How much Tax is too much?

[El Presidente]

How much Tax is too much? 

It is tax time here in Oz and many are scrambling around to get the maximum deductions possible. 

I certainly don't mind paying my "fair" share of Federal tax. I appreciate that Govt revenue is required for essential services and a base security net for all who genuinely need it. In Oz, our company tax rate is 25% (most companies) Personal tax rates are on a sliding scale withthe top rate at 45% above for every dollar earned over $180,000 AUD (120,000 USD). 

I have a base rule of thumb as to what is "fair".  Assuming a 5 day week (M-F), I would be happy to work for the Government until 10am Tuesday.  Outside of that, they can go and get rooted. 

Now there is a big push in Oz by one of our parties to target the higher end of income earners (above $200,000 AUD / 133,000 USD) with a sliding scale 60%. 

Who in their right mind would want to work for the government until late Wednesday? 

Of course I haven't taken into account State and local Gov't land and utility taxes. 

My question is if there a Govt in the world who has got the balance right? By balance I mean the formulae to tax in an intelligent manner that meets the needs of its populace while incentivising effort/risk/endeavour? 

[Jack]

I'm sure I'll be corrected, if my memory has faded or things have changed, but the State of Alaska not only has no personal income tax, the corporate rates top out at something like 10%, there is generally only property tax in highly populated areas (sales tax instead in less dense places.)...and they pay each permanent resident (no matter age) each year to live there. Yearly rates vary but US$1,000-3,000 per year recently.

Of course you have to move to Alsaka, but there's nothing wrong with that!

There is always that pesky Federal tax to deal with, but I had a cousin who lived in Alaska for many years and simply forgot to file - didn't hurt that the majority of his income was in cash.

[NSXCIGAR]

I don't know but the American colonists fought a revolution over a 3% tea tax. 

[Li Bai]

4 hours ago, El Presidente said:

I have a base rule of thumb as to what is "fair".  Assuming a 5 day week (M-F), I would be happy to work for the Government until 10am Tuesday.  Outside of that, they can go and get rooted.

That's funny, I have a similar rule but mine would apply to each working day. Let's say I start at 8am and finish at 6pm I would agree to work for the government until 11am, maybe noon tops without complaining if my money was actually used efficiently, which it is not of course.

In France, the tax rate is quite similar, the president François Hollande had wanted to put a 75% personal tax rate for "high" incomes (would work from 8am to 3 30pm for them) but it didn't go through. 😅

All of it is without considering all the hidden taxes of course (iva, gas, tobacco,...). I can't work 50% of my time or more for somebody else, I just can't compute it. 🤯 

All the more when that money seems to be thrown away by the government.

[99call]

Here in the UK, everything is broken. The Tories have succeeded in all their aims. NHS crippled, Waterways polluted, UK Steel sold off, Local councils bankrupted, Royal Mail sold off. Police crippled, Libraries closed, Leisure centres closed, youth centres closed. People say the Tories have failed, that's utter nonsense. This hulling out of public services has been their goal from the start, for the Tories this is a glittering success.  

I was listening to Vox Pops yesterday of the UK election, and even in dyed in the wool Tory voting towns, the people on the street are suggesting they would be amenable to pay more tax if it meant public services actually worked. Meanwhile, billionaire "patriot" UK business men and women are saying they will leave the UK if they have to pay more tax. My answer to them...is GO!...Get out! The kicker is, most of these people already live abroad in tax havens. 

When David Cameron issued in austerity for the UK he said, "we will collectively have to tighten our belts". From day one of this idiotic enterprise, the rich have gotten excessively richer. The tightening of the belt, has been exclusively for the working classes. 

I would happily pay more tax if it meant the society that I lived in wasn't corrupt, and conversely issued in a fairer, healthier, more progressive nation. 

Not long now!

[RDB]

I don’t see paying tax as ‘working for the government.’ I see it as paying for my country to be healthy, safe and educated. Sure, I could pay for my own health and education privately, but I’d rather everyone had those things. 

There’s no science to this, but a marginal rate of 50% seems like a reasonable upper limit of personal tax to me.

The big fairness issue is that once you get into the realms of wealth rather than income, the more affluent people get, the lower their effective rate of tax. Many pay almost nothing on huge fortunes, compared to median workers on marginal rates of say 30%. This has become normalised, but it’s still wrong.

[NSXCIGAR]

29 minutes ago, RDB said:

The big fairness issue is that once you get into the realms of wealth rather than income, the more affluent people get, the lower their effective rate of tax.

But "wealth" is what's left over after people have already paid their taxes. Not sure how fair it is to go after that. 

