In the Australian today Adam Creighton is pointing out that the top 1% of income earners pay 17% of tax. And the top 10% pay 50% of tax. Which isn’t news, but I guess in the current climate of talking about tax breaks on super, it’s worth noting.
My real dissonance here is the way the right are allowing the left to control language. The taxation arrangements around super are described as a tax break, as leakage in the system and a number of other terms. I think that secretly some on the left think that the 49% tax rate implies 51% leakage – because the other half of your income should also be appropriated by the government.
The reality is that there is a tax system with tax rates that apply. It’s not leakage when you set a tax rate at a particular level, unless we’re also going to say the low income tax offset is leakage, the fact that people on under 100,000 are taxed at a lower marginal rate is leakage, the family tax benefit is leakage etc etc.
What is needed is a discussion about what super savings are, and why they have a different tax treatment. Basically superannuation savings are reducing the amount that government needs to spend when people get old. So every dollar that someone saves into super is a dollar that the government doesn’t need to spend in 20 years time. With an aging population this is a massive saving to the future budget. Governments of both persuasions have recognised this over the years and created / improved / extended a superannuation system that most countries in the world wish they had. Attacking the underpinnings of that system for short term political benefit is amazingly short sighted.