Thursday, April 23, 2009

How should you really split the restaurant bill?

I thought that today I would attempt to get everyone thinking about the complexities of our current Tax System by offering you the following excellent article by an unknown author titled "Who really pays tax?". It's an example of a beautiful analogy of an ugly and complicated issue and I hope it results in some serious pondering by you and possibly some alternative ideas to end the demotivation that the current system brings "to the table".

"Here is the REAL story to lighten the Budget discussion! You've heard the cry from across Australia in the last couple of weeks: "It's just a tax cut for the rich!" - and then it's accepted as fact. But what does that statement really mean?

The following explanation may help.

Suppose that every night, ten men go out for dinner at La Porchetta's. The bill for all ten comes to $100. They decide to pay their bill the way we pay our taxes, and it goes like this:

  • The first four men (the poorest) paid nothing.
  • The fifth paid $1.
  • The sixth $3.
  • The seventh $7.
  • The eighth $12.
  • The ninth $18.
  • The tenth man (the richest) paid $59.

All 10 are quite happy with the arrangement, until one day, the owner says: "Since you are all such good customers, I'm going to reduce the cost of your daily meal by $20. " So now their dinner for ten only costs $80.

The group still decides to pay their bill the way we pay our taxes. The first four men are unaffected. They will still eat for free. But how should the other six, the paying customers, divvy up the $20 windfall so that everyone would get his "fair share"?

They realise that $20 divided by six is $3.33.

But if they subtract that from everybody's share, then the fifth and sixth men would each end up being paid to eat. The restaurateur suggests reducing each man's bill by roughly the same percentage, thus:

  • The fifth man pays nothing (like the first four) instead of $1 (100%saving).
  • The sixth pays $2 instead of $3 (33% saving).
  • The seventh pays $5 instead of $7 (28% saving).
  • The eighth pays $9 instead of $12 (25% saving).
  • The ninth pays $14 instead of $18 (22% saving).
  • The tenth pays $49 instead of $59 (16% saving).

Each of the six are better off, and the first four continue to eat for free, as now does the fifth - but outside the restaurant, the men began to compare their savings.

"I only got a dollar out of the $20," declared the sixth man. He pointed to the tenth man "but he got $10!"

"That's right," exclaimed the fifth man. "I only saved a dollar too. It's unfair that he got ten times more than me!"

"That's true!" shouted the seventh man. "Why should he get $10 back when I got only $2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"

The nine men then surrounded the tenth and beat him up. The next night the tenth man didn't show up for dinner. The nine sat down and ate without him, but when they came to pay the bill, they discovered that they didn't have enough money between all of them to meet even half of the bill!

That, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore. There are lots of good restaurants in Monaco and the Caribbean."

Wednesday, April 22, 2009

Private Health Insurance at risk again?

I read today that the Private Health Insurance rebate may be targeted in the May Budget. This would indeed be a huge mistake, given the following factors:

  1. In times when spending is being seriously reduced by households, people don't need much of a reason to "cut" their household budget, particularly when a free version does exist - albeit not as convenient at times.
  2. Public hospitals would indeed feel the brunt of this. Given the state of the public hospital system in most Australian States, this would be highly undesireable. As an analogy, if 25% of all of the Private schools closed down tomorrow (Friday), what would the public education system look like on Monday morning? Chaos would probably be an understatement.
  3. The associated costs in the increase to the public sector would contra out any govt savings so you would need to ask what the point of such an exercise would be, other than to allienate a large portion of Australians who are trying to look after their own health and not depend on the government.
  4. Private hospitals would free the brunt of this too. It's important to remember that private hospitals also employ many thousands of Australians. Huge investments in their medical equipment and building projects are forecasted on the basis of the current health policy. It's hardly fair to change such a policy on a whim without taking into account the concertina effect. Medical equipment and building companies involved with these hospitals also employ many thousands of Australians.
At the end of the day, anything that makes Australians rely more on the government is a BAD thing for Australia now and in the future. Every Australian political party should aim to minimise their day to day "interference" in your life. Unfortunately, that's easier said than done. Elections seem to be more about promising people more and more government programs rather than less. And Australians fall for it over and over! Our thinking needs to change. Government Programs grow government. Let's be very clear about that. Big government means higher government costs, which means higher taxes for the Australian taxpayer.... And cutting to the chase, it's hardly motivating for the taxpayers funding a large portion of these programs who, on the whole, usually miss out on their benefits because they earn too much!

