24 January

How progressive tax works is one more thing I think has been lost in public understanding in our time. We have a progressive tax system, where there are increasing rates of tax as you earn more, because that way each person pays roughly the same proportion of tax, according to their income. Without those increasing tax rates, lower income earners pay a much larger share of the tax burden. This is what flat tax rates do, which many conservative politicians argue for. And what Scott Morrison’s Stage 3 tax cuts were trying to push Australia towards, by abolishing the 37 cents in the dollar rate so that those better off paid less tax proportionally. It’s unfair, hidden behind simplistic stories about aspiration, ‘if you work harder, you deserve to be rewarded by paying less tax’. It’s self-serving nonsense, that slogan assumes people who earn more work harder, which there’s no evidence of at all, in fact they often work much less hard, or not at all, living off interest and/or speculative investments. With flat tax rates the tax burden falls on those who earn less, because they pay proportionally more tax. Just one more example of slogan-led politics.