THE TAX SYSTEM EXPLAINED IN BEER.

[Marty_d]

Decades ago we drove past miles of trashed forest in eastern Tassie. Large branches were pushed up into windrows ready for burning. We followed a truck load of big, straight hardwood logs. The timber mills of my home district could have converted it into high-value sawn timber. The truck turned into the Triabunna woodchip plant.

Not an isolated incident unfortunately, they still do it today.

 

 

[cscotthendry]

If there was ever any doubt about how much companies pay in tax

 

http://www.brisbanetimes.com.au/national/westfield-short-26b-on-tax-report-20140528-394rm.html

 

"The report by Roman Lanis, a senior lecturer in accounting and tax at the University of Technology, Sydney, found the combined arms of Westfield pay an ''effective corporate tax rate'' of just eight cents in the dollar - far below the official 30 per cent rate levied on business in Australia. On average, the top 200 sharemarket-listed companies in Australia pay 22 cents in the dollar."

 

I wish I could get away with paying 8% tax, but I can't offshore my income through tax haven countries like corporations can.

 

 

[eightyknots]

If the forests were logged sustainably there wouldn't be an issue. I love wood. I build with it, make toys for the kids, burn firewood for warmth. And in some regards I agree with OK about the Greens being too broad a church and thereby including the nutter element. However I believe you can get more value out of old-growth forests by well thought-out tourism, for example the Tahune Airwalk in the far south of Tas, or a "flying fox" setup that I visited in South Africa, than cutting it down and using it for woodchips. Plant pine plantations by all means, they grow like weeds and can be used for structural framing/roof trusses etc, and use the valuable hardwoods for value-added products like furniture, flooring, kitchens and the like. But using 100 year old (or even 50 year old) trees for woodchips is just wasteful.

I am not in favour of rapaciously cutting down all the trees in a forest, and I am even more against this if this used for low value-added products such as chipboard. I am very much in favour of sustainable forest management as I described in post #72 above. This is actually better, in most instances, than locking them up by the state.

 

 

[Gnarly Gnu]

The Laffer curve has just bitten France on the butt, President Hollande (now 20% popularity rate) is dismayed at the 'unexpected' low tax return from his 75% top income tax rate & now has a 14b euro black hole and a 0% economic growth rate.

 

[/url]

 

French President Francois Hollande

 

has raised income tax, VAT and corporation tax since he was elected two years ago. The Court of Auditors said receipts from all three taxes amounted to an extra 16bn euros in 2013. That was a little more than half the government's forecast of 30bn euros of extra tax income.... The figures come a week after French Prime Minister Manuel Valls, who was appointed in March following the poor showing of Mr Hollande's Socialists in municipal elections, appeared to criticise the president's tax policy by saying that "too much tax kills tax".

 

I wouldn't be surprised if the extra 2% on the top tax rate here could also prove to be income negative for the government, certainly producing a dud budget with new taxes has come back to sting them already. No, the top rate certainly doesn't directly affect me but high taxes are simply bad for the economy as they discourage productive activity which in turn effects everyone financially. Abbott himself acknowledged this - before he went ahead and raised taxes anyway.

 

 

 

 

 

 

[bexrbetter]

I wish I could get away with paying 8% tax, but I can't offshore my income through tax haven countries like corporations can.

I'm guessing you have never run a business in Oz as you don't seem to be aware of many other considerable cost burdens, a lot more than 8% ends up in Government hands. And they pay billions in GST.

 

Anyway, look at the bright side, a few Corporations such as Ford, GM and Toyota are packing up soon liberating some 50,000 Australians from their evil shackles. Who needs their stinking 8%.

 

 

[Old Koreelah]

I am not in favour of rapaciously cutting down all the trees in a forest, and I am even more against this if this used for low value-added products such as chipboard. I am very much in favour of sustainable forest management as I described in post #72 above. This is actually better, in most instances, than locking them up by the state.

As long as some old growth sections are left for wildlife and re-seeding, selective logging has the least impact. That's how my grandad managed forests. He also planted mobs of trees during the depression. Decades later some of my less-educated greenie comrades tried to prevent them from being logged- until it was pointed out that the nice big gum trees were in rows.

 

 

[Bob Llewellyn]

The Laffer curve has just bitten France on the butt, President Hollande (now 20% popularity rate) is dismayed at the 'unexpected' low tax return from his 75% top income tax rate & now has a 14b euro black hole and a 0% economic growth rate.

[/url]

 

French President Francois Hollande

 

has raised income tax, VAT and corporation tax since he was elected two years ago. The Court of Auditors said receipts from all three taxes amounted to an extra 16bn euros in 2013. That was a little more than half the government's forecast of 30bn euros of extra tax income.... The figures come a week after French Prime Minister Manuel Valls, who was appointed in March following the poor showing of Mr Hollande's Socialists in municipal elections, appeared to criticise the president's tax policy by saying that "too much tax kills tax".

