‘Aussies earning over $135,000 do deserve a tax cut’

Aussies earning $200,000 aren’t rich and do deserve the generous tax cuts they were promised, says Caleb Bond.

OPINION

Earning $135,000 a year does not make you rich.

Sure, you might be earning more than some. But you don’t own a superyacht and you’re not washing down your dinner with Grange every night.

It’s now clear that the Albanese government will abandon stage three tax cuts, which would have created a marginal tax rate of 30c on all income between $40,000 and $200,000.

It instead seems likely that the tax-free threshold will rise, delivering a small tax cut to most workers, and the 37c bracket will kick in at $135,000 instead of the current $120,000.

So anyone earning between $135,000 and $200,000 – again, doing well but by no means rich – will receive a much smaller tax cut than promised.

It’s a broken promise. Prime Minister Anthony Albanese and Treasurer Jim Chalmers repeatedly promised they would deliver stage three tax cuts in full – and just last week were saying their position had not changed.

That was clearly a bald-faced lie. This is Mr Albanese’s “there will be no carbon tax under a government I lead” moment.

But it is also patently unfair.

Prime Minister Anthony Albanese and Treasurer Jim Chalmers promised stage three tax cuts. Picture: Glenn Hampson

Thanks to bracket creep and rising wages, the federal government is now making record amounts out of income tax.

Between October 2019 and 2023, the government’s quarterly income tax revenue increased 62 per cent from $56.3 billion to $91 billion.

That’s your money, that you earnt, being taken by the government in record numbers.

The previous government’s tax white paper projected that the number of workers in the second-highest tax bracket would increase from about 250,000 in 2015-16 to more than two million this financial year.

That’s not because everyone has magically climbed the corporate ladder – it’s because wages have naturally risen and forced more people to pay more tax.

Someone earning in the mid-to-high $100,000s likely has higher expenses such as a bigger mortgage or private school fees.

They will have made plans on the basis of stage three tax cuts – and not to buy a new Maserati.

People earning in the mid to high $100,000s may have higher expenses, says Caleb Bond. Picture: Tricia Watkinson

What the government is doing is reopening ugly class wars, pitting lower-income Australians against everyone else.

It is a sad by-product of Australia’s famous tall poppy syndrome. Success must be discouraged and demonised at all costs.

Why should someone who has worked hard and earns $180,000 – enough to afford them a few luxuries but not enough to pack up and live on the beach – be expected to shoulder a higher and higher share of the tax burden?

The top one per cent of earners, on an average of $317,090, came to 117,000 people in 2020-21.

They paid 18.3 per cent of all income tax that financial year. That proportion would, no doubt, have increased since then.

The idea that high-income earners don’t pay their fair share of tax is nonsense. They pay most of it.

But the government wants us to believe that the top end of town must be deprived of a tax cut so everyone else can have one because it suits their own ends.

Labor is on the nose with many working class voters, so what better way to attempt turning that around than by demonising those evil ‘rich’ people.

Casting people on less than $200,000 a year as part of the top end of town is a cynical ploy to pit Australians against each other. No one on $150,000 a year, particularly if they live in Sydney or Melbourne, feels rich.

Many of them will be hardworking tradies who keep this country moving.

It’s those income earners who often give employment opportunities to others. Someone running a reasonably successful small business – which provides 42 per cent of employment in Australia – is being slapped in the face.

Everyone deserves a tax cut. They should be far more generous than what was originally offered in stage three.

The government could easily have provided higher tax cuts to low income-earners while keeping stage three in place.

But it has instead tapped into a mean jealous streak that makes us all poorer.

Caleb Bond is an Sydney-based commentator and host of The Late Debate on Sky News Australia.