The numbers are as follows:
$5M @ 33% = income tax of $1,650,000. The exact figure would be slightly different, taking the average 20% on the first $70K, plus "John" might pay 39% on some of that income, however I'm assuming that most of the income goes into a trust and is taxed at 33%.
After tax income of $3,350,000, from which he invests roughly $500K (so no GST) and spends the rest. GST included in that amount spent is roughly $350K. I'm rounding pretty heavily, but I'm rounding down, not up. And a specific number isn't really relevant to my point (i.e. it stands whether he pays $1.8M, $2M or 2.2M).
As for "fairness", I don't think that can ever be objectively defined. We can probably all agree on things that are definitely unfair, e.g. if Bob & John are both required to pay a flat $100K per year, you'd be hard pressed to find anyone that didn't agree that that would be grossly unfair. My point is that we shouldn't be so quick to jump on the back of the recent report and proclaim that the rich don't pay enough tax when they're paying huge amounts of tax. And it isn't "greedy" for anyone to not be wanting to pay more tax. I'm sure we can all find someone who survives on a lower income than we do, and yet we probably all think someone else should be made to pay more tax before we are. Are we all greedy for wanting to be able to choose what we do with as much of our money as possible?
Another scenario to add to the "why fairness can never be objectively defined):
I've two friends who were earning around $300K each. Tax on $300K is $97K. Last year, one of the two decided to take a career "gap year" and just lived off savings/overdraft for the whole year, so he didn't pay any income tax at all (he probably paid a small amount on his investment income, but it would have been less than $1K all up). They both still used public services, their kids went to school, doctor etc. and yet one contributed $97K in income tax and the other next to nothing; is it fair that the those that choose to work have to subsidise the ones that chooses not to?
$5M @ 33% = income tax of $1,650,000. The exact figure would be slightly different, taking the average 20% on the first $70K, plus "John" might pay 39% on some of that income, however I'm assuming that most of the income goes into a trust and is taxed at 33%.
After tax income of $3,350,000, from which he invests roughly $500K (so no GST) and spends the rest. GST included in that amount spent is roughly $350K. I'm rounding pretty heavily, but I'm rounding down, not up. And a specific number isn't really relevant to my point (i.e. it stands whether he pays $1.8M, $2M or 2.2M).
As for "fairness", I don't think that can ever be objectively defined. We can probably all agree on things that are definitely unfair, e.g. if Bob & John are both required to pay a flat $100K per year, you'd be hard pressed to find anyone that didn't agree that that would be grossly unfair. My point is that we shouldn't be so quick to jump on the back of the recent report and proclaim that the rich don't pay enough tax when they're paying huge amounts of tax. And it isn't "greedy" for anyone to not be wanting to pay more tax. I'm sure we can all find someone who survives on a lower income than we do, and yet we probably all think someone else should be made to pay more tax before we are. Are we all greedy for wanting to be able to choose what we do with as much of our money as possible?
Another scenario to add to the "why fairness can never be objectively defined):
I've two friends who were earning around $300K each. Tax on $300K is $97K. Last year, one of the two decided to take a career "gap year" and just lived off savings/overdraft for the whole year, so he didn't pay any income tax at all (he probably paid a small amount on his investment income, but it would have been less than $1K all up). They both still used public services, their kids went to school, doctor etc. and yet one contributed $97K in income tax and the other next to nothing; is it fair that the those that choose to work have to subsidise the ones that chooses not to?