[LINK] Why so many of us think we're overtaxed

[Viveka]

At 11:54 AM +1100 25/2/03, Saliya Wimalaratne wrote:
>For skilled (i.e. mid-high income bracket) people in Australia:
>
>Taxation is perceived as high
>Perceived results are low
>Other countries offer a better result/taxation ratio
>Skilled people are leaving .au because of the above

I think this thread is revealing that the above statement is not 
universally true.

I'm paying quite a lot of tax; mid-high income bracket (I once heard 
the results of a survey indicating that *everyone* in Australia 
considers themselves "middle class" - at the extremes, the poorest 
will call themselves "lower-middle" and the richest will call 
themselves "upper-middle")... Money seems to be coming in, despite 
all the time I spend on Link, and I'm doing no tax minimisation, not 
even income splitting despite the fact that I'm the income-producing 
partner of a single-income family.

I've spoken to US colleagues, and I note that
1. they pay as much tax as I do, once you add it all up - Federal 
Tax, State Tax, etc. If you just look at Federal tax, sure it's lower 
than Oz federal tax, but it seems that the US states have the power 
to directly tax their citizens, unlike Oz states. Our states also hit 
us with various duties and levies, but the US states seem to do that 
just as much.
2. USians receive much less in social services than Australians.

It's true that I don't take advantage of all the social services 
available - but I still consider it a benefit *to me* that they are 
available to others. People have to eat somehow, and if there was no 
dole there'd be more crime. Crime is an inefficient means of 
redistributing wealth, because of all the destruction (material, 
psychological and moral) caused, and also enforcement costs.

The only thing that occasionally makes me think about moving to the 
US is the fact that their government spends much, much more than ours 
on R&D. It's clear that the current mob of luddites in charge 
actively dislike R&D, considering it thinly-veiled tax evasion. This 
makes us all poorer in the long and medium term.

Of course, the current paranoid climate in the US, along with the 
complete lack of civil rights afforded non-citizens under the PATRIOT 
act, has made me unlikely to consider moving there again. I'm even a 
little worried about my planned trip to San Diego in July for 
SIGGRAPH.

>Taxation cuts are mostly directed at winning votes. Therefore, they
>will be offered to the greatest number of people; which won't be the top-level
>income earners. Your 'hope' in this instance is almost assured by virtue of
>the reasons for the cuts in the first place :)

This would seem to be logical, but is not borne out empirically.
The tax cuts in the US are going to the very richest only.
The GST was a tax cut for the Australian rich, and a tax *increase* 
for the very poor. Before the GST, the very poor paid no tax at all. 
Now they pay 10% on all goods and services they buy. Since they are 
unlikely to be using those purchases to make taxable supplies, they 
won't be able to claim any of it back either. At the same time, I am 
now paying less tax overall than I did prior to the GST.

One fundamental question is whether
1. income should be redistributed and
2. whether income tax is an appropriate means for doing that

I think income should be redistributed, since our system of laws and 
property is arbitrary anyway, and therefore income is *already* being 
redistributed, in favour of those who inherit wealth (both material 
and cultural), and particularly in favour of those who find 
themselves in a position to extract rent of one sort or another. 
Formal redistribution is merely a way to partially redress the 
structural  redistribution that happens already.
I further think that income tax is one reasonable way to do this, 
since progressive taxation is well-understood and relatively easy to 
administer.

Subsidies to big business are so ingrained in our system that we 
don't notice them any more. For example, you'll note that the road 
system gets the vast majority of its use at rush hour - which means 
that it's a subsidy to big business. They can locate in the CBD, to 
which all roads lead, instead of paying the cost of having many 
offices closer to where their employees live.
The low price of bulk electricity and water, despite their 
environmental cost, is a subsidy to the aluminium and cotton 
industries in particular, among others. And so on.

I believe that income redistribution provides a public good to all 
society, including those from whom wealth is being redistributed.
* Universal health care allows people to see doctors earlier, so 
illness does not become acute and therefore more costly to remedy
* Early intervention and free child care would, if it were 
implemented, make happier, better educated children who would grow 
into happier, better educated adults who would be less likely to 
steal my car stereo and more likely to buy the high-tech gizmos that 
I work on
* Same as above for the dole
* More and better paid teachers and police likewise
* Subsidies to the bush (both ongoing infrastructure development and 
drought relief) provide food security to Australia, as well as the 
immeasurable benefits of 1. the availability of *cheap, fresh* food 
and 2. the bush mythos

And to bring us for one moment on topic (gasp!)

* Cheap universal access to high-bandwidth Internet links would 
reinvigorate regional areas, stimulate information-driven industries 
(particularly high-bandwidth industries like film post-production, 
which can not currently afford to use the Net for file transfer, 
which is stifling), promote collaborative projects, cut down on 
transport costs (both the the economy and the environment), and 
generally stimulate the creative sector of the economy no end.

Regards,

V.
-- 
Viveka Weiley, Karmanaut.
{ http://www.karmanaut.com | http://www.planet-earth.org
    http://www.MacWeb3D.org | http://sydney.siggraph.org.au }
Hypermedia, virtual worlds, human interface, truth, beauty.