Why is Tax So High in Australia?

If we earn over $180 thousand a year we have to pay 45% in income tax, Medicare Levy and mandatory Superannuation contributions. Plus the 10% GST on most items we purchase. This is not including other tax luke stamp duty and etc.

We have one of the highest Tax rates in the world yet we don't have free education, Our roads and public transport are in terrible shape and our Hospitals are way understaffed with very long wait times.

I really do wonder why our tax rate is so high and where the money is really going? Because it certainly isn't for education,roads and healthcare.

Comments

          • @cashless: You do realise that teacher salary of $60k is taxed, right?

      • +5

        For $120K, you pay about $30K in tax each year, so your overall rate is about 25%.

      • +3

        I think you missed the memo: become a billionaire like the Packers and pay $1 in tax.

        • +2

          Tax only applies to working class people. Many business owners pay less tax than their employees and enjoy driving their "Business Porsche" to work.

          • @kfcfatfat: Hence, zero tax for working class, and just tax business owners. How? You tax the source, not the sink. For example, all properties, including intellectual properties, all natural resources, etc. People can't usually create something from nothing, and if there are those who can, maybe they deserve not to be taxed.

  • +12

    Tax not as high as the nordic countries. It is unfortunate but a lot of tax is unfortunately spent on social services and welfare. It points towards a broken system where the bar for entry for our school teachers are getting lower due to insufficient demand and poor pay. It is the dumb teaching our children, and putting us into a broken spiral.

    In Denmark, school teachers earn a high enough wage that they comparable to a doctor. If we want to reduce our society's burden on social services and welfare, we need to start with our children and our education system. Increase the wage and increase the regulatory requirements to ensure that we are hiring teachers that we would be proud to teach out kids.

    • +8

      Nordic countries have free education and proper paid parental leave thats over a year, we only get 18 weeks for mothers and that's it!

      • +2

        short of a few hundred of book fees etc, isn't our education free? in my experience, it is.

        • +1

          Have you seen how expensive university fees are?

          • +2

            @[Deactivated]: Depending where you live there are free courses for in demand jobs.

            https://www.vic.gov.au/free-tafe

            I believe there should be alot more, but we do have free, primary, secondary and some tertiary education.

            • -1

              @whiskeyjack89: I wish more courses were free, but we already have lifetime students who are endlessly jumping courses to stay on Welfare without looking for work.

          • +3

            @[Deactivated]: have you seen their tax rates too??? nearly 60%.

            They have a brilliant social system and quality of life but are also as a populous happy to pay for it. Society there is proud and happy to pay taxes because they see what they get out of it. On top of that, when average incomes in countries like Norway approach 100k, the tax revenue for government there would be significant and is further aided by the enormous oil royalties and sovereign wealth fund returns they have. They run consistent budget surpluses historically (small deficits recorded in Covid period) as a result and can provide amazing public services and subsidies as a result.

            Meanwhile you're complaining about high taxes yet you're consistently making unfair comparisons and trying to justify it.

      • Maybe vote for those things?

        Taking your username into account it's probably safe to assume you're conservative leaning and if you vote conservative you are voting against all these things you say we should have with a high tax rate.

        Essentially, you're whinging about taxes and then actively voting against those things taxes should be used for. Classic.

        • +1

          False.

          It was the Tony Abbott liberal government that had proper paid maternity leave as one of their election campaign promises but it was shut down by the 'progressive' side as it benefited high income mothers more than stay at home mums. Both sides of politics can and do have a mix of good and bad policies - the same liberal government stuffed up the NBN. Not everything is right vs left….

          • -1

            @sternocleido: I don't really see a good argument why it shouldn't be means tested. It meant women who had corporate jobs with a generous paid parental leave program could also get the government one on top.

            Doesn't seem very fair in a society which pays you less per week in unemployment than it costs to pay the rent. I don't really understand why it couldn't be used to provide a given number of weeks which could either top up an employer provided one or provide one in full. I mean wasn't it something stupid like offering to match wages or something too?

            It's almost like they presented something unpalatable on purpose so they could set the narrative you've parroted here.

            • @Talonparty: It was means tested - they paid up to $100,000.

              I know several highly paid women, none have 'a generous paid parental leave program' - many are so low that it is boderline offensive.