So, how do we reduce the size of Government we have? By reducing government costs of course. EVERY Australian should do their utmost to get the government out of their lives as much as they possibly can. Then, and only then, will Australia move forward to greater success. If you are an Australian that has two good arms and two good legs and a brain in your head (and isn't in retirement) and you depend on the government to survive, I urge you to rethink where you're heading, and get out of that cycle as soon as you can. Start depending on yourself and "unlock the potential" that EVERYONE has inside them. Everyone is special in some way and it's time to find "your way" so that you can help to point this country, once again, in a successful, motivational, and innovative direction.

Come on Australia, get that rusty key out and start unlocking!

What are your thoughts? Would love to hear from you!

Tuesday, April 21, 2009

"Rudd goes after the Wealthy"

I've written today's Blogg in response to an article in today's Newspaper titled "Rudd goes after the Wealthy". Read the article at:,23836,25368920-953,00.html

I can't help but think that our whole tax system really is back to front. And let me tell you why.

On the whole, the majority of the people targeted in these situations still pay a high level of tax each fiscal year. Politicians and the various members of the Politics of Envy Party would have you think that this is not the case but the fact remains that the tax they are talking about in these "loop hole" situations is indeed minimised but rarely wiped out. And remember, "minimised" means different things to different people depending on what tax rate they are on. Some people minimise their tax and their tax bill might still be $200,000 or in the millions.

It's important to also remember that these people are currently not doing anything illegal and, frankly, they would be regarded as foolish if they didn't minimise their tax as any other taxpayer would in their position. I still remember Kerry Packer saying something to that effect many years ago and he was absolutely right. The Australian Taxation Office is not a charity that we donate to when we are feeling generous, it is a government institution where certain rules apply to our income and we follow those rules.

Is Mr Rudd making the mistake that so many politicians of the past have made? Is he targeting the wrong audience? Instead of demotivating high income earners, is it time Mr Rudd tried the reverse and motivated Australians to greater success rather than demotivated them to less? After all, doesn't the government have the most to gain from increasing the success chances of each and every Australian by somehow unlocking the potential that remains more and more dormant as the group depending on handouts continues to grow? Indeed, to motivate through reward might lead to innovation, and god forbid, new industries and employment!!! And so goes the cycle...

Could the reason this country has problems not simply be about loop holes but be about the fact that there are simply too many people sitting around doing nothing and getting paid for it and what's worse, that they think it is their god given right to?

We all know that jobs are hard to get right now (and again our Government is very good at telling us how bad things are and how bad they are going to be in the future) but the truth of the matter is that many of these people, to whom I am referring above, were sitting around when times were very good. THEY are what is dragging this country down, not the high income earners who actually make a contribution. It really is as simple as that.

Our tax system needs to motivate, motivate, motivate. Right now it doesn't. It looks like the house with 1000 extensions because everyone that has owned it added their little bit here and there. There comes a time that it should just be bull dozed and rebuilt from scratch because the foundations are crumbling and it looks plain ugly.

Another thing I would like to address is the growing discomfort at having wealth in this country. If you earn good money, I urge you not to feel guilty about it and not to let anyone else make you feel guilty about it. I will admit that I am what would be classified as a high income earner and I refuse to apologise to anyone for it (not that I go around telling anyone). I see it as an inevitable outcome after many years of effort (and continuing effort) by my husband and myself. I don't lie, I don't cheat, I don't rip anyone off, and I am very good at what I do. This is the side of the high income story does not get told enough. Do I reduce my tax as much as I can? You bet I do. Do I still pay alot of tax? You bet I do!

So come on Australians, let's go back to a relatively old idea but a great one, "stop asking what your country can do for you and ask what you can do for your country!". True success is keeping the government out of your life as much as you can.

What's your opinion on our tax system? Would love to hear from you!!

Saturday, April 18, 2009

The Australian Voting System

Recently, Queensland had a State election where a number of seats became marginal with some having under 100 votes separating 1st and 2nd place. What I want to ponder today is the voting system and your confidence in it.

