Fact check: Does Joe Hockey’s income tax claim stack up? 143



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Yesterday, Treasurer Joe Hockey told ABC RN’s Fran Kelly that 50 per cent of all income tax in Australia is paid by 10 per cent of the working population.

Ben Phillips, Principal Research Fellow at the National Centre for Social and Economic Modelling (NATSEM) at the University of Canberra set out to determine whether this was a truthful statement.

Mr Phillips used the  Static Incomes Model, which simulates the taxation and government benefits system and allows us to evaluate current and alternative policies and how they would affect different family types on various income levels, plus Budget data.

“When I restricted the STINMOD base population to the working age population only (aged 18 to 65) and rank these people by their taxable income, I found that the top 10 per cent (those with taxable incomes beyond $102,000 per annum) do pay around 52 per cent of all personal income taxation,” Mr Phillips writes in The Conversation.

Since high income earners usually have greater scope for minimising tax through deductions, such as negative gearing, Mr Phillips double checked the statistics using a different income measure called “total income from all sources” to rank personal incomes. “On this ranking, the share of personal income taxation paid by the top 10 per cent drops to 50.5 per cent.”

This analysis does not include the 2.9 million people who are not in the workforce for whatever reason. Removing these people from the labour pool reduces the tax share to 46 per cent paid by the top 10 per cent of workers.

So it seems the Treasurer’s statement stacks up. Mr Phillips says this is a sign of a well developed income tax system.

“Australia’s personal income taxation system is strongly progressive, with higher income earners paying both a higher marginal tax rate and average tax rate compared to lower income earners.”

The researcher found the average tax rate of the top 10 per cent earners was 26.7 per cent, while average taxpayer was paying less than half that, at 12.3 per cent.

According to the 2015-16 Federal Budget, Australians paid around A$176 billion in personal income tax in the 2014-15 financial year. In 2014-15, personal income tax made up around 47 per cent of all tax received by the federal government


Do you think Australia’s income tax system is fair? What changes could be made to improve it?

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  1. All the taxpayers know what needs to happen. Those millionaires, billionaires, major and international companies who pay no tax whatsoever in Australia should have to. Easy fixed, but then where would the donations to political parties for the next election, come from. Seriously though, American Warren Buffet came up with a brilliant tax system that would sort all this out. So, hey Joe Hockey – please take a closer look at it.

    9 REPLY
    • Hey Joe. And just how much do you pay??? You always come up with the smart answers thinking you know what everyone does or doesn’t do or what is good for everyone.

    • The majority of taxes have always been payed out by the workers lower income to middle income. Those that are above can and do get expensive accountants that sees money going back into there hands some times millions. Also what needs to be looked at are the big business welfare handouts along with the ripping of of taxes

    • We need a fairer tax Why do the higher earners get away without paying thier fair dues( Scratch my back and I will look after you)

    • Why not allow lower wage earners the same rights as the high flyers and see how quick we would be equalised

    • I also heard that your government is going to make them GST registered, and they have to pay tax as well that might be the case they will doom. I hope so for Australian sake.

  2. It’s simple just tax every working person 20 percent with no deductions.

    2 REPLY
    • That’s hardly fair to those on a low income as 20% of their income is worth a lot more to them than those on a high income and what about part timers?

    • Absolutely, no loopholes, no sliding scale according to income, it was a great idea when it was first floated and still is.

  3. Maybe you should be paying your fair share Joe

    9 REPLY
  4. Can only the people that vote comment please

    2 REPLY
    • Always PM or Joe Hockey being accused of fraud. Just heard on Ch 10 T Burke had to repay 15 claims for children & a plane trip for his father . He didn’t know he couldn’t claim as he was young., only took him 5 years, to learn this, so obviously he isn’t bright enough to do the job. Better still got away once , then again,again, again, Thats fraud in most peoples eyes, except Labor

  5. Lower end of the scale no doubt. Easy to make figures look good, just remove a couple of items and bingo the top 50% are paying half.

  6. I’d like to see fully broken down numbers. Ie the over 1/2 mill $ mob Gina Reinhard of the world etc bet a different set stats would come out.
    Lies and damned statistics.

    1 REPLY
    • Gina has just bought a big property, so thats one saved & more jobs , at least her money has gone to Australia .

  7. Nothing new here 10% of the population has been supporting the other 90% tax dodgers for the 65yrs I have been alive. that’s why they continue to donate to their selected party.

    1 REPLY

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