              Either way, the exact workings of any legislation is exactly why draft's are written, debated, revised before passing. The key is someone driving the principle idea

    • This has come to my mind a few times. No offence to the teachers who are great, but I see a few friends who's gone into teaching and they are not the smartest tool in the shed, and yet these are the ones that are teaching the next generation? It's a bit of a worry to say the least.

      • +8

        they are not the smartest tool in the shed

        lol nice mixed metaphor, brainiac

      • -1

        Why don't you do it then?

      • +5

        Why would the brightest people get into teaching? Have to deal with nightmare parents, kids that don't care, lots of unpaid overtime apparently, and pretty average pay after doing 4 years of uni. What incentive is there?

  • +21

    FYI we have sliding tax scales, so you only pay 45% on every dollar you earn above $180k.

    Not that I believe you need to worry about this, but tax on $180k is $51,667 (plus medicare levy/surcharge), so you are paying more like 30%.

    • +10

      I'm surprised I had to scroll this far for someone to point this out.
      OP was right on one thing though

      where the money is really going? Because it certainly isn't for education

      • +3

        You missed this then. You didn't have to scroll so far.

      • Tax doesn't actually go anywhere, the government decides how much money to print each year and where to spend it regardless of how much tax is claimed. If you want education to be cheaper simple get the government to print more money for it just don't make degrees so cheap that there is a over supply of people trained in a sector without enough jobs looks at most arts degrees and paramedics.

        Tax is a system designed to manage direction of efforts and sometimes lowering the inflation caused by printing money from nothing, while also increasing the value of money by making it a demanded resource instead of backing it with something like gold or sheep.

        the crunch of this though is that the public demand less spending while expecting more for service so some public funded industry get crunched like hospitals, schools, emergency services ect ect

    • +6

      Brilliant insight. Really does mean that the average Aussie is paying well under 30% as an average tax rate.

      Quickly did comparisons to other English-speaking countries based on a $180k AUD salary in their respective currency. We are line ball.

      Average tax rate @ $180k AUD equivalent income
      AUS: 30.7%
      NZ: 28.3%
      USA (California): 31.16%
      UK: 32.8%
      Canada (Ontario): 31.38%

      • -1

        MEDICARE LEVY. God how come everyone here forgets this? Not to mention CAD worths more than AUD and you will be paid much more in Cali

        • +2

          Whopdee doo! I forgot the 2.0%
          At 32.7% weā€™re still within the range of all these other places in the world.

          And mate did you read my comment.
          @180k equivalent income. I took my time to convert our income into the local currency and calculated the average tax rate. I didnā€™t just stupidly throw in 180k for all of them irrespective of currency.
          And yeah some fields/areas would pay more than Australia in Cali but likewise people in Sydney/mining in wa/qld/nt would be earning a lot more than elsewhere in the country but thatā€™s not the point of my comment. Itā€™s was just to say if your earning the exact equivalent of our top tax bracket in other countries, what could you expect to pay in tax, I havenā€™t factored in average incomes or cost of living either because Cali and the UK would be much more than Australia on average too

          • @JDMcarfan: It also depends on the state. Alberta(in Canada) has MUCH better tax brackets if you are a high income earner. In the end, it's a tradeoff. If money is your concern you can be an expat in UAE if you want to sacrifice social life.

            With the added sneaky medicare levy you can see australia is actually on the high end of taxes.

            • @DrScavenger: are you kidding me. i know that.
              I picked the largest state in each country that has state based taxation as that's where most people in Australia would look for a comparable city and lifestyle to the cities they live in back at home.
              I could've picked Texas and had a much lower tax rate too, but that wouldn't be a relevant nor indicative metric for the US.
              You're clutching at straws to pick apart my point. Congrats!

          • @JDMcarfan: Also note that the UK has a NHS of 1.25%, and NZ is massively increasing its tax rates this year for incomes above $180k (although it only brings up the equivalent % noted above to 28.7%)

    • Your effective tax rate will be a little higher than your income tax. YMMV but add up the following:
      Income Tax
      GST
      Stamp Duty
      Excise (Fuel, Alcohol)
      Medicare Levy
      Capital Gains Tax
      Passenger Movement Charges (AKA Airport Tax)
      EV Taxes (in Victoria)

      These can add up to a sizable sum.

      Also if your an employee, there are the indirect taxes that impact on the remuneration your employer may offer you (Payroll Tax and Fringe Benefit Tax).

