The viral fact of recent days is that 55 Australians who earned more than $1 million in income in 2012-13 paid no tax.
That true and shocking snippet is being aired in support of a policy proposal for a “Buffett tax
", which the ALP national conference adopted for consideration
as part of the party’s policy platform on the weekend. Named for US billionaire Warren Buffett, it would ensure the rich pay a minimum percentage of their income in tax, perhaps 30% or 35%.
In Australia, most people with a million dollars in income are actually decent, running a factory or a stock-broking firm, and paying their workers while also paying their taxes.
But like a crowd at the footy or a Saturday night in the city, a few idiots ruin things for everyone. Turns out, there’s a 1% in the 1%.
Those 55 millionaires (0.6% of millionaires) paid no tax. Fortunately the vast majority of millionaires are far better behaved.
The categories at the bottom of this chart show the size of millionaires' incomes after deductions. That big line on the right is the 9155 people with an income over $1 million who paid tax on more than $1 million in income. That’s 93% of millionaires.
They are paying an average of $958,000 in tax each, or 43% of their total income in tax. That seems fair. They get great benefit from government services and should contribute according to their capacity.
But what about those 55 zero-tax millionaires -- the little blue sliver on the left of the graph -- are they all vile tax shirkers?
It’s not totally clear from the data. They could
just be unlucky investors who used up all their total income in investing expenses. For some of them, this is likely genuinely the case.
But there are clues suggesting some of them are tax haters -- the kind who drop Ayn Rand
quotes in conversation and have Ludwig von Mises
tattoos that remains unseen until they shed their Charvet
Their cost of managing tax affairs are startlingly high on average. The millionaires who paid zero tax spent 70 times more on tax accounting than millionaires who paid the most tax.