Inequality: Let Them Eat Potato Cake!
Picketty came and went, his book selling well to those who read such volumes - the upper middle class, one expects. Not many tradies or kindergarden teachers would have bought it, let alone Australia’s 19% un- and under-employed. One point five million sales world-wide and sold out at one stage in America. But so what?
Sightings of “inequality” do pop up in the mass media here and there. Headlines appear from time to time - 1% of the world’s people own more than all the rest; the richest 55 own half the world’s wealth; 8 men own half the world’s wealth . . . the numbers change rapidly, always in the same direction - greater inequality. The obscenity of this extreme imbalance gets a little traction at first, but then the next statistic or scandal or terror scare captures our attention and we just can’t focus long enough to do anything about it all.
Brexit bursts upon us like the end of civilisation as we know it, only to fade and linger as if it’s not important at all. Last year Trump was a barking mad wannabe but suddenly he’s elected POTUS and everyone goes crazy, one way or another. Shock horror statistics about Budget deficits and tax avoidance make it into the Australian media for a while but then our government says it has to lower corporate tax. They tell us Pauline Hanson is back in town.
The pundits - remember Australia has one of the highest concentrations of media ownership in the world (extensive evidence for this assertion here) - lecture us: the “people” are getting restless, they’re disenchanted with the elites. Hence the shock of Brexit and the vote for Trump, as well as the re-emergence of Hanson. It’s the end of the two-party system, apparently. It might even be the end of democracy as we know it.
Yet nowhere does our mainstream media give a coherent economic narrative. None of it makes sense, econobabble rules the airwaves. The Aussie dollar is up a point, the Hang Sen is down, oil is . . . but what was it yesterday? In 2008? In 1929?
Reminds me of an old folk song, cluck old hen, the dow jones average is down again: Alison Krauss.
Malcolm Trumble, as President Trump has called him, advocates corporate tax cuts as part of the well-known trickle down theory, but Australia actually has a problem with corporate tax avoidance.
Quite apart from the fallacies of “Trickle Down”
Large companies, especially foreign ones, are adept at avoiding their taxation obligations, meaning many of the world’s biggest companies pay less tax than most individuals
Almost 100 companies, earning revenue of $47 billion between them, had no tax payable in 2013-14. This is entirely legal — these companies have used the tax laws to reduce their taxable income. Last year 59% of voters identified this - large corporations not paying their share of tax - as the thing that bothered them most about our tax system — well ahead of the 23% who nominated the amount of tax they themselves paid. And that view was remarkably consistent across voting groups and income levels. More than three-quarters of voters think multinational companies should be forced to pay a minimum rate of tax on their Australian earnings.
But the government appears untroubled by tax avoidance — indeed, it fought tooth and nail to prevent the release of this ATO information.
Paying tax has become optional for at least 56 of Australia's highest earners. Newlyreleased tax statistics show who paid next to no income tax in 2013–14, not even the Medicare Levy. Even though each earned more than $1 million! Combined, the 56 earned $128.6 million, averaging $2.3 million each, but managed to push their taxable incomes down below the $18,200 tax free threshold. Most managed to drive their taxable incomes down below $6000! Forty three reported taxable incomes of zero. And eight reported combined losses of $19.3 million!
They managed this by paying millions to tax advisors as the "cost of managing tax affairs." Some claimed millions for gifts or donations to charities and political parties, some claimed deductions for interest payments. Some brought forward previous losses, capital losses and deducted negative gearing. All but two paid no income tax at all. One paid $3603, the other was asked to pay just $4.
The average wage in 2013-14 was $56,690. The highest taxable incomes, averaging $200,015, were found in the Sydney postcode of 2027, which takes in Darling Point, Edgecliff, Rushcutters Bay and Point Piper in the Prime Minister's electorate of Wentworth. The second highest average taxable incomes of $167,407 were in the Melbourne postcode of 3142, which takes in Hawksburn and Toorak. Average CEO salaries in the same period were around $181,000 with top rank CEO’s averaging $1.86 million.
Murdoch's News Corp have reported this a bit differently - The Australian Council of Superannuation Investors report on CEO Pay in ASX 200 Companies revealed the average base pay for chief executives fell 3.3% from 2014-16 to $1.86 million a year. Including bonuses and shares, the average realised pay was $5.54 million — 68 times the average fulltime adult worker’s $81,900 salary as recorded by the Australian Bureau of Statistics. Even Prime Minister Malcolm Turnbull’s salary paled in comparison, at $517,500.
That report includes an intereactive chart of who gets what in the Australian corporate world.
Take note though - CEO salaries are falling!
Meanwhile, my own meagre age-pension has been cut from $245 a fortnight to $185, Centrelink recipients are being accused of false debts, and the Government is moving to cut social welfare payments across the board. But PM Trumble did stoop to give $5 to a homeless guy on the street - while the media clicked away!
Beggars on the street. Homeless camps under bridges. This is not the Australia I grew up in!
Have the elite, the financial 1%, heard of the French Revolution? Of Marie Antoinette, who had no idea the inequality of her time was so deep that it penetrated to the heart of the populace?
- How much tax do companies pay? Who pays none? Corporate Tax Secrets
- The 1% own 51% of world wealth Michael Roberts Blog
- Income and Wealth Inequality in Australia - The Australia Institute
- Inequality in Australia - ACOSS Report
- Wealth of the Nation - Evatt Foundation
Published February 2017
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