I see that there is a tentative deal to avert the US "fiscal cliff" by resorting to that age-old vote-winner, taxing the rich.
If you are a wealthy American citizen who earns over $400,000 ($450,000 for couples), you’ll possibly now be paying 39.6 cents in the dollar, rather than 35 cents. And if you have an estate worth over $5 million, then you may end up paying 40 cents in the dollar.
Two things come to mind.
1) This is very similar to what David Cameron’s coalition government has just tried in the UK, where taxes on "the rich" rose to 50%.
This has been a resounding failure, because while Inland Revenue was able to find a fair few "the rich" to tax in the first year, quite suddenly the number of "the rich" in the UK has now fallen to an all-time low.
It’s quite touching that diehard lefties and rusted-on redistributors in Blighty have forgotten that one of the nice things about being "the rich" is that you can afford good accountants.
2) What constitutes "the rich":
- In the UK, you have to earn over £150,000 (around AUD$234,000) to be considered worthy of extra bleeding at the 50 per cent rate (now cut back to 45 per cent)
- In the US, it’s over $400,000 (around AUD$384,000) and then you’re paying only 39.6 cents
- In Australia, you have to be earning over $180,001 (I love that $1 on the end) to pay a lump sum of $54,547 (that’s around 1/3 of your income right there) plus 45 cents in every dollar after that.
The one consolation here is that our federal parliamentarians are on a basic salary of $190,550, which means that we really are being governed by ‘the rich’.
But gosh, no wonder Bill Shorten complained that he was struggling. It’s all that tax he’s paying. I mean, surely good socialists like the ALP Cabinet wouldn’t stoop to tax minimisation of their incomes through the use of good and expensive accountants?
Philippa Martyr blogs at Transverse City. She did not enjoy this year’s Edinburgh Military Tattoo as much as she usually does.