Income tax is plain crazy

Income tax is plain crazy

By | 2017-12-08T18:42:04+00:00 January 5th, 2018|Article, Economic problems, Income tax, Social problems|Comments Off on Income tax is plain crazy

If you lift your head out of the “conventional thinking bucket” for a moment you might be hit with an epiphany.

Taxation should be simple, fair, understandable, efficient and penalise productive economic activity as little as possible.

Income tax fails all those tests.

Not some of them but all of them.

The Tax Act (last time I checked) runs to thousands of pages and is impenetrable to all except the high priests of taxation. The average person has not the faintest chance of making sense of it.

Strike off simple and understandable.

Even at the time of writing this (2017) income tax is still optional for the mega-wealthy. We knew that was the situation years ago when Australia’s then richest man paid not one cent of income tax for six consecutive years.

But even today — surely not? Oh, yes!

Recently the tax office released information that 55 Australians who earned an average of $2,350,000 of income managed to write it all off and pay no income tax at all.

The thought of a wealthy person paying no income tax while the person who mows their lawn pays thousands of dollars a year surely must be offensive.

Strike off fair.

OK, let’s hope income tax is efficient and doesn’t penalise useful economic activity. Is that too much to hope for?

Apparently so.

You might get a clue about efficiency from the fact the Tax Act runs to thousands of pages and is chock full of loop holes for the wealthy.

But also, economist Mason Gaffney estimates that for each dollar income tax collects it destroys a dollar (or perhaps more!) of economic activity. Government gets a dollar by crushing the general economy for a dollar.

Many people only have their work to offer. The ordinary people who don’t have rental properties or a juicy share portfolio.

Income tax penalises those people heavily for simply working to keep themselves alive.

Strike off efficient and doesn’t penalise useful economic activity.

What are we left with?

A steaming pile of just plain craziness that should drive us all — except for the mega wealthy — absolutely nuts.