      • A lot of those countries (if not all) also have sales tax (GST), capital gains tax, stamp duty, etc. As well as state taxes. So itā€™s harder to calculate and compare apples with apples.

  • +3

    If you earn $180k exactly — your avg tax rate is ~30.7%. It's only 45c in every dollar over that. I think the $180k threshold is moving up to $200k in 2024.

    edit — @djkelly beat me to the punch

  • +3

    The feds use taxes to steal from the working class to give to their buds.

    May 6, 2021 ā€“ 12.08pm
    A $1 million man
    In its 2019-20 annual report, the bank for the first time published the salaries for each of its top seven executives, non-executive members of the RBA board, and non-executive members of the payments systems board.

    The latest release shows the governor pocketed total remuneration of just over $1 million last financial year, off a base salary of $911,728; the deputy took home just over $787,000, off a base salary of $668,595.
    https://www.afr.com/politics/federal/champagne-and-the-qantaā€¦

    "What is my name? Say it." Philip Lowe

    • +2

      Are you voting for a party that's supporting a federal ICAC?

    • +3

      Would you rather a grubby officer level equivalent running the RBA for $100k pa?

      Yeah it's a lot, but it's not a lot for a CEO equivalent anywhere else… and before you say this isn't a company, well it's a government body/regulator it needs to run better than a company… and to attract the component people you need to offer them something…

      And don't lie to yourself if you are going to respond with people should take a pay cut for a government job, because out of the goodness of their heart they want to serve the community………

      • +1

        Jerome Powell, someone with real powers that can affect world markets when he sneezes "tapering" is on $203,500.

        Congress sets the salaries of the Fed board members. In 2019, the chair's annual salary was $203,500. The annual salary of the other board members, including vice-chair hair, is $183,100.

        There is no reason for Philip Lowe to command a $1M salary other than he calling in chits for the job.

        Australia should give the job to Powell and and pay 1/2 of Lowe's salary.

  • baby bonus, covid support, pensions

    • +2

      baby bonus

      Not a thing anymore, thankfully.

    • +1

      baby bonus

      New TV money

      • back when TVs were expensive

  • +14

    Our tax rate is so high because you don't understand how progressive income tax works.

  • +10

    Like… are we being trolled here? The name "Alex Jones" isn't exactly analogous to rational thinking and support of government policy.

  • +3

    What's the deal with the Random meaningless Capitalisation?

    • Is it Any worse than Jv when he does Random bolding?

      • +1

        She

        • -2

          JV is definitely a man.

  • +6

    Our politicians are around the highest paid in the world so that accounts for some of it.

    If governments didn't whore out all of our natural resources and major assets, we would probably be better off tax wise.

    • +1

      whore out all of our natural resources

      What does this even mean? How does not selling our resources improve our economic situation?

      • +10

        State owned and operated mining for example would drastically improve our economic bottom line. But instead the vast riches are pocketed by mining magnates and shareholders. The nation gets some piddly royalties and operating/licensing fees.

        • +2

          The way governments operate, a state operated mine would probably run at a loss. šŸ˜„

          • +1

            @Ugly:

            The way governments operate, a state operated mine would probably absolutely run at a loss.

            FTFY.

            • @Seraphin7: They would have so much surplus cash that they could pay to get better administration.

              Australia goverment cops a lot of shit for inefficiencies. But look at AusPost its government owned and makes crazy profits still.

          • @Ugly: Nah just the way our government operates. Couldn't imagine Germany running things poorly, and Norway does this already.

      • +3

        Look at what Norway did with their sovereign wealth fund. We should have replicated that model here.

        • Did you know the fund bought Bitcoin?

          Do you think the Australia should do the same?

          • @rektrading: I don't have a view on what the fund invests in.

            I'm saying that the idea in theory is good (imho) and could have benefitted the general Australian population by increasing spending in sectors that our country needs.

          • @rektrading:

            Did you know the fund bought Bitcoin

            Directly, or indirectly via investing in a company which may also have crypto as part of its assets.

            Plus, considering the size of their fund, its a very insignificant portion

            • @SBOB: 600 Bitcoin via proxy.

              There is more to come in 2022.

