It’s a common catch cry among low-income earners and those on social welfare.
In a strong vibrant economy there’s no doubt those earning above average incomes have a duty to pay a commensurate amount of tax.
But if you keep going to the well, it will eventually run dry.
I’m not talking about the seriously rich here, just those earning two or three times the average wage.
As we all go through life each increase in income is soaked up by a bigger house, better car, private schooling etc. It’s a reasonable dream and aspiration in a bountiful country like Australia.
The proposed flood levy skewed to take a much bigger grab from middle and upper income earners highlights how this taxpaying group is seen as ripe pickings .
However, those calling for a “rich tax” please consider this.
I was talking to a business aquaintance, someone who would be considered well off by average standards, He claims his above average income is committed, Yes he has a bigger house for his family of 6, but a lot of his income is taken up by private school fees.There’s not a lot of fat, he’s not salting large amounts away every pay day.
When asked what he would do if something like the flood levy became permanent he already had his plan mapped out.
“Well firstly we wouldn’t be eating out two or three times a week.”
“I’d cut the gardener who comes once a fortnight.”
We might have to do without a cleaner once week ,everyone might need to do their own ironing.”
And the movies might not be a weekly family event.
A “rich” family slugged but who is hurting?
If this story is typical and other middle income earners make similar cutbacks, the restaurants would have to cut staff, the gardeners would be out of a job, as would the cleaners and ironing ladies.
And the movie houses would have lots of empty seats.
So tax the “rich” if you will but look at the potential “knock on” effect.
Those people who had been earning income from “the above average earning family” would possibly have to fall back on social welfare.
Instead of paying tax they’d become be a burden on the tax system.
Those who earn more should pay more tax – no argument – but tampering with our tax structure for a quick fix could have long- lasting and harmful effects on our economy.