produced a comprehensive document over 15 years ago to completely reform taxation and the Rudd-Gillard governments didn't want to touch it!

The other adult conversation needs to be government being reminded of the social compact and responsibility of not wasting tax payer money! Programs like the NDIS need to be brought under control, not just pretending to do something. Massive public service and bureaucracy for our population size. The renewable, "cheap" energy fantasy which will cost Trillions. And as for Albo's legacy plan of universal childcare for all, paying just $10 per day, we can't afford this sort of extravagance.

Unless spending is brought under control, more revenue generated from more taxes won't solve the problem. We have a spending problem first and foremost.

James,

Spending has nothing to do with the crazy housing bubble we've built.

Go after that first.

Australia has the 29th highest total tax of all OECD countries (that is all tax, not income tax). To be clear, that means 28 other countries (in the OECD) have a higher total tax. The 15% of income earners who pay about half the total tax in Australia have ways of avoiding tax if they want to go down that road.

The numbers on medical practitioners -- can be miss leading. It does not take into account hours worked.
People like GP's, surgeons ,etc do not 38 hour weeks.
It is impossible to work just 38 hours per week even if you did not want to work the hours we did. How do you say to a patient "Sorry will not attend to you I have done my 38 or 40 hours this week".
The bulk of my working life I was paying 50% of my wage in taxes -- now retired for 6 years. However the tax regime was different then and I will admit more generous when it came to deductions for tax. Over the yrs post Keating the deductions became less generous, basically tax remained the same and I started to work less hours ( did not see the value of working hard and losing 50% of the extra money I was earning).
Recently returned from Sweden and Norway. Personal tax rate highest was around 55% and there are high indirect taxes e.g. 25% GST. The welfare system is different and more inclusive.

Totally agree … the stats do not report the truth.

Post code 6011 is not in NSW. Fix it.

Michael,

Read the article again because I mention the error in the chart, and they got the state wrong not the postcode. And I can't fix it because it's an ABS chart, not mine.

I’d expect that once you account for social welfare (power subsidies, Family tax benefits, rent assistance …the list goes on), the proportion of people paying no net tax (or next to no tax, will be even higher. I still love the old tax policy explained in beer analogy…it doesnt end well.

But keep bringing in people hat the nation does not end and they will keep voting for these clown and the young will eventually end up paying for their own silly voting patterns…or there may of course be a generational punishment for anyone who saved by the remaining jealous and envious

I have long thought the fairest way to decrease income tax is to raise the tax free threshold. Everybody gets the same dollars, but it means more to the paupers.

The real issue here is a government spending issue. That needs to be cleaned up first before reviewing major changes to taxation.
These statistics can be skewed to paint the picture the government wants. It is still clear that most pay little or no tax and are reliant on a few, who pay most taxes already by far The government and agencies gloss over this, and keep looking at the top payers and how to squeeze ever increasingly more from them to feed the machine. The modern wealthy have become today's slaves to the majority of individuals.

You have exactly understood the problem, although the challenge facing the nation is to have the half of the population that benefits from government money or in other words from the efforts of the other half of the population that actually creates the wealth, to fully appreciate the scale of the problem. It is patently obvious to anyone with half a brain that the government already has an agenda (leaked via less than competent treasury official) to squeeze more tax from the usual suspects while the so called round table discussion is merely a convenient smoke screen to deflect blame when that reality is dropped on the nation at large.

Yes. And BTW, I believe that the accidental release of that document was quite deliberate with Chalners' full knowledge. He is very happy for these summits and public discussions. Its part of the perpetuity of the Robin Hood mentality. However, that no longer holds true and I read recently that more than half now get most of their income from the government courtesy of the "wealthy slaves". This is very possibly true, given that most people overall are tax positive and pay far less tax than they benefit from in the form of pensions, handouts etc.

I agree. The big problem Australia has, is that we have a Socialist government that is incompetent and has no other agenda, other than to keep themselves in a job and keep their respective noses in the trough. Albanese and Co, couldn't give two hoots about improving the well being of Australians. all they want is to keep getting the big salaries and bigger perks and to make themselves look like heroes. Wouldn't P1ss on any of them if they were on fire.
They waste so much of the money they take off the people, that it is nothing short of criminal.

"Australia has a progressive tax system where the more you earn, the more tax you pay."
Well sounds good but not exactly true.
The GST is a regressive tax that is a flat 10% on everyone. So the less you earn the greater the proportion of your after income tax disposable earnings you pay.
Rates on unimproved land values are also a regressive tax because they are applied irrespective of what you earn or your capacity to pay. Just because you are a pensioner or average earner whose land has seen major increases in assessed value doesn't mean you have the same capacity to pay as the millionaire living next door on the same sized and same valued property.
Here in the ACT rates have risen 30% in the last five years, far in excess of inflation and wages. Rates have more than tripled since 2012. Many retirees and average income earners in older suburbs are now being taxed close to $10,000 a year in rates on their land value, whether the block has a new mansion or an original weatherboard. Rates are a tax on unrealised capital gains and I dispute that such a tax is 'progressive'. Home owners can't just sell part of their house or part of their household block to pay these ever increasing exorbitant rates.