              • +1

                @rektrading: Yeah, because they invested in microstrategy right.
                A software company who has crypto as one of their hedge bets (ie not their core business)

                It's not like they are doing any otc Bitcoin or crypto purchases

                I know you like pumping crypto good news stories, but this one's not even worth 0.01% of an Elon tweet ;)

                • @SBOB: The fund can't just buy Bitcoin directly. There is no way for them to secure the coins. They've to use a proxy or a service like NYDIG.

      • +1

        Its more that we sold our raw resources and land to mining companies.
        Who then make mega profits ripping it out of the ground.

        Other countries keep and run their own Mines, Telecommunications, Power distribuition and profit that way by selling on

  • +19

    Don't forget the $billions Scumo and Fraudenberg handed out to businesses in 2020 for Jobkeeper.
    Most of those businesses boomed, but refused to hand the money back.
    That was taxpayers money being flushed down the toilet for no reason whatsoever

    • +12

      And the hundreds of millions given to companies like GM/Holden during the GFC to keep auto makers in Australia, only for GM to close Holden down a few years later…

  • +7

    Why is Tax So High in Australia?

    It is not compared to some countries.

    If we earn over $180 thousand a year we have to pay 45% in income tax

    Yes but that is only 45% on money earnt OVER $180k……

    If you earn $180,001 and over, you end up paying $51,667 plus 45 cents for each $1 over $180,000

    So for someone earning $200k a year, they pay around $60k tax. So about '30%' tax on all earnings.

    I really do wonder why our tax rate is so high and where the money is really going? Because it certainly isn't for education,roads and healthcare.

    That is a really good question, as the libs are certainly pork barreling all their friends while screwing over the taxpayer, by cutting healthcare, education, roads and basically all services.

    But fear not, gerry harvey got a good chunk of your taxes last year, so he can sleep at night knowing he made mega profits all while taking a gov handout he didn't need!

    • if you looking at your ATO statement, its tells where your money goes. Big ticket items are Welfare, Health and Other Purposes category lol

      • +6

        That it does. But just because it says Health or Welfare, it doesn't mean every dollar was spent wisely in those areas. So many pork barreling contracts are out there now thanks to the libs.

        I'm ok with welfare/health spending, its way lower than what people think it would be when asked. Its rot like Gerry Harvey getting jobkeeper handouts when his company had record profits for the year! Way too many companies fudged the books to get jobkeeper only to return record profits.

        People need to remember that when the gov pays for something, that is really you the taxpayer paying for it. It is not oh silly gov wasted $60b on jobkeeper, it should be OMFG the gov wasted $60b of taxpayer dollars on jobkeeper!

        • -1

          Doesn't matter lab or lib, that's always the case.

          • +4

            @boomramada:

            Doesn't matter lab or lib, that's always the case.

            Not really, some parties pork barrel less than others!! Anyone need a carpark? :)

            Its all about getting value from your taxes at the end of the day. Too many people complaining about paying too much tax as they don't see 'value' in what they are getting. So rather than have a view to pay less taxes, maybe people should be asking why they are not getting better value from their taxes than they are today!

            • -2

              @JimmyF: LOL that's your point of view but in my point of view they all the same. That is why I only vote for party that providing me maximum possible benefit for new few years.

          • @boomramada: At leaset one of those parties is supporting a federal ICAC.

            • @Nereosis: Yep…. Can't have a federal ICAC as they would find we did wrong!!

      • Private helicopter rides for Liberal members.

  • there are many who earn a very high salary and buy properties to then use negative gearing to offset the taxes…

    this results in unaffordability for new comers or newer generation to buy real estate…

    one option is to work 6 months and then take a break during next 6 months if you feel tax is too high… or split ur work and holidays according to your preference. This way you will not be getting paid the remining 55% as well but it probably worth it…

  • +25

    Another kid needing everyone else to do their thinking for them.
    Whinge about taxes, whinge about 50% of the population.
    Earns 50% more than the median household but thinks the tax is too high.

    Next whinge? Everyone thinks I'm overly entitled, for some reason.

    • It's not about how much one makes but how much one can keep.

      Finding ways to reduce the biggest cost to one's productivity should be the number 1 priority.

      • +6

        Keep 100% in war torn Yemen.

        It's about if tax delivers a good society.
        Anti tax people always complain there is something they don't like, but can't acknowledge others have the same view.

        Start with "end the waste". Ok, what spending would you cut as 'waste'?

