Silly masseuses: should've 'swapped services' - no money (or credit), no accounting, no diary entries.
That's a "Win - Win" (for masseuses) & Lose (for the Tax Man)" situation. Not that the Tax Man can 'lose' something he never received in the first place. It truly is a "mind game".
Here’s a cracker: Franked dividends. “Tax free” because “the company already paid tax on that money”. But we are talking about *your* income, not the companies income. It’s a scam for the rich sold with the same double counting. (*actual policy in Australia)
> If count a person’s tax from one transaction when they are the seller, and another transaction when they are the buyer, you are double-counting the tax but not the payments.
> If you did this for everyone, and added it all up, your number would be exactly twice as high as the total amount of tax raised.
Economists don't study "people", they study "things", called consumers, producers, etc. to whom they ascribe "properties" or "attributes" rather than their feelings, emotions, etc. Personal perspective determines what people see. For example, no object has a 'left' or 'right' side, until someone applies their 'personal perspective' to it.
When I purchase anything with 10% tax added into the sale price, I SEE part of my income funding the tax payment enforced on the seller (who gets the price he wanted anyway). This means, the price I paid was higher than what he really wanted to charge.
When I SEE a tax deduction recorded on my pay-slip, I SEE part of my income disappearing before I get my hands on it. That is "lost income" to me. I'm not double-counting tax, I'm assessing my assets and liabilities as an individual.
I can open a personal account and record 'losses to tax' which would include all "taxes DEDUCTED from receipts" as well as "tax components ADDED to purchase prices".
Your solo footnote uses "money" (not "credit") to modify the noun, "balances" - a surprisingly common failing of economists. Maintaining the "credit-is-NOT-money" distinction may help you unravel the magical mysteries of banking since, what are "created and destroyed within this system of payments via lending and repayment ..." are "credit" balances, which are nothing more than bank liabilities.
So, my question for you is: "Can anyone "lend" their liability - as banks claim to do?"
This question arises from a statement in the article ,“Money creation in the modern economy” - by the Monetary Analysis Directorate of the Bank of England, in its Quarterly Bulletin, in 2014 [Volume 54 No. 1, at p.16] - thus: “Bank deposits are simply a record of how much the bank itself owes its customers. So they are a liability of the bank, *not an asset that could be lent out*.” [my *emphasis* added.]
I find your explanation as confusing as the "problem." I suggest, just saying (if you need to take on this solecism at all) that, no, taxes in Australia are only x%.
If they double counted then the petrol cost would have included excise, gst, and income tax in the price, but the tweeter included income tax on their end only. It's possible you're the one getting tricked by myltiple transactions.
The tweeter still needs to produce ~$100 worth of labor to get ~$30 worth of fuel. Calling them an idiot for noticing that is ironic.
Try explaining in a way that shows how a person doesn't actually have to produce $100 of work for $30 of fuel.
Or explain how this is wrong, let's say the Tweeter does $100 worth of labor but gets paid in petrol. They get $30 of petrol and the govt takes $70 in tax. Is there more tax in this situation than in the present? Does 2 transactions really matter?
You are adding the tax on the value of labour (I supplied $100 of labour, not $68 of labour), but not on the value of fuel (i only get $28.56 of fuel, not $68 worth).
It’s either $100 worth of labour and $68 worth of fuel OR $68 of labour and $29 of fuel.
If you did $100 worth of labour and get paid in fuel, you get $68 worth of fuel.
It's fairer to view the fuel as costing $2 per L, and you get $70 worth, i.e. 35L. It's the fuel station's business that they pay 50% tax on that piece of their income, just like it's your business that you pay 30% tax on *your* income.
I assume Cameron agrees with this view as he's liked your comment.
Earlier Cameron said: "If you did $100 worth of labour and get paid in fuel, you get $68 worth of fuel." You said "$70 worth, i.e. 35L."
I take that to mean that if I did $100 worth of labor and got paid in fuel, I'd get 34L if there were $1/L excise or 68L if there were no excise. (but that I should describe both of these as "$68 worth of fuel").
If you assume you produced $100 worth of labor then your employer got $100 worth of labor for $100 (probably not quite because there's some overhead but it's not the point).
Counting this way the employer pays 0 tax on buying your labor.
I'm about 70% sure this is a different issue to the one Cameron is pointing out. The Tweeter also says she pays $68 for the petrol and counting this way she pays no income tax on that petrol (despite income tax definitely contributing to the price of the petrol).
