TAXATION PHILOSOPHY [next]
To really understand the Philosophy of Tax it is sometimes best to start at the very beginning. Tax did not just happen recently, but grew from small seeds to the giant industry that it is today.
Boring! (Click here to
miss this load of boring historic waffle)
Tax is generally boring to those who don't pay Tax, pay very little or have no need to TaxPlan. If you or your family are rich and wealthy and pay 47% + of your marginal Taxable Income up to $100,000 per annum to the Australian Tax Office that's Heroic.
But if you would prefer to be Patriotic, Rich and create Family and National Wealth - and pay no tax - or perhaps very little - read on. ----
You do have the "Freedom of Choice" and in particular, the Taxation "Choice Principle" within ATO Part IVA to help you consider your three options - (1) pay tax or (2) create the Wealth of our Nation or (3) a bit of both. Your other option is to evade tax - but you can go to gaol for that.
This is How it Happened:
Once upon a time our ancestors lived in the trees as protection from predators and the elements. Although they were gregarious they each were responsible for obtaining their own food and drink. Each kept a vigilant eye open for danger and mated for great fun and to ensure the survival of their species. They were not obligated to anyone, being master of their own limb of the tree and paid tribute to no one.
There was no rich and no poor then - no controllers or critics - just Homo Arborus creating the dawn of our society. Their young played like all young animals do, to learn the technique and tactics of future survival.
Down and Out of the Trees:
Eventually, however, a pecking order evolved in the forest and the superior would impress the inferior for better food, sleeping or better mating arrangements for the survival of the fittest. Thus leaders and followers were established which led to the leaving of the safety of the trees for better control by the superior primates - Homo Erectus.
(A primate is an animal who can mate his first finger with his thumb - better to hold onto tree branches and other similar objects such as primitive tools or large male organs. So, the evolution of our own primate species became feasible - if not preordained - by males with superior willies)
On the ground the primates were at a disadvantage with predators, needs for shelter, and lack of food and sex at arms length. They became cave users on their way to better feeding grounds. Eventually, when fire was discovered, they became cave dwellers from which many scouted for fuel and food.
A clan or tribal Chief was selected, collected, elected or projected to organize protection, shelter, food and great sex distribution - besides basic discipline within the group.
Team Sport Already:
Now the young played together as a team to learn those techniques and tactics that would help them survive as a tribe in the future and to protect their tribe against predators and potential enemies.
Tribal Chiefs, Sex and the Shaman:
At this point one can visualise a group of male primates sitting about a fire in their cave. Seated would be the Controllers making decisions about the conduct of the tribe or social system based no doubt upon the size of the weaponry and the associated skills that mattered.
Standing at the back of the leaders would be the lesser endowed Critics - not able to vote on the decisions but verbalising to the extent that the leaders might take consideration of their views.
(Older females generally, were not overt leaders but usually got what they wanted by that age old recipe of hot tongue and cold shoulder)
Out on the plains would be the hunters and gatherers of the food, fuel and other Creative necessities - such as looking after the young maidens of the tribe - or the tribe down the road.
Later would come the Shaman - the witch doctor or religious who would Criticise and Control all by way of mysticism and/or spiritualism (psychology) from an aloof and even haughty, almost godlike position. (to whom, at a special moment, a fair haired maiden or smally boy was delivered no doubt)
Kings and Queens:
As the years go by, each primitive in it's evolution is endowed by nature to his respective vocation and these idiosyncratic attributes define not only the character but the attitudes of each of the three personalities that make up a social system. Controllers, Critics and Creatives. (Executives - Examiners - Entrepreneurs - the future Westminister System)
Kings and Emperors - Controllers - evolved. Critics, courtiers, teachers and theorists set up their pulpits. Creative artists and artisans helped tradesmen to create art and the goods and services needed for the developing social system.