Also people seem to forget that most wealth gets invested somewhere. If it's in a bank it's getting loaned out as capital. If it's in the stock market it's invested in businesses that make the stuff we buy. 

The lifeblood of an economy is capital. Capital comes from savings. 

[99call]

1 hour ago, RDB said:

I don’t see paying tax as ‘working for the government.’ I see it as paying for my country to be healthy, safe and educated. Sure, I could pay for my own health and education privately, but I’d rather everyone had those things. 

Wonderfully put. This really holds a mirror up to whether someone sees themselves as a meshed in part of society. Or simply and individual amongst other individuals.

[El Presidente]

1 hour ago, 99call said:

Wonderfully put. This really holds a mirror up to whether someone sees themselves as a meshed in part of society. Or simply and individual amongst other individuals.

So black and white?  No mid colour/hue? just a "meshin in or an individual amongst...."  

How very lefty of you  

[Duxnutz]

Depends what you get for your taxes. In Oz you get the healthcare, some kinda safety net for people on hard times and some decent facilities like parklands and leisure centers. 

In the broken state of Hawaii we have crumbling infrastructure, crappy roads and homelessness taking over the place.  

[99call]

12 hours ago, El Presidente said:

So black and white?  No mid colour/hue? just a "meshin in or an individual amongst...."  

How very lefty of you  

There are shades of grey, as you and I had discussed before. I'm pro-business when it comes to genuine entrepreneurs when it comes to the creation of good jobs products and services. When it comes to tax, I don't think any government should be in hock to wealthy individuals, like they have to keep them sweet 'or else!'. If wealthy people, find that at a certain point there level of taxation has become onerous, simple...take the foot off the peddle. The people at the bottom of the spectrum are forced to make those decisions, why should it be different for the wealthy? We can't have this situation of mega-corporations and monopolies that become so rich and powerful, that they eventually end up paying no tax through loop holes, and influencing through lobbying

As ever Rob, I'm just pro social mobility. I'm happy for people to grow companies and build wealth, but it should never be allowed to become dynastic, nepotistic, protectionist, exponentially easier and more rewarding the wealthier one gets. I would say the same thing about the opposite side of social mobility, life shouldn't become harder the closer you get to slipping down the plughole. For example poor people paying more for energy on metered boxes in the UK.    

I do have sympathy for people who enjoy business, not necessarily for the creation of wealth, but more as challenge and achievement, whereby they want to grow but don't want the higher threshold that comes with it.

Ultimately, I think any situation that has bread both a billionaire class, and record levels of child poverty, is doing something pretty messed up. 

[Li Bai]

11 hours ago, 99call said:

Ultimately, I think any situation that has bread both a billionaire class, and record levels of child poverty, is doing something pretty messed up.

I fully agree, but taxing more those middle or upper-middle classes is always what they end up doing and it doesn't change a single thing.

I have good friends who are physicians here in France who work countless afterhours everyday and still have to be careful when it comes to buying a car (for example).

[SirVantes]

I don't think the question "how much is enough" can be taken isolation. As has been mentioned above, it is inherently linked to "how are those tax dollars administered? On what? How honestly and efficiently?"

In Singapore, the top income tax bracket is 24%. Corporate tax rate is 17%. No capital gains tax, no estate tax. GST (VAT) 9%. For that, we get top class infrastructure and education basically free. Housing is heavily subsidised. Defence spending is high. Health is subsidised to a degree...but once the subsidy runs out, you don't get free health care however long you wait. There is zero social safety net. So if you worked all your life, but get ill, lose your house as a result, it's the (litter free) streets for you, until you die (untreated). Is 24+17 "enough"?  

And the conditions necessary to work those tax dollars for those results is a whole other conversation.  

[GerardMichaelTX]

The American Revolution was started more or less over a .25% stamp tax. So I guess any percentage at a quarter-of-one-percent or above that should be considered too high.

As far as national taxes go, I believe in either a flat fee or no income tax at all and as minimal taxes on goods and property as possible. I do not believe that the public benefits from monolithic administration buildings and bloated government burecracy.

[MrBirdman]

10 hours ago, SirVantes said:

I don't think the question "how much is enough" can be taken isolation. As has been mentioned above, it is inherently linked to "how are those tax dollars administered? On what? How honestly and efficiently?"

In Singapore, the top income tax bracket is 24%. Corporate tax rate is 17%. No capital gains tax, no estate tax. GST (VAT) 9%. For that, we get top class infrastructure and education basically free. Housing is heavily subsidised. Defence spending is high. Health is subsidised to a degree...but once the subsidy runs out, you don't get free health care however long you wait. There is zero social safety net. So if you worked all your life, but get ill, lose your house as a result, it's the (litter free) streets for you, until you die (untreated). Is 24+17 "enough"?  

