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Australian Income Tax Law - Essay Example

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According to Adam Smith statement in his “Wealth of Nations”, the subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state…
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Australian Income Tax Law

Download file to see previous pages... The expense of government to the individuals of a great nation is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation. Every tax, it must be observed once for all, which falls finally upon one only of the three sorts of revenue above mentioned, is necessarily unequal in so far as it does not affect the other two.
Looking at income tax rates methodology, we see that a taxpayer's income is taxed progressively. Broadly, this means that as you earn more income your average tax rate rises. And it’s really fair! Progressive taxation means that higher income earners pay more tax than lower income earners. The Government defined a maximum sum, which is not taxed –$6000. Let’s imagine, that your income is equal to X. Then if your income lays between you’ll pay 17% from (X-$6,000) sum. If your income is , you must pay more - $2,652 (according to previous rule) and 30% from (X-$21,600) sum, etc. This is achieved by taxing a range of income brackets as a set percentage or cents in the dollar. These income brackets are called tax brackets. The following tables detail the tax brackets of our progressive tax system for the financial years ending 30 June 2005 and 30 June 2006. ...Download file to see next pagesRead More
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