[staringclown]

tor, on 04 January 2012 - 06:21 PM, said:

It would only cost twice as much as the median property in Sydney. And I bet that people living in million dollar homes earn more than double the median income.

Land holdings, I would suspect, are less variable than incomes. Therefore a flat land tax on value will be less progressive than income tax.

As usual I heartily support a land / consumption tax as a replacement to PAYG because I will be better off.

I don't think it would necessarily be "fair" because anyone on higher PAYG rates will pay less tax which will have to be made up from those currently paying lower rates (unless tax evasion is prevalent and only by the rich).

Ah yes but to pay $100000 pa in income tax the household would need to be pulling in between 6-7 times the median wage though. Between $268000(single income) - $320000(dual income)

E.g. Median wage in Sydney from 2006 census is $518 pw. Allowing for inflation since then say it is now $750 pw. * 52 = $39000 pa.

Even using the household disposable income figures from 2009/10 of $848 (mean) or $715 (median) - 90% of all households have less than $1448 household disposable income ($75296 pa) Adding back the ~30% paid in income tax this gives 90% $110000 - $120000 gross or less.

As cobran says Packer paid less than 10% income tax. Land tax is harder to avoid.

You are correct in that there would be an advantage for high income earners with low property assets. The theory is that you have to spend that money on something so you're either buying cool stuff (and help the economy going that way) or you will spend the money on a better property (because you can afford to) or you'll invest the money in business and help the economy that way) so I for one will be happy that you get a windfall. (As long as I get invited onto your boat )

[tor]

staringclown, on 04 January 2012 - 09:39 PM, said:

Ah yes but to pay $100000 pa in income tax the household would need to be pulling in between 6-7 times the median wage though. Between $268000(single income) - $320000(dual income)

and a median house in Sydney would require 50K per year in land tax which would mean that a 10% land tax would mean no one at all would own property at current valuations and so it is completely unworkable.

At any X% in flat land tax the lower income ranges will do worse:

• PPOR's are not in the same multiples as wages; 4 times median income is more common than 4 times median house price (and that is if you work on house value, not land value, it is even worse if it is done on land value as expensive land has more expensive houses).
  
• Anyone using land as an investment will either pass the tax on if possible or divest themselves of a now stupid investment.

This applies even if land values drop drastically (which they obviously would). I would go out on a limb and say that the higher value properties would drop more in valuation than the average type places which would further reduce the gap and make it worse.

My windfall in this scenario would not come at the expense of people earning more than me, it would come from people earning less than me. This is why I think it a bad tax for society in general.

[staringclown]

tor, on 04 January 2012 - 10:32 PM, said:

and a median house in Sydney would require 50K per year in land tax which would mean that a 10% land tax would mean no one at all would own property at current valuations and so it is completely unworkable.

At any X% in flat land tax the lower income ranges will do worse:

• PPOR's are not in the same multiples as wages; 4 times median income is more common than 4 times median house price (and that is if you work on house value, not land value, it is even worse if it is done on land value as expensive land has more expensive houses).
  
• Anyone using land as an investment will either pass the tax on if possible or divest themselves of a now stupid investment.

This applies even if land values drop drastically (which they obviously would). I would go out on a limb and say that the higher value properties would drop more in valuation than the average type places which would further reduce the gap and make it worse.

My windfall in this scenario would not come at the expense of people earning more than me, it would come from people earning less than me. This is why I think it a bad tax for society in general.

The prosper proposal also includes the removal of consumption tax (in fact all other taxes) so lower income households would be paying less for stuff. Even so it certainly wouldn't negate the need for welfare for the poorest households.

I would dispute that the burden would fall on the lower income households necessarily as the table above indicates that the top quintile of asset owners derive the majority of their income from sources other than wages income. Business and 'Other' seem to be the mainstays and the 'Other' includes rents. These incomes are the most easily mimimised for tax purposes.

Not sure if it would trigger a flight from owning property. It would certainly trigger a flight from owning under utilised property. People would still need a PPOR. Land at the margins
would attract less tax and so lower income earners could live in these areas (they do already) or better serviced areas would become higher density and attract lower tax per household.

The stated objective is to make land more affordable so I agree that prices would drop significantly. This would also be of benefit to lower income households. I believe that the tax would be on the land only component of property else any improvements to the dwelling would incur a penalty. (Which would be unfair)

The scheme has some rough edges for sure. Pensioners and unemployed in particular are problematic. The transition would also be rather painful as property prices drop. But I think the principle is sound.

[zaph]

Easy Tiger, on 04 January 2012 - 05:09 AM, said:

A land tax would be super easy to set up. It’d be something similar to the walk score on Google Earth.


Flat tax on everything would be good. How about we just chuck GST on EVERYTHING and scrap the levies and duties and other taxes. 10% income tax. 10% onto shares, onto housing etc. No exceptions either for charities or churches. No exceptions period. Not even at the airport for duty free.

Easy to work out for everyone.

never going to happen. there are too many groups that will whistle for their cause. there are several hundred thousand PBI workers that will not give up their favoured tax treatment without a battle.

