Buffet Rule could boost tax revenue by $2.5 billion
THE Federal Government could introduce a simple tax rule on high income earners to boost its revenue by $2.5 billion a year, a study has found.
The Australia Institute senior economist Matt Grudnoff said the highest paid people in Australia often claimed massive deductions and paid zero tax.
He said introducing the Buffett Rule, named after US billionaire Warren Buffett, would create a tax floor that still allowed legitimate deductions to be claimed, but meant earnings over a certain level could not reduce high income earners' average tax rate below a specified minimum.
"They're taking the ATO, and the rest of us for mugs," Mr Grudnoff said.
"Many on extremely high incomes are not just reducing their tax bill, they're managing to pay nothing at all.
"Luckily, a billionaire has proposed a simple and effective solution, which NATSEM modelling shows if implemented in Australia would recoup $2.5 billion of revenue."
The institute's study looked at setting a 35% average tax rate as a floor for people earning more than $300,000 a year.
"This isn't a new tax, but rather a way to close the loopholes and fix the system so it works in the way it was intended," Mr Grudnoff said.
"Startling data from the ATO that shows 75 very high income earners are, on average, spending over $850,000 on tax advisors, and paying zero income tax.
"It depicts a cynical game of cat and mouse which is leaving average Australian taxpayers out of pocket.
"Sure, it's rational for them to spend that much if you they can avoid more than that in tax.
"But from a society point of view, it represents a flow of money away from government services towards millionaires and their tax advisors.
"This would only affect very high income earners - and only those who are electing to engage in complicated avoidance schemes."