 

I wouldn't be surprised if the extra 2% on the top tax rate here could also prove to be income negative for the government, certainly producing a dud budget with new taxes has come back to sting them already. No, the top rate certainly doesn't directly affect me but high taxes are simply bad for the economy as they discourage productive activity which in turn effects everyone financially. Abbott himself acknowledged this - before he went ahead and raised taxes anyway.

 

 

 

This is US data... so how do Laffer or the Trickle On Your Heads theory explain this? 

 

 

 

 

[Marty_d]

I'm guessing you have never run a business in Oz as you don't seem to be aware of many other considerable cost burdens, a lot more than 8% ends up in Government hands. And they pay billions in GST.Anyway, look at the bright side, a few Corporations such as Ford, GM and Toyota are packing up soon liberating some 50,000 Australians from their evil shackles. Who needs their stinking 8%.

Didn't those companies get quite a bit of government money? Let's look at some figures...

 

Toyota Australia - after tax profit of $149.1 million for year ending 2013 (Toyota globally: 18.8 BILLION $US net profit) - can see why those poor buggers need somewhere cheaper to manufacture.

 

General Motors - gross profit: US $18.5 Billion (would have thought they'd be able to support their lower-performing Australian arm until it became profitable again.)

 

Ford Motor Company - gross profit: US $8.6 Billion, net $7.2 Billion. Another struggling entity unable to prop up their brand here.

 

Perhaps what is really needed internationally is moves to get rid of tax havens. Surely the countries losing the most tax dollars could come to a fiscal arrangement with places like Jersey which would encourage them to raise their corporate tax rates substantially above 0%.

 

 

[Gnarly Gnu]

Perhaps what is really needed internationally is moves to get rid of tax havens.

Agree with you on 'corporate welfare', the govt should treat all companies the same however I admit it is complex with auto manufacturers given distortions in other countries.

 

But so-called tax havens - and tax competition - are actually beneficial to our economy. In fact we all indirectly benefit. This guy explains it well:

 

 

 

[bexrbetter]

Didn't those companies get quite a bit of government money? .

I hope so, they are worth keeping to the tune of 50,000 jobs and all the small companies and private storeowners that those 50,000 support - it's a flow on effect and Oz is going to suffer from this (that's not a Labour or Liberal attack either, just fact). Who gives a toss if the car company is making a loss and being supported by the Country if the Country is flourishing because of it? - Apparently a lot of people actually who can't seem to see the big picture.

 

Many other countries support business to keep their economies going and simply put, many Oz companies are moving there because of it, why wouldn't they?

 

Look at the German car industry, Germany throws 3 times as much (per head of population) at their car industry than Oz ever has and Oz is wealthier.

 

Didn't those companies get quite a bit of government money? Let's look at some figures...Toyota Australia - after tax profit of $149.1 million for year ending 2013 (Toyota globally: 18.8 BILLION $US net profit) - can see why those poor buggers need somewhere cheaper to manufacture.

Firstly Toyota don't owe Australia anything, I am happy for what they have given when many times previously they should have pulled the pin from a business point of view but they stuck at it here.

 

Secondly, the reason they are going is very simple and they have stated it; If Ford and GM leave there is no way all the component suppliers can maintain supply or at the current pricing so Toyota just simply can not afford to stay. Example; One month before GM made their announcement, Toyota signed a 5.5 million supply contract with ROH wheels in Adelaide to supply until 2022.

 

General Motors - gross profit: US $18.5 Billion (would have thought they'd be able to support their lower-performing Australian arm until it became profitable again.)

Ford Motor Company - gross profit: US $8.6 Billion, net $7.2 Billion. Another struggling entity unable to prop up their brand here.

 

.

There's more issues than just money.

 

 

[Gnarly Gnu]

This one is too good not to include also (I like this guy) - Tax competition & how we all benefit:

 

 

 

[Jaba-who]

Wow, if you're the ONLY one in your business contributing to the income of the business, why are you paying the employees at all?

While I go and do the actual work that customers actually pay for, I need someone to run the office, do billing, banking, rostering my work and jobs, finding me a replacement when I finally get a holiday or get sick (which by the way I don't get paid for (no such thing as holiday leave loading or holiday pay, sick pay or conference leave pay. I stop work...I don't get paid, but of course my staff do continue to be paid and when they take holidays they get an extra 17.5% loading. I go into loss mode when I don't work.) They also deal with customers who come to the office. None of these activities gets paid for by customers it all has to come out of the work that I go out an do.