Possibly. In Cameron's massage example he's counting income tax over an over without counting the additional value the massages create. Saying that "of your $100, you pay $100 in tax" just because you bought a massage over and over is a bit misleading because you also get a lot of massages.
On the other hand, if there were a massage tax and an income tax then you'd have to pay both even if you only counted the single massage. The tweeter is complaining that she has to work more to get fuel because of taxation. To work out the hours-to-fuel ratio, you have to incorporate both taxes. The tweeter is correct to think that both income tax AND fuel excise increase the amount of work she has to do to get the same amount of fuel.
There's a bunch of reasons why her figure is an exaggeration but, as far as I can see, double counting isn't one of them.
I wanted to agree with Cameron but in the end I agreed with the Tweeter.
His model and economic theory says the payee pays the tax so because the servo pays the excise and GST on her behalf she should ignore it. Same I suppose, as I should ignore GST and Stamp Duty on my insurance policy, or power bill since I don't actually have to pay the bill directly.
However, since the market prices of these products are adjusted to take into account the transfer of the tax on my consumption to the Government, I am not sure why I would/should ignore it.
In the end, without the excise and GST components she would pay about $30 for her petrol and get the same utility from the purchase car-wise.
So maybe that's where the confusion is....not double counting the tax but only counting the utility of the petrol in my car and dismissing the utility of $40 tax redistributed by the Govt from my petrol purchase to fund roads, schools etc.
Anyway, thanks for taking a contrary view. Helped my be brave enough to contribute :)
Imagine that the person gets their income as a landlord and rents their own home. There is only one tax, a 30% landlord excise”. So they earn, say, $100 before tax, get $70 in their pocket. Then the pay their own rent of a cheaper $70 place, which gives their landlord $49 in the pocket after another $21 tax. So this person has to earn $100 to rent a home the costs $49. So they are paying 51% tax! But this is double counting, clearly
Silly masseuses: should've 'swapped services' - no money (or credit), no accounting, no diary entries.
That's a "Win - Win" (for masseuses) & Lose (for the Tax Man)" situation. Not that the Tax Man can 'lose' something he never received in the first place. It truly is a "mind game".
I always find two more glaringly obvious errors in the 'taxes take half my income' argument.
1) they start by using the marginal tax rate, rather than average
2) they assume the only thing they ever purchase is fuel, perhaps the second highest taxed item in Australia after tobacco.
This scenario is intended to target midwits, and tradies living out in the 'burbs.
Here’s a cracker: Franked dividends. “Tax free” because “the company already paid tax on that money”. But we are talking about *your* income, not the companies income. It’s a scam for the rich sold with the same double counting. (*actual policy in Australia)
Would your personal returns from your stake in the company not be greater if the company had not already paid company tax on those profits though?
> If count a person’s tax from one transaction when they are the seller, and another transaction when they are the buyer, you are double-counting the tax but not the payments.
> If you did this for everyone, and added it all up, your number would be exactly twice as high as the total amount of tax raised.
"Double-entry accounting" wink wink wink
Economists don't study "people", they study "things", called consumers, producers, etc. to whom they ascribe "properties" or "attributes" rather than their feelings, emotions, etc. Personal perspective determines what people see. For example, no object has a 'left' or 'right' side, until someone applies their 'personal perspective' to it.
When I purchase anything with 10% tax added into the sale price, I SEE part of my income funding the tax payment enforced on the seller (who gets the price he wanted anyway). This means, the price I paid was higher than what he really wanted to charge.
When I SEE a tax deduction recorded on my pay-slip, I SEE part of my income disappearing before I get my hands on it. That is "lost income" to me. I'm not double-counting tax, I'm assessing my assets and liabilities as an individual.
I can open a personal account and record 'losses to tax' which would include all "taxes DEDUCTED from receipts" as well as "tax components ADDED to purchase prices".
Your solo footnote uses "money" (not "credit") to modify the noun, "balances" - a surprisingly common failing of economists. Maintaining the "credit-is-NOT-money" distinction may help you unravel the magical mysteries of banking since, what are "created and destroyed within this system of payments via lending and repayment ..." are "credit" balances, which are nothing more than bank liabilities.
So, my question for you is: "Can anyone "lend" their liability - as banks claim to do?"
This question arises from a statement in the article ,“Money creation in the modern economy” - by the Monetary Analysis Directorate of the Bank of England, in its Quarterly Bulletin, in 2014 [Volume 54 No. 1, at p.16] - thus: “Bank deposits are simply a record of how much the bank itself owes its customers. So they are a liability of the bank, *not an asset that could be lent out*.” [my *emphasis* added.]