And the conditions necessary to work those tax dollars for those results is a whole other conversation.    

Well said - it’s less a question of how much tax and more how much is required to optimally invest in society and meet our moral obligations. People bellyache night and day about relatively small expenditures in this country but ignore Congress forcing the Pentagon to spend $25 billion on some weapon system they don’t want. 

That said, my gut feeling is that 60% is too high for anyone not earning well into 7 figures. Maybe it’s actually optimal - doubt it, but I’m not an economist. 

[99call]

11 hours ago, Li Bai said:

I fully agree, but taxing more those middle or upper-middle classes is always what they end up doing and it doesn't change a single thing.

I have good friends who are physicians here in France who work countless afterhours everyday and still have to be careful when it comes to buying a car (for example).

There has been a huge attack and undermining of genuine specialists over the last 15 years. I think your physician friends (if anything like the UK) have probably had stagnant wages in those 15 years. I think they deserve more respect, more social standing, and more money. 

We should go after the upper classes and I do think there is more burden the upper middle classes can bare. For example currently at the moment, the incoming (touch wood) Labour Government are going to bring in charges on Private schools. The private schools (many of which) have a stunning range of facilities are now crying poverty. When state school have been cut to the absolute bone, when teachers are buying books and stationary, and food for kids out of their own meagre salaries. There is fat to cut in the upper & upper middle classes, it's just that they outraged when they are on the menu, because they are not used to it.    

[Chitmo]

Wife and I did the math and out of 12 months of income the various levels of government take 7 of them from us in taxation here in Canada. 53% income tax for her, 44% for me, 15% sales tax on everything you buy and who the hell knows how much carbon tax. I used to be okay with it, but the health care system is in shambles and every other day there’s a ridiculous news story about the feds blowing another Bagillion dollars on a vacation for the PM or some other nonsense that only benefits a handful of people. I’m self admitted left leaning with my politics but I’ll be voting right next election. Canada has become a socialist paradise and it’s costing a lot of money for the people that actually work. 

[Arabian]

I don't pay personal taxes.

 

 

[Dr Process]

10 hours ago, 99call said:

I think they deserve more respect, more social standing, and more money. 

I’m going to schedule you a full hour at our next department meeting!  

[99call]

10 hours ago, Dr Process said:

I’m going to schedule you a full hour at our next department meeting!  

If you are a doctor, you should be respected, and paid what you deserve. 

When I was a kid growing up in the 1980's 90s. Doctors, Engineers, Architects, Lawyers, Scientists, etc etc these were people you would look up to and professions you would aspire to. 

Now we are encouraged to think qualification free, snake oil salesmen social commentators are the new social hero's kids should look up to. It's truly f-dup, and needs reversing asap.

 

[Vetteman]

I believe Scandinavian countries have a max tax rate of around 60%. I don’t know what their corporate rates are, but those countries consistently rate among the happiest each year.

[ha_banos]

Where are the millionaires going? They are leaving the UK and China for sure.

https://www.business-standard.com/finance/personal-finance/millionaires-on-the-move-where-are-the-world-s-rich-migrating-to-in-2024-124062100122_1.html

[SUP8333]

10 hours ago, SirVantes said:

I don't think the question "how much is enough" can be taken isolation. As has been mentioned above, it is inherently linked to "how are those tax dollars administered? On what? How honestly and efficiently?"

In Singapore, the top income tax bracket is 24%. Corporate tax rate is 17%. No capital gains tax, no estate tax. GST (VAT) 9%. For that, we get top class infrastructure and education basically free. Housing is heavily subsidised. Defence spending is high. Health is subsidised to a degree...but once the subsidy runs out, you don't get free health care however long you wait. There is zero social safety net. So if you worked all your life, but get ill, lose your house as a result, it's the (litter free) streets for you, until you die (untreated). Is 24+17 "enough"?  

And the conditions necessary to work those tax dollars for those results is a whole other conversation.  

Singapore is brilliant from an outsiders point of view. Probably the greenest of all green pastures.

[SirVantes]

9 hours ago, ha_banos said:

Where are the millionaires going? They are leaving the UK and China for sure.

https://www.business-standard.com/finance/personal-finance/millionaires-on-the-move-where-are-the-world-s-rich-migrating-to-in-2024-124062100122_1.html

Singapore is the third most popular destination for migrating millionaires, who often have great wealth, rather than (taxable) income. So I ask again, is 24 + 17 (and zero cap gains or estate tax) enough?

[Li Bai]

@99call, where would you put upper-middle or upper classes in terms of income ? In France the definition has clearly shifted over the last decade... 

120000 euros a year definitely don't make you belong to the upper class here nowadays.