#PBI (public benevolent institutions) enjoy a tax free component of their salary of around 16k. the list goes on.... and on.. and onnnn...

[staringclown]

Mr Medved, on 04 January 2012 - 09:17 PM, said:

I thought I'd throw this into the "rich pricks not paying tax" discussion.

http://www.vexnews.c...cover-the-loot/

Couldn't happen to a nicer prick. How's his swimming pool built on public land going?

[zaph]

i get round to doing this years and perhaps lasts tax return this holidays

[Mr Medved]

staringclown, on 05 January 2012 - 12:39 AM, said:

Couldn't happen to a nicer prick. How's his swimming pool built on public land going?

http://www.vexnews.c...lly-built-pool/

[mattau]

staringclown, on 03 January 2012 - 08:27 AM, said:

1/3 of all people who earn zero or negative income and therefore pay no income tax are in the richest (asset wise) 20%. They can afford better accountants. Haven't got any company figures.

This is really intriguing.
What's interesting to me is the row of "Other Income". Seems that the wealthiest quartile get 57.5% of this "other income" - I wonder what that actually comprises of? dividends and rental income I suppose, and others? Any ideas?

[Mr Medved]

mattau, on 06 January 2012 - 01:07 PM, said:

This is really intriguing.
What's interesting to me is the row of "Other Income". Seems that the wealthiest quartile get 57.5% of this "other income" - I wonder what that actually comprises of? dividends and rental income I suppose, and others? Any ideas?

Income via trusts, income offshore, investments/trading and dividends, capital gains, maybe rental income too... have a look at the tax pack (including supplement) to get an idea how the ATO categorise income streams...

[staringclown]

mattau, on 06 January 2012 - 01:07 PM, said:

This is really intriguing.
What's interesting to me is the row of "Other Income". Seems that the wealthiest quartile get 57.5% of this "other income" - I wonder what that actually comprises of? dividends and rental income I suppose, and others? Any ideas?

Edit: The table should be read as 57% of all people whose main source of income is from other sources are in the top quintile of net worth. It's not saying that 57.5% of all 'other income' is going to the top quintile. Most households would have a mixture of income sources and the chart only reflects the main source.

The definition from the ABS HOUSEHOLD INCOME AND
INCOME DISTRIBUTION 2009-2010 6523.0 is

Quote

Income other than wages and salaries, own unincorporated business income and
government pensions and allowances. This includes income received as a result of
ownership of financial assets (interest, dividends), and of non-financial assets (rent,
royalties) and other current receipts from sources such as superannuation, child
support, workers' compensation and scholarships. Income from rent is net of operating
expenses and depreciation and may be negative when these are greater than gross
receipts

[zaph]

Mr Medved, on 06 January 2012 - 09:15 PM, said:

Income via trusts, income offshore, investments/trading and dividends, capital gains, maybe rental income too... have a look at the tax pack (including supplement) to get an idea how the ATO categorise income streams...

most wealthy people run businesses. businesses of any size are incorporated and pay their owners in dividends and would therefore be covered under other income.

[sydney3000]

cobran20, on 03 January 2012 - 09:25 PM, said:

A flat tax would encourage people to work harder and earn more as they would not be taxed at a higher rate when they increase their earnings.

The relationship you point out could work if we managed to abolish the 168 hour limit of the week.

[savagegoose]

sydney3000, on 07 January 2012 - 07:37 PM, said:

The relationship you point out could work if we managed to abolish the 168 hour limit of the week.

im sure a few cab drivers have clained longer.

[tom]

tor, on 04 January 2012 - 10:32 PM, said:

This is why I think it a bad tax for society in general.

Tor I think in the end I agreed with you that land tax is less progressive than income tax but it is still progressive.

I don't agree with land tax replacing all income tax and I don't think many do. Infrastructure is only one part of what a government provides and a land tax is the best way of providing for it, but don't use it to provide for health, defence and other services apart from infrastructure that gives the land some of its value.

Renters pay for infrastructure twice, once in the rent to the owner and again in taxes to the gov to build more of it and maintain it. Owners reap the reward in higher property values depending on how much they own v their income they may or may not pay for this service. As has been suggested by many just broaden the existing land tax system and unify it across the country. Does not need to be 10%, make it 2.4% as per NSW or even 1% as per the Henry review recomendations but have no threshold or a low say 100k land threshold but increase the rate to say 4%. This means most unit owners don't pay it, and in many capital cities those on the fringe will pay very little.

Also you have been talking about the total value of a property. Land tax importantly has to only be on the land value for it to maintain the efficiency dividend supporters of it say it has. If someone chooses to capitalise on land and build a 50 story apartment block because it is well connected to inferastructure than they should pay the same as the vacant block next door. This is how it drives investment around existing infrastructure on the most expensive land.

Land tax is mainly for efficiency, fairness is secondary but it is possible to make it more progressive with a threshold or sliding rates though I believe this would impact on its efficiency overall and have some potentially counter productive side effects.