If there’s one thing a politician loves more than stumbling upon a free bottle of Penfold’s or a Halal Snack Pack, it’s finding an easy target.
And there’s no easier target than the ‘big end of town’. You know what I’m talking about – those evil companies and rich bastards who polish their monocles with the tears of Sudanese orphans. The ones who profit off hard-working Australians, shit on pensioners, kick puppies and listen to Nickelback while they laugh all the way to the bank.
Because we all know that they never pay their fair share in taxes.
...or do they?
Compared to our OECD partners, Australia’s company tax rate is amongst the very highest – only behind France, Mexico, Belgium and the United States. A key point here is that France and Belgium benefit from European Union integration while the costs of operating a business in Mexico and most of the United States tend to be lower since there is less regulation and Labour costs are significantly lower.
What’s more, the United States and the United Kingdom both plan on reducing their corporate tax rate at a time when some Australian politicians are actually calling for an INCREASE on ours. When you tax a company trying to do business in your country more, the result is simple – less money left over to do business and less cash to hire and pay people with.
Also interestingly, many countries known for being welfare states with high standards of social security - Canada, Iceland, Sweden, Finland, Netherlands, Austria, Denmark, Norway… all demand a significantly lower tax rate from their corporations than we do!
Distribution of net company tax – share and effective tax rates of the largest firms (firms with a taxable income of greater than $1000000).
The largest firms in Australia now pay nearly 3/4th of all company tax, a close-to 5% increase since 2001 and contribute 70% of ALL taxable income.
But the buck doesn’t stop there.
What about income tax? Surely those fat cats in baby seal fur coats raking in corporate bonuses worth millions aren’t paying their fair share. There used to be a time back in the day when our society was a more equitable one but today, the rich are getting richer and the poor are getting poorer.
Comparison of Net Income Tax Share paid by the Bottom 25%, Middle 50% and Top 25% of Australian Income earners
The top 5% – net income tax share and effective tax rate
In 1996-97, the top 5% of income earners paid 25% of net tax. Closer to today, that figure has shot up to nearly 35%.
The rich aren’t just paying their share of tax – they're paying a share of tax which has steadily but surely crawled up in the last 20 years and shows no signs of abatement – certainly not when there’s enough political will to keep milking them and a series of federal governments that just can’t seem to fix the other side of the equation by cutting needless government spending.
But hey, that sounds… really, really hard.
Thanks, rich guys!
Graphs credit: Professor Sinclair Davidson, Royal Melbourne Institute of Technology
Satyajeet Marar is the Director of MyChoice Australia