The Rich is Targeted to be 'Fair' to the 'Poor'

KEVIN Rudd is preparing the nation for cuts to benefits and increased taxes for high-income earners, to help pay for his pledge to boost pensions by billions of dollars. As the Government prepares for its May budget, the Prime Minister said "fairness" would guide its decisions.

“Longer term you have to look at what can be afforded by way of additional support from those who are better off,” Mr Rudd said today. “A pensioner is not out there earning 150,000 a year. There is a question about fairness in Australia to how you balance it out.

“We think Australia is all about fairness. People who are at the upper end, over time, perhaps could be in a position to provide greater support.”

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Is this fairness? Don't the people who earn more deserve what they get paid? The market dictates that these people demand the salary they earn, and we have the government manipulating this to pander to the 'poor'. Now before you go whacking me for my insentitivity, at least hear me out. It is a no brainer that a progressive tax system, one like what Australia's got is a disincentive for hard work or to take on more responsibility for higher pay. What is worst, the Prime Minister of Australia want to tax the higher income people even more, who at the highest tax rates is already paying 46.5 cents to the dollar.

Australia's taxation system needs a complete revamp according to tax experts as it is too complex. There should not be a reason why an individual with minimal investments should not be able to do his own tax returns but sadly a high proportion of personal tax submissions are done by hired accountants. The main reason is hardly a day goes by without some sort of change
in the tax legislation. According to some reports I've read, the cost of implementing the Goods and Services Tax is more than half the GST itself. The Family Tax Benefits and other pension calculation etc. are so complicated you'll need a double pHD to even understand the crux of how it all works.

Tax rates either through bracket creep or a reduction in the tax rates has put a lot of money back in the pockets of the taxpayer for the last decade under the Liberal government. Liberal has always been about business and money while Labor has always been about 'fairness'. I've got nothing against fairness but is this so called 'fairness' doing a disservice to the country? Obvious examples are the chronic unemployed who have little incentive to find a job. They get the dole from the government for doing nothing so there is little incentive to go out to find a job. Most of the skill sets of the chronic unemployed do not give them the luxury of a high paying job, so when they work, their dole entitlements will be reduced accordingly. Let me illustrate this point in case. An unemployed man is getting a $500 dole payment a fortnight from the government. He then gets a job at Mc Donalds that pays him $500 a fortnight. Technically if all else remains equal he should have an income of $1000 ($500 from the dole and $500 from Mc Donalds). However, in reality, his dole will then be reduced to $150 a fortnight, which means he will take home only $650 a fortnight ($150 from the dole and $500 from McDonalds) putting him up only $150 compared to if he didn't work, although he needs to put in about 40 hours a fortnight or 20 hours a week to get this additional $150. What's more, taxes need to be paid and earning more may also put him in a higher tax bracket, so in all reality, he'll probably end up with less than $150. To a lot of them, it's just not worth it and I tend to agree.

I think social welfare is good and should be improved to help the people who really need it. I agree with the 'fairness' espoused by Kevin Rudd, but I don't agree in the intended forms of implementation to get it. By raising the higher incometax rates (which is already at 46.5% as mentioned before) makes Australia a very unattractive destination for top talents, especially from overseas. They will choose other nearby destinations like Hong Kong and Singapore which have more attractive tax structures especially if these expatriates are not going to retire in Australia hence not going to be able to enjoy the generous Australian social welfare which their high taxes are funding.

If you produce a child, the Australian government will give you a $5000 bonus, even if you are a multi millionaire (although I understand this legislation has changed recently to be means tested). If you are over 65 years old and had no income, the government will give you the full pension (tax exempt) even though you may have ten million dollars in superannuation and you're sitting on a fully paid off multi million dollar mansion. While that happens a working family may be on a single income taking home only half their salary after paying 46.5% in taxes (excluding Private Insurance cover which is mandatory for families earning over $140,000 a year) and laden with crippling bills like a $3000 mortgage (based on a $400,000 house loan), thousands in education and tuition fees and 10% interest car loan for their two cars, one for work and one to bring the kids to school.

I'm not against helping the poor and being 'fair' but it should really be fair and not blindly give the pensioners and lower income people a hand out just because they are technically poor. As it is the technically poor already enjoy discounted medication, car licence and insurance, water and council rates, free bus travel and a whole lot of other benefits. I would not for a moment deny the really deserving poor their right to these priviledges but the loophole has gotten larger and those not deserving are benefitting unfairly as well. Some of these technically poor people are going on holidays twice a year and drinking coffee everyday while many working class people pack their lunch everyday and have never gone on a holiday for years. I'm all for helping the poor but in the same vain, they must be genuinely poor and not through some technicality of being a pensioner or unemployed. With these populist politicians, all they know is bashing the rich and pandering to the 'poor' as apparently there are more poor people than rich people and that's where they'll be looking for their next votes.

Just by taxing the rich more and giving them to the 'poor' is not going to make anything 'fairer' nor is it going to improve Australia's international competitiveness as a destination of choice for employment.