Does our voting system in its current form lend itself to being abused? Answer these questions and perhaps you will have your answer:
  1. Can people vote in every booth in their electorate without being caught on the day?
  2. Can people vote absentee as well as locally without being caught on the day?
  3. When these people are caught (well after the election), how do you correct it?
  4. Are people required to show ID routinely when they vote? Is it possible for me to vote for my dead grandmother?
  5. Are returning officers currently audited to ensure they send out ballots in a timely manner?
  6. When more than say 10 voters live at one address, is this ever investigated?

With some seats being so close, I have to say, it does make you think. Some people may think, what difference will it make? The government won by many seats but I assure you that to that candidate who may have lost, it makes one hell of a difference. I've had a brother that ran (and lost) for parliament more than 20 years ago, and I remember very well the hard work and personal cost that he put into the exercise. The long service leave that he sacrificed, the many fund-raisers, the early mornings on info booths, the late nights, the door knocking, the many compliments, the abuse, letters, phone calls, pamphlet drops, etc, etc, etc. To have any taste of fraud thrown in would have been devastaing I assure you. A good loss, one can accept, a fraudalent loss, no way.

Currently, the Qld seat of Chatsworth is under investigation. With only 74 votes the difference, my confidence in that seat is a little shaky I have to admit. But then, given the above information I gave you in the opening questions, my confidence in any Queensland seat with a less than 500 vote margin is a little shaky right now.

Does the seat of Chtasworth provide a perfect opportunity for Queensland to trial a new electronic voting system? What do you think of the current system? What do you know of the Chatsworth situation? Do you live in the area? Are you suspicious of the result which changed quite dramatically from Andrea Caltabiano to Steve Kilburn, the declared winner?

Would love to hear your views.

Illegal Immigrants

The illegal immigrant debate raises its ugly head once again and once again it's a clear debate with the "fill out the right forms" on one side and the "you poor darlings" on the other.

Folks, this is serious. There are many, many countries in our region and beyond with serious poverty and political issues and understandably they want to find greener pastures at any cost. Many other western countries simply won't have them because of their own population issues and let's be honest, because they don't have any sort of welfare system available to them, and don't want to create a new class of homeless people.

Australia doesn't have a population issue coupled very nicely with a generous welfare system. So if you're asking why they are aiming for Australia, you probably have your answer. Add to this the fact that we're also pretty good at criticising ourselves in the public domain for being a bit "mean" about illegal immigrants. When the spin doctors think our image is suffering a bit much, they do their best to "soften" our public stance, it is interpreted in these countries as such and they start packing once again.

So what's the solution? A tough stance or a welcome mat? When you consider it, don't just think emtionally, think financially and think culturally. One can't think about one without considering all three. This is a huge emotional and financial decision for Australians, remembering that the government will collect all associated costs from you as a taxpayer. In addition, large intakes of migrants can results in cultural confusion for years and possibly decades through further generations. Consequences of this could be cultures living separately, cross cultural hatred continuing, religious hatred continuing, female degradation continuing, language issues, etc, etc, etc.

Obviously this issue is a difficult one. The question is do we need to control the immigration system more than we presently do or be more welcoming and less lenient to people that come in boats at a huge risk to their finances and lives? Are they ill-informed, plain desperate or just cheeky and impatient? And what should we do with the actual smugglers? After all, they are equivalent to the drug dealers here...

So, Have I got YOU thinking? What are YOU thinking? I would love to hear your thought through view. Get Blogging!
Welcome to Australian Poli Ticks Me Off!

I look forward to providing you with many open minded observations about Australian Politicals and the present happenings. Rather than share my point of view, it is my aim to pass obversations and have you form your own opinion. This is something that is sorely lacking in journalism today. Feel free to comment on my observations and add solid information that you have on hand.

Please, this site is not for close-minded political types who would vote for their favourite party even if Lassie was running. This site is for thinkers and for people who really care about the democracy and well being of Australia. It is for people who believe in contributing to their country more than taking from their country, and it is for people who care about not just the present day, but the future days. The days when our children and grandchildren will inherit what we are making today. Be that positive or negative.

Thank you for reading and taking part.

Suzy Qld