 

This is nothing special about me. The coalface of most Australian small business runs like this. People who have never been in this position haven't got a clue.

 

 

[Jaba-who]

" (after tax comes the cost of running my business, paying my staff etc . )" ......well and truly BEFORE any tax calculation.

Oops, sorry let me correct that. Lets turn the order around.

 

I work from Monday morning till end of play Monday afternoon to pay my business costs. Then I work four more days. Out of that I pay I pay nearly 50% of my income in tax (46.65%) - damn still takes me till end of play Wednesday afternoon.

 

So yep you are right. I was wrong all the time. I only work till Thursday morning till I start earning some money for myself not Thursday lunchtime. God I feel so much better now that's been pointed out to me!

 

 

[coljones]

While I go and do the actual work that customers actually pay for, I need someone to run the office, do billing, banking, rostering my work and jobs, finding me a replacement when I finally get a holiday or get sick (which by the way I don't get paid for (no such thing as holiday leave loading or holiday pay, sick pay or conference leave pay. I stop work...I don't get paid, but of course my staff do continue to be paid and when they take holidays they get an extra 17.5% loading. I go into loss mode when I don't work.) They also deal with customers who come to the office. None of these activities gets paid for by customers it all has to come out of the work that I go out an do.This is nothing special about me. The coalface of most Australian small business runs like this. People who have never been in this position haven't got a clue.

Maybe you should internally price yourself as an employee, at an appropriate level. Any profits left at the end of the year are your reward for innovation and entrepreneurship and a return on capital invested. If that profit isn't too flash maybe you should close the business and return to being a wage slave.

Any business which can't be run without paying all the staff, including the owner, a fair rate for their efforts should not be in business. This not only included the big end of town but the local coffee shop.

 

Staying in business by cheating the staff, the landlord, the local council, the bank, the taxman, health and safety, your parents, stealing the footpath outside and going bankrupt to avoid your responsibilities is a waste of valuable resources.

 

 

[coljones]

Maybe you should internally price yourself as an employee, at an appropriate level. Any profits left at the end of the year are your reward for innovation and entrepreneurship and a return on capital invested. If that profit isn't too flash maybe you should close the business and return to being a wage slave.Any business which can't be run without paying all the staff, including the owner, a fair rate for their efforts should not be in business. This not only included the big end of town but the local coffee shop.

 

Staying in business by cheating the staff, the landlord, the local council, the bank, the taxman, health and safety, your parents, stealing the footpath outside and going bankrupt to avoid your responsibilities is a waste of valuable resources.

Or maybe the art of "Entrepreneurship" is how many of these rip-offs you can do without being caught.

 

 

[Jaba-who]

Maybe you should internally price yourself as an employee, at an appropriate level. Any profits left at the end of the year are your reward for innovation and entrepreneurship and a return on capital invested. If that profit isn't too flash maybe you should close the business and return to being a wage slave.

Any business which can't be run without paying all the staff, including the owner, a fair rate for their efforts should not be in business. This not only included the big end of town but the local coffee shop.

 

Staying in business by cheating the staff, the landlord, the local council, the bank, the taxman, health and safety, your parents, stealing the footpath outside and going bankrupt to avoid your responsibilities is a waste of valuable resources.

You've missed the entire point. The business does run well. It doesn't not pay its bills and its not that I don't get paid.

 

The point is I get paid and then I have to give half of it to the ATO and people like some of the posters on this thread think I should be happy that I do so and to be happy to pay even more.

 

.

 

 

[Marty_d]

Agree with you on 'corporate welfare', the govt should treat all companies the same however I admit it is complex with auto manufacturers given distortions in other countries.But so-called tax havens - and tax competition - are actually beneficial to our economy. In fact we all indirectly benefit. This guy explains it well:

 

No. There's not. If a large company can make higher profits by moving their business to another country they will. Ever notice that all your calls from Telstra are coming from Bangladesh? This is why Apple and Google have parts of their business in countries like Ireland. It's why most clothing manufacturing is done in the poorest countries on earth. As soon as Myanmar settles down a bit there'll be a swag of large corporations setting up there to take advantage of the poverty level wages. Qantas, the national carrier, moves maintenance offshore at the drop of a hat. It's all about the bottom line, Bex. Maximise the profits and your share value goes up. If your share value goes up then so does the CEO and board's remuneration.

