Dear Mr. Colebatch and Editors of The Age:
I would like to express my strong disagreement with your premise that lowering the top tax rate from 48.5 percent to 39 percent “would make little difference.”
As an American temporarily living (but not working) in Australia, I often get the question “Do you want to become an Australian citizen?” or “Do you want to live here permanently?” These are reasonable questions as I’m about to marry a wonderful Australian lady, and Australia offers a very nice quality of life.
In my profession I expect to be a fairly high earner, but I have to take substantial risk, so my answer is always “Not with these tax rates!” So my fiancee and I are moving to the USA, where we hope to be able to make and SAVE some money, something which is simply not possible with Australian confiscatory tax rates.
A cut from 48.5 percent to 39 percent in the top rate would be nothing more than a fair start. 39 percent is still too high, and the income level at which it is reached is ridiculously low.
You should be concerned not only with how many high-income Aussies move away (and I think you underestimate the effect such a rate change would have), but also with how many productive foreigners avoid moving here. In this global economy, talent is very mobile and countries must compete in many ways, including on tax rates. An argument that Australia is in a certain place in the OECD rankings is barely relevant unless you strive for, say, Germany’s unemployment rate.
Ross G. Kaminsky
Sydney (formerly of Chicago)
Ross G. Kaminsky is a former member of the Board of Directors of The Heartland Institute.