I find your explanation as confusing as the "problem." I suggest, just saying (if you need to take on this solecism at all) that, no, taxes in Australia are only x%.
If they double counted then the petrol cost would have included excise, gst, and income tax in the price, but the tweeter included income tax on their end only. It's possible you're the one getting tricked by myltiple transactions.
The tweeter still needs to produce ~$100 worth of labor to get ~$30 worth of fuel. Calling them an idiot for noticing that is ironic.
I honestly don’t know how much more clearly I can explain this.
Try explaining in a way that shows how a person doesn't actually have to produce $100 of work for $30 of fuel.
Or explain how this is wrong, let's say the Tweeter does $100 worth of labor but gets paid in petrol. They get $30 of petrol and the govt takes $70 in tax. Is there more tax in this situation than in the present? Does 2 transactions really matter?
You are adding the tax on the value of labour (I supplied $100 of labour, not $68 of labour), but not on the value of fuel (i only get $28.56 of fuel, not $68 worth).
It’s either $100 worth of labour and $68 worth of fuel OR $68 of labour and $29 of fuel.
If you did $100 worth of labour and get paid in fuel, you get $68 worth of fuel.
Lets say my wage is $20 an hour before tax. I work 5 hours and get $100. If I pay income tax I get $70 instead.
Lets also say fuel is $1 per L pre-tax and has another $1 of excise.
If there's no tax at all my 5 hours work gets 100L. If There's income tax but no excise I get 70L. If there's both I get 35L - right?
This isn't necessarily a fair portrayal of tax incidence but its hard to call it double counting.
It's fairer to view the fuel as costing $2 per L, and you get $70 worth, i.e. 35L. It's the fuel station's business that they pay 50% tax on that piece of their income, just like it's your business that you pay 30% tax on *your* income.
I assume Cameron agrees with this view as he's liked your comment.
Earlier Cameron said: "If you did $100 worth of labour and get paid in fuel, you get $68 worth of fuel." You said "$70 worth, i.e. 35L."
I take that to mean that if I did $100 worth of labor and got paid in fuel, I'd get 34L if there were $1/L excise or 68L if there were no excise. (but that I should describe both of these as "$68 worth of fuel").
Am I still misunderstanding it?
If you assume you produced $100 worth of labor then your employer got $100 worth of labor for $100 (probably not quite because there's some overhead but it's not the point).
Counting this way the employer pays 0 tax on buying your labor.
I'm about 70% sure this is a different issue to the one Cameron is pointing out. The Tweeter also says she pays $68 for the petrol and counting this way she pays no income tax on that petrol (despite income tax definitely contributing to the price of the petrol).
In the case of petrol it's simply a different tax. That might be the source of the confusion.
Possibly. In Cameron's massage example he's counting income tax over an over without counting the additional value the massages create. Saying that "of your $100, you pay $100 in tax" just because you bought a massage over and over is a bit misleading because you also get a lot of massages.
On the other hand, if there were a massage tax and an income tax then you'd have to pay both even if you only counted the single massage. The tweeter is complaining that she has to work more to get fuel because of taxation. To work out the hours-to-fuel ratio, you have to incorporate both taxes. The tweeter is correct to think that both income tax AND fuel excise increase the amount of work she has to do to get the same amount of fuel.
There's a bunch of reasons why her figure is an exaggeration but, as far as I can see, double counting isn't one of them.
This is doing my head in.
I wanted to agree with Cameron but in the end I agreed with the Tweeter.
His model and economic theory says the payee pays the tax so because the servo pays the excise and GST on her behalf she should ignore it. Same I suppose, as I should ignore GST and Stamp Duty on my insurance policy, or power bill since I don't actually have to pay the bill directly.
However, since the market prices of these products are adjusted to take into account the transfer of the tax on my consumption to the Government, I am not sure why I would/should ignore it.
In the end, without the excise and GST components she would pay about $30 for her petrol and get the same utility from the purchase car-wise.
So maybe that's where the confusion is....not double counting the tax but only counting the utility of the petrol in my car and dismissing the utility of $40 tax redistributed by the Govt from my petrol purchase to fund roads, schools etc.
Anyway, thanks for taking a contrary view. Helped my be brave enough to contribute :)
Imagine that the person gets their income as a landlord and rents their own home. There is only one tax, a 30% landlord excise”. So they earn, say, $100 before tax, get $70 in their pocket. Then the pay their own rent of a cheaper $70 place, which gives their landlord $49 in the pocket after another $21 tax. So this person has to earn $100 to rent a home the costs $49. So they are paying 51% tax! But this is double counting, clearly