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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: KyrosL who wrote (77032)	3/29/2008 4:53:10 AM
From: Moominoid	Respond to of 116555

There's no state income tax here so the top rate is comparable to high taxing US states. 1.5% supposedly goes to fund health care. No extra social security taxes apart from that. With all the potential loop holes the burden is heaviest on high income employee low assets taxpayers without children (who get a bunch of tax breaks). They pay more tax than in the US. I doubt the other groups do. There is no double taxation of profits if the profits are paid out as dividends. Corporation tax is 30%, so maximal tax on dividends earned from Australian activities is 16.5%. Long term CGT rate maximum is 22.5%.

To: KyrosL who wrote (77032)	3/29/2008 5:03:34 PM
From: Moominoid	Read Replies (1) \| Respond to of 116555

I made this comparison chart a few months ago: I assumed a single person who is an employee earns no other income and whose only potential deduction is state income tax and who is covered by private health insurance (relevant in Aus). I chose California - one of the highest taxed U.S. states as the point of comparison. Low tax U.S. states will look better. I also include FICA taxes in the U.S. calculation and Medicare in the Australian case. Apart from a blip around $US35k California's taxes are higher until we get to incomes above $125k. I only went as high as $150k because above that level the U.S. system starts to phase out exemptions and deductions. The top Australian tax rate is 46.5%. The U.S. Federal top rate is 35%, California, 10.3%, and FICA is 1.45% at those top rates. So eventually the two lines converge again. From my experience though there are more tax-reducing loopholes in Australia that high income individuals can use as there is no alternative minimum tax.