One of the things that I find down right disturbing about the parts of the new federal budget is the mentality that “It’s okay to tax the “rich.””

I have a few issues with this and many of the specific policies which have been unveiled.

First of all “the rich” is a little hard to define.  There have been suggestions that families on six figures are rich.  Executives are rich.  People who can afford cars over $55k are rich.  I beg to differ.  I don’t see how people can comfortably bring up a family on less than $100k these days, considering the cost of housing, health care, childcare education, food and clothing.  And that’s before you even consider sending your one child to a private school, to extra curricular activities or family holidays.  I also fail to see how any one who wants a decent sized family car that can fit the kids and all their stuff into it (and possibly the kid’s friends or the family dog) for under $55k, if you are in the fortunate position of being able to get a new car.  I know people can and have to raise a family on significantly less, however I fail to see how you could be comfortable on much less than $250k (combined income).  I would say that these people are far from rich.  Additionally as the cost of housing does not get cheaper if you are a single trying to live by yourself, you need an income of $4k/month (post tax = aprox $66k pa) to service a $250k loan (the average loan in Australia at the moment), which incidentally in Brisbane only really buys a shoe box apartment or town house a good 20kms from the city.  Not exactly ideal for the young working professional, if indeed they can find a job which pays that well.  The said young professional who may want to move up in the world would probably not consider themselves rich even when they finally made it from a supervisory or senior role to manager (which should pay over $110k pa).  To me to be rich, you really have to have more money than you can use to cover sensible expenses for yourself and your family as well as being able to make some investments for the future so they are self-sufficient if and when one or all of the family members can not work.  I don’t really think that that is a huge percentage of the population at all.

But what I also have a problem with is that there are people in government who think that it’s okay to take money off these people for no other reason than they’re rich and the government wants to look like they have a great big budget surplus.  It’s not much of an achievement to have a budget surplus when you are providing less services and are taxing people more.  Oh and I forgot, they’re also increasing tax to curb inflation.  Since when is that a reason to take money off people?

People are paid more than the average for a variety of reasons.  They may have worked hard and climbed up the career ladder.  They now work longer, harder and are responsible for the livelihoods of a variety of other hard-working Australians.  They may be working in a job which is undesirable and has to offer higher salaries to attract people to the industry.  There may also be a wages premium for people who have engaged in a more extensive education or training scheme than other roles, because they have valuable experience or are highly specialised.  None of these are reasons to penalise people for their extra income, and they are all valid reasons to pay people more.  If we do no, we loose the incentive for having any roles which require a skilled, educated or experienced workforce.  It reeks of malice to penalise people because we perceive them to be rich or label them wealth.  Especially in this instance when they are not, not really.

I also have a few other issues with systems which tax people more as they earn more.  First it removes some of the incentive for people to aim higher and progress in their careers and also in their business enterprises.  The second has a worse impact as well, I’m sure it doesn’t take a rocket scientist to figure out that as businesses expand and do more business, they provide more jobs for Australians.  Which is a good thing.  Taxing people more with higher incomes also provides an incentive for those who have the resources, to avoid paying their fair share of tax.  People who are able to access advice which allows them to set up business and other structures which optimise their incomes and minimise their taxation (eg trusts which split income between family members to take advantage of lower rates of tax when the same income is split amongst two, three or more people).  Also I’ve heard the suggestion that increasing rates of tax as people earn more is a way to ensure that people pay their fair share.  The fact of the matter is that as you earn more money, you pay more tax anyway, even if there is a flat rate of tax.

I think that I may sound like more of a ranting idiot than intended if I introduce the idea that there should be a flat rate of tax which should be low enough that it’s not worth people’s while to find ways of avoiding paying it.  But that’s probably a bit extreme.

But back to my first point, it is extremely vague saying that “rich” people, who are mostly just middle class people, deserve to pay more tax.  It is unjust to remove people’s property (which includes money/wealth) for no discernable benefit (as it is just for a budget surplus not to deliver more services or benefit to the public).  It's not even from those who have to those who need, it's just from those who have.  And it is irrational to say that it is good or better to remove it from people who have more from their working activities.

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