I would like to know how much tax we pay over a year considering property tax, GST, car rego, stamp duties, etc and income tax.

Average incomes quoted in articles, whether in financial literature, General media or otherwise are always pure fiction. When the bits we know for a fact are so off piste, we can only be sceptical about the accuracy of the rest. !

If someone has a high taxable income (say $200k and up) you can bet that their gross was initially much higher. Long retired, I was on a reasonably high income, yet quite legally cut it in half for the ATO.

"I was on a reasonably high income, yet quite legally cut it in half for the ATO. "

I was also on a reasonably high income for most of my career but didn't need to cut it in half because the ATO did it for me by taxing 42% of everything I earned (GST and other taxes likely took it to at least 50%).

Nah. I get a bill every quarter,what was called provisional tax.The franking credits don't cover the tax that should be paid on the gross income. The current one is payable by 28 July.I paid it last week . 6 figures a year in tax,no pension ,no CSHC card or whatever it's called.I'm still a bit disappointed that I'll never make it to paying 7 figures a year in tax.

Please tell us how to cut taxable income so we can learn to do the same!

We need to move away from income tax. Get it from over 60% off tax receipts to the OECD average of 34%. Increase the gst, broaden the base (compensate bottom 20%), remove refundable franking credits, drop Div 296 to $2m, index it and remove tax on unrealised gains. Then the country will be fairer. Won’t happen of course.

Then we might have a fairer system.

"Then we might have a fairer system.":

'Fairer' for those with large incomes and small expenses, for whom only flat tax would be 'fairer'.
'Fairer' if those with small incomes and large expenses toughened up.

As I said compensate the bottom 20%. What about that is not clear to you

"As I said compensate the bottom 20%.":

They are already compensated by receiving more in welfare than they pay in tax and pay no GST on food; effectively paying them to eat.

"remove refundable franking credits":
Taxing "the bottom 20%" at 30% on their dividends would be 'fair' considering their food would be 'free'.

Also of interest would be the overall income including all social benefits attributable to each of the above cohorts. That would present a better overall picture of the fairness or otherwise of the whole system. In addition, earnings by gender and profession, adjusted for hours worked per annum, if it were possible somehow, would be very interesting.

I've always wanted to know this.
Add in all government benefits and then calculate the % of tax paid and then let's see what is actually equitable.
I am of the opinion that the current wealthy are now the "slaves" of the 21st Century, with the majority of that small cohort paying to keep non-workers and low income workers fed and housed, more so that they dont have to work if they choose not to. Think about that with an open mind.
I fail to understand that 50% of our population earns most of their income from the government (aka tax payer) handouts. There cannot possibly be so many people needing assistance. Most are able minded and bodied, surely.

Agree with you Vee. As someone who's a self employed farmer, we are the slaves of the 21st century. Often selling goods at below our cost of production. b98% of the total wealth generated by us is from capital gains, the other 2% from cashflow. When the day comes to sell the farm, I'm looking for every cgt discount and tax deduction available. Wages are too high, we compete with other industries for workers.
I enjoy farming, but buying a farm and paying it off is almost impossible. With current lamb prices, it's become a bit easier, but ppl are moving out of sheep farming in droves due to the economic fundamentals. In the end farming is a large property investment portfolio, you work your balance sheet through leverage and try to build off farm wealth. The cash payday happens once you sell up.

the 15% earning more than $120,000 accounts for 68% of the net tax collected by the ATO.

This shows just how unfair our tax system is, hence I'm looking for every loophole there is to minimise tax.

Beamer, I think it should read 58%, adding the numbers in the charts. Not quite so "unfair" as if it was 68%, then.

CC,

Re CEOs, my guess that it includes all the small businesses with CEOs/MDs. If right, the figure would make more sense.

On anaesthetists, yes, it does seem low.

I'm MD. My taxable income is less than my tax free threshold, which is less than my non-taxable income.

My "non-taxable income" is actually not income, it is capital withdrawn from Super.

There must be a lot of very clever accounting going on if you think the average CEO earns less than $200K....
I also know for a fact that full time Anaesthetists and other Medical specialists make more than stated there, so perhaps the figures include part timers

The above number of CEOs is 231,000 so that includes a lot of people outside the ASX 200, hence the 'average' income of $195k

I suspect the medico's have a few deductions from gross income to get to those taxable income averages, and some cleverly rigged accounting ploys to help with structures too.