If rich people can afford cocaine, they can afford to pay more tax.
That’s the view of Your Money presenter and The Australian economics editor Adam Creighton, who has used this example to argue the tax burden should be shifted to the richest people in Australia.
“It was a fun way to make a point that a lot of people in Australia have so much money that they are spending it on cocaine, so the idea they couldn’t afford a bit more tax is pretty absurd,” Creighton said, citing a report that found cocaine coming into Australia has tripled in recent years.
Creighton argues it is important to increase the tax rate and threshold for very wealthy Australians to ease the burden from those who can’t afford the current tax rates.
“At the moment the tax rate is 47 cents and it cuts in at $180,000.
“The Labor Party is proposing to lift it to 49 per cent. Which I think is outrageous.”
That rate is too high, Creighton says.
“That covers five to six hundred thousand people in Australia. I think it should be no higher than 40 per cent.”
“But the only way you can do that to raise the same amount of revenue is to to get tax from elsewhere.”
Under Creighton’s idea, the super wealthy would be taxed a high rate above a certain threshold, not the whole income.
It was done in the past, so why not again now?
“Back in the old days, we used to have these really high rates that would cut in at really high levels of income.
In the early 1950s, the equivalent level of income of $500,000 would be taxed at 75 per cent, while in the US it was 91 per cent, Creighton explained.
“I’m certainly not suggesting the overall quantum of tax should be increased, but just it should be shifted more to extremely high-income earners so that everyone else can pay a much lower rate.
Creighton concedes his idea it would be hard to implement because the super wealthy people affected could easily move overseas.