The Beginning of Tax And The
Birth of Controllers:
Thus we have controllers, managers, supervisors, sergeants or rulers with their committees, boards, councils, soviets, congress, governments, parliaments, senates, royal chambers and chains of command - with their rules - and regulating accordingly. To do so they needed to set a tribute, excise, levy, tariff, tax or duty to raise revenue to support themselves and their employed enforcers.
As money was yet to be invented by some Rabbi (Creation Law) or Philosopher (Big Bang Theory) the tribute was usually in the form of grain, animals, or a fair haired maiden daughter or two.
And Their Critics:
We have the social Critics with their bars, courts, professional rooms, political parties, class rooms, newspapers, magazines, books, TV and "talk back" programs. They censor and vent their approval or disapproval as they see fit and varied by circumstances of popularity, status or "cash for comment"
Religious Shaman at one time and up to the present, convinced the Controllers of the need for "tithing" - or a smally boy or two. They also fabricated myths of passed history and the future. Usually with their tribe being the chosen few who had "been there done that" and who would be looked after in some future paradise - provided they were "good".
"From each according to his capacity - to each according to his needs" might ring a bell.
And last, but not least, we have the Creative people whose function it was/is to create, actuate and produce the goods and services we eat, wear and utilise from day to day. The creative people usually preferred to make something - like profit - from their farming, crafts or Gilds.
All make up the Social
or Trinity System:
Each of these three characteristics or attitudes is indispensable within any given social system. All systems - natural or man made require these three basic elements:- a sensor, a control and an actuator. The human body has sensors, eyes, ears etc. - a brain/control - and extremities to create.
Kids know a computer system requires an input device or sensor, a central processor unit - control, and Creative output devices or actuators.
A footy fan would know a football game (system) needs spectators, referees and Creative players to make the game worthwhile.
It should be plain to see that it is difficult - if not impossible - to be all three elements of a system at the same time. A natural Division of Powers in effect - now known as the Westminster System.
Each element of the system is not interchangeable i.e. the controller is not the sensor nor the actuator neither are they the controller. Each has it's own ordered and orderly function.
Take a break!
Use it or loose it!
Peg in a Square Hole?
Is there something wrong, then, with our Westminster System of Government and it's "Division of Powers"?
Critical Lawyers (High Court Justices) look after the Judicial Arm of Government and our
Federal Constitution very well:
Professional Controlling Executives and Perminant Heads - Public Servants - manager the Executive Arm of Government as well as can be expected.
The Creative or Legislative Arm of Government, responsible for Creating Legislation for a better social environment, is predominantly managed by out of work CRITICS - lawyers, accountants, doctors, second-hand car dealers, real-estate salesmen and of course, union officials.
Not a Creative Entrepreneur amongst the bloody lot?
Smith? Bloody Hell!
Is there any wonder they fail to create a better mousetrap?
And Pollies have no idea of the "Division of Powers". They would like to run the High Court and the Tax Office besides Creating new rules in Parliament.
Please consider "Yes Minister!" as the way the system operatest. And more than half of the pollys have to go to an accountant to have their Tax Return filed because they cannot understand their own rules and regulations.
Pardon me while I have a little cry.
Fortunately, they are there only for the poor people - who need welfare, circuses and the
chance to vote for something every now and then.
Attitudes at Age Five:
(If You Want to
be Rich and Wealthy, Don't go to School)
If we look back on our childhood we can readily identify the kids who would be Controllers, Critics and Creatives. By the age of five, after pre-school, where he learnt all he "need to know", a child's attitude has already manifest itself.
It is here that society probably makes its first and possibly, it's worse blunder.
At age five we send our creative children off to school to learn the Rules and Regulations of Control and the debating "ethics?" of Criticism and other "nice to know" subjects. This is fine for future Controllers and Critics, but it inhibits the kids who prefer their basic Creative and Entrepreneurial instincts.
Civilisations don't advance by rules and criticism but by the ingenuity of its Creative Artisans. In fact most empires have disintegrated when Control and Criticism has polluted and destroyed the Creative capabilities of it's