I just did my quarterly taxes and once again it was a frustrating exercise in complexity and confusion. To add to the concern my tax software has not been correctly working out my income tax. I did it manually and found I had a significant liability. So now I am going to have to go begging to the state tax office to try and avoid penalty fees. I am not amused.
The tax system needs to be simplified. Progressive income tax scales are a good idea but they are complex especially when done at several levels. Property taxes are actually easier for me to pay and work out than income taxes. Because I am consulting I do not have to deal with service/consumption taxes directly so I do not have an informed opinion on that.
What would premier cam do [WWPCD] if given the keys to the NSW Cabinet?
Assume the parochial worst, I win a competition off the back of a Cherry Ripe wrapper to be Premier of NSW for a day. The competition is intended to be ceremonial where the winner gets to cut a ribbon on the Harbour Bridge and then open the ride at the new Luna Park where you have to duck the sword of a De Groot mannequin.
However I point out that turnips are used in Cherry Ripes instead of cherries as they are cheaper by the kilogram and taste the same if dunked in artificial flavouring. Rowntree and the NSW Government determine Australia cannot handle this secret escaping into the wild and consequently give me twenty-four hours to introduce a legislative agenda.
So, WWPCD?
I have had a go at trying to work out a simplified yet egalitarian system of taxation before. That didn't take into account the policies of Superannuation and 401Ks which have become popular since. Especially as the labor market is no longer biased toward youth and the boomers are getting older. This is forcing retirement savings into private accounts with government encouragement and tax breaks.
The simplest thing to do with income is to make it flat. This makes working out tax liabilities for businesses and individuals much easier and simpler. But how do you do that without losing the fair manner in which progressive taxes weight toward those that have a greater share of the economy's income. If you mix policies of flat tax and superannuation I think that issue can be solved.
1. The federal government has its income tax capability removed and NSW becomes the sole arbiter of income taxes in the state (this is constitutional, the feds tax by state agreement, not by legislative right).
2. There is a flat tax of 25% on individual's income. No exceptions.
3. Those that earn under half of all state income (which is approximate 65,000 IIRC) have any tax collected go directly into tax-free superannuation accounts (private/public/choice/whatever).
4. Those that earn over half of all state income have their tax collected under that halfway point go into superannuation as per point 3, but the tax collected above that goes to government revenues for operating expenses etc.
5. Individuals can withdraw money from their superannuation prior to age sixty, however a 25% tax is leveraged against that withdrawal and the tax moneys go to government operating revenues.
This policy should satisfy economic liberals (flat tax and private responsibility for retirement), social liberals (progressive taxation through superannuation policy and default savings), as well as republicans (decentralisation and limited government overhead).
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