Hello Cruel World
Wednesday, May 12, 2004
Persistent Taxation Myth
Is there a deliberate policy that circulates this myth of "paying half what I earn in tax" ?
The only people who ever "lose half their money in tax" are very low earners who may lose large amounts of benefits by earning a small amount. You only pay the marginal rate on the money you get above the limit.
For 2003-2004, you'll pay a total of $16,182 tax at $62,500 -- that's 25.9% tax -- then start paying 47 cents of any dollar above that (not counting any other fancy bits off or on).
To get close to paying 47% of your total income you have to be getting much, much more, e.g. 42% tax on $262,500; 46% tax on $962,500. Since 80-90% of Australians earn less than $62,500 pa, there'd be a very small number indeed liable. Most of those would be doing "taxation minimization" (very legally of course).
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