Research shows that the rich tend not to realise how rich they actually are and the overwhelming majority of Australians consider themselves middle-class. With a debt levy on the wealthy potentially on the cards in the Budget, James Carleton works out who’s really earning what.
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If the leaks are to be believed, next week's Budget will include a new debt levy on the wealthy. Initially, the threshold was put at an annual income of $80,000, but now word is that it’s likely to kick in at $180,000.
However, while the Coalition may deem that income as that of a wealthy person, Labor leader Bill Shorten says it's middle- and working-class Australians who will be hit.
Coal miners in my electorate earning $120,000, $130,000, $140,000 a year are not wealthy. That is the sort of money you need these days for property prices etcetera. In Sydney’s west you can be on a quarter of a million dollars family income a year and you’re still struggling.
Studies have shown that the rich don’t realise how rich they are and the poor think the gap between them and the rich is smaller than it actually is. Consequently, the overwhelming majority of Australians consider themselves middle class.
Ben Phillips, principle research fellow at the University of Canberra’s National Centre for Social and Economic Modelling (NATSEM) told RN Breakfast that for those paying tax, the middle income is around $55,000 per year. If pensioners who do not pay tax are included, that figure is closer to $45,000 per year.
So, if you earn one dollar over $45,000 you are in the richest half of the country.
Officially, the average wage is $75,000 a year, but that is skewed by a small number of very high income earners.
In reality, around 70 per cent of tax payers actually earn less than the average wage. If pensioners are included in this count, four out of five Australians earn less than the average.
It seems that when politicians try to appeal to everyone and offend no one, they include the one person in five getting more than the average as a resident of struggle street.
‘Coal miners in my electorate earning $120,000, $130,000, $140,000 a year are not wealthy,' said Labor’s Joel Fitzgibbon. ‘That is the sort of money you need these days for property prices etcetera. In Sydney’s west you can be on a quarter of a million dollars family income a year and you’re still struggling.’
But according to former Labor leader Mark Latham, with $250,000 you can go to the movies and eat out, pay off a nice house, occasionally go travelling overseas and get your kids a good education.
‘My family has lived on $250,000 a year in this region and you are not struggling, it’s paradise,’ he said.
If a debt tax kicked in on incomes of $80,000 or more, Mr Phillips says 25 per cent of tax payers would have to pay.
If the debt tax kicked in on an income of $180,000 then it would be closer to four per cent of taxpayers, 400,000 individuals around Australia.
The government has also proposed axing Family Tax Benefit B for parents who earn more than $100,000.
The payment was uncapped under the Howard government, but Labor brought in an income cap of $150,000 three years ago.
‘This is a government which thinks that a policeman married to a nurse is part of a super-rich family,’ said Tony Abbott at the time. ‘This is a government that thinks two school teachers in a family in Sydney are super-rich.’
Mr Phillips says there is a 'warped perspective' on incomes in Australia.
‘If you’re living in a very nice area of Sydney and you are earning $200,000, your neighbours are also earning$200,000 so you may well feel like you’re like everybody else,' he says. 'So your reference group may be your neighbourhood but in reality you’re very well off compared to most other regions of the country.’