 

I suspect there's a certain point where companies go from being small to medium businesses with a focus on their product or service, to being large businesses with a focus on pure profit. Jaba, for example, goes in the first lot. For all his complaining about how much tax he pays, he still personally works at whatever his business's core function is, has staff supporting him so in other words he's employing locals which is great. If he were to grow his company to the point where he's got say 20 people doing whatever it is that he used to do himself, but he's still keeping his hand on the tiller and trying to be the best in the field, he's still focussed on the core business. Say the company keeps growing and he decides to go public. He floats the company on the stock exchange, takes a seat on the board or sells it all and retires to the south of France. All of a sudden "his" business is not really his any more. Instead of making decisions with the primary factors being the product/service and the welfare of his staff, his primary focus is profit because that's what the shareholders want. And while he's bitching about tax now, he's still paying it. Once the business gets big enough, the board who runs it (of which he may or may not still be part of) will be looking at increasing that profit margin by any and all means possible - which may mean sending parts offshore, setting up real estate investment trusts, and avoiding paying tax wherever they can.

 

 

[bexrbetter]

No. There's not.

Yes, there is.

 

That's twice I've said it so it must be right, so there, I win, nah nah.

 

 

[Gnarly Gnu]

Rather than subject myself to 9 minutes of conservative propaganda, how about you summarise in your own words how corporate greed benefits everyone?

That's a shame you aren't interested in educating yourself a little Marty, the clip is informative and has nothing to do with politics only tax competition and the effect of tax havens. Both clips are relevant and simple to follow.

 

You can berate companies for chasing profits but I suspect that is exactly what you do every week also if you have a job. Would you be OK if your boss was a bit flexible on the hourly rate & superannuation he paid you or do you insist on maximizing your profit for time expended and be paid the full amount due? Recall that if you claim any deductions on your return you are also a tax minimiser.... As Keating said always bet on the self-interest side first, it's human nature.

 

 

[bexrbetter]

Rather than subject myself to 9 minutes of conservative propaganda, .

Actually Marty I'm a cynic of cynics and I went in sneery too but actually found it was a fairly unbiased and straight up presentation of what is factually happening in the World today, you might want to have a look at it.

 

how about you summarise in your own words how corporate greed benefits everyone?

I believe I have offered some evidence why they are good, how about someone telling me why they are bad, and some real world factual stuff not "lunchroom oppressed worker" myths thanks.

 

 

[Marty_d]

I believe I have offered some evidence why they are good, how about someone telling me why they are bad, and some real world factual stuff not "lunchroom oppressed worker" myths thanks.

Examples of where corporate greed is bad? Hmmm. That's a tricky one.

 

- Big tobacco denying health problems caused by smoking, targeting advertising to hook more smokers young, etc etc... to keep the profits rolling in.

 

- Banks and other financial institutions engaging in reprehensible practices resulting in the GFC. Also for profit.

 

- Clothing companies including high-end fashion brands sourcing product from countries with no worker's rights (including health and safety), resulting in the deaths of at least 112 workers in 2012. Just to increase the bottom line.

 

- Environmental devastation caused by corporations more interested in chasing the dollar than safeguarding the environment. Many examples there. Exxon Valdez. Deepwater Horizon. The Bhopal methyl isocyanate leaks causing 22,000 deaths plus ongoing genetic diseases.

 

You know as well as I do that there are thousands of examples of where loss of life, loss of biodiversity, loss of income, loss of health and many other impacts negative to people and the environment have been caused by corporate greed. Oil companies such as Koch Industries fund lobby groups to delay climate change regulations. James Hardie slowly killing its workers from asbestosis and mesothelioma, then splitting the company to avoid its full compensation obligations.

 

I trust the above does not fall into "lunchroom oppressed worker" myths. (Actually I've never been oppressed in the lunchroom!)

 

 

[skeptic36]

- Clothing companies including high-end fashion brands sourcing product from countries with no worker's rights (including health and safety), resulting in the deaths of at least 112 workers in 2012. Just to increase the bottom line.

Hi Marty,

I wonder have you considered the side effects of the clothing companies not doing business in those countries. For instance, a lot more suffering from malnutrition related problems than those being injured cutting and sewing fabric under a dodgy roof.

 

I reckon most would rather eat than sit in an empty state of the art factory.

 

 

[Marty_d]

Hi Marty,I wonder have you considered the side effects of the clothing companies not doing business in those countries. For instance, a lot more suffering from malnutrition related problems than those being injured cutting and sewing fabric under a dodgy roof.

I reckon most would rather eat than sit in an empty state of the art factory.

Or, paying an extra dollar per item of clothing on the proviso that the manufacturer provides basic safety, sanitation and freedom from rape.

 

 

[Bob Llewellyn]

Or, paying an extra dollar per item of clothing on the proviso that the manufacturer provides basic safety, sanitation and freedom from rape.

oh no, we couldn't defraud the shareholders of that one dollar's profit just for the sake of an ethical recognition that we are a global society, not an anarchy!

 

 

[eightyknots]

It all comes down to the dichotomy: Pie Maker versus Pie Cutter. I am sure you have heard this before.