        • +2

          The feds only exist to steal people's productivity.

          There are a few countries that don't steal or very little.

          Malaysia
          Dominican Republic
          Singapore
          Czech Republic
          Mexico
          Guatemala
          Vietnam
          Andorra
          Belize

          United Arab Emirates
          St. Kitts And Nevis
          Cayman Islands
          Bahamas
          Vanuatu
          Monaco

          The Caribbean
          Cyprus
          Isle of Man
          Anguilla
          Dominica
          Brunei
          Panama
          Estonia
          Malta
          Antigua
          Nevis
          Labuan
          Hong Kong
          Gibraltar
          Switzerland
          Bahamas
          Puerto Rico
          Marshall Islands
          Vanuatu
          RAK
          Hungary
          Scotland
          BVI
          St. Lucia
          New Zealand
          Mauritius
          Ireland
          Cook Islands
          Samoa
          Seychelles

          Start with "end the waste". Ok, what spending would you cut as 'waste'?

          I would find ways to shift one's productivity to tax-friendly or zero tax jurisdictions.

          • +5

            @rektrading: Free ride the services everyone else pays for?
            Not exactly admirable or sustainable.

            • @mskeggs: Nope.

              I still pay consumption tax. It's the only tax that's fair. It treats everyone equal.

          • +6

            @rektrading: "Feds" is American talk. I know you download crypto-bro YouTube and Reddit straight into your eyeballs and it's predominantly American, but it always has (and always will) sound strange when you talk about our government as "the feds".

            Pretend saying "the govt" is a sick meme like hodl, wagmi, etc.

            • @CrowReally: Hi fren.

              Australia has 3 levels of government but only one federal. Typing feds is faster on a mobile device.

              • +3

                @rektrading: TIL "feds" has fewer letters than "govt"

                • @CrowReally: I'll stick to feds. You can use govt if you want.

                  • @rektrading: No worries! Incidentally, "feds" is American talk. I know you download crypto-bro YouTube and Reddit straight into your eyeballs and it's predominantly American, but it always has (and always will) sound strange when you talk about our government as "the feds".

                    • -1

                      @CrowReally: Hi fren.

                      Australia has 3 levels of government but only one federal. Typing feds is faster on a mobile device.

          • @rektrading: I hope you donā€™t use Medicare, any Centrelink payments or use the public health system, which are funded by taxes.

            Otherwise you are just another wanton hypocrite crawling out of the bushā€¦ā€¦.

            • @Dack Smith: A consumption tax should pay for that.

              BTW did you just call me a slut?

          • @rektrading: The fact that the first country on your list is Malaysia makes the rest of your argument redundant because it's laughable that you think that the Malaysian government steals very little. Perhaps you should look up 1MDB as a start?

    • +1

      Everyone thinks I'm overly entitled, for some reason.

      Everyone thinks I'm overly entitled, for some reason. But slightly better than average looking.

      FTFY

  • +13

    Gotta pay all those boomers their negative gearing tax refunds. It's not gonna pay itself.

    Also, gotta keep the red-pill'rs from buying up all the good women from the incels…

  • +5

    yet we don't have free education

    hmmm . last time I sent my kids to school it was free.

    our lord and saviour , Gough Whitlam , introduced free tertiary education but that was stopped by the Hawke government in the late 80s

    • +3

      Imagine all the complete waste of time degrees we would have to pay for if we had free higher education these days.

  • Itā€™s so we can live in this amazing, progressive world-leading country.

    • +1

      progressive? I think we are going backwards at an alarming rate

      • +5

        We are so progressive, coal is the future everyone with a brain knows it. Thatā€™s why we have the ā€œLiberal Party of Australiaā€ in power. Unlike Labor who are clearly the Conservative party here because the LNP has the word ā€œLiberalā€ in their name.

        Thank god we have them in power too because under Labor weā€™d be a bunch of commies/socialists/lefties and everyone would own a house, we donā€™t want that happening. With the Liberal party in power some people can get very very rich whilst poor people suffer which is the way the world should be. They introduced negative gearing which means you can get super rich on property and pay less tax which is awesome for the country. Also scrapped the carbon tax because climate change isnā€™t real which is great.

        We are living in the best country on the planet. Aussie Aussie Aussie!!!! Oi Oi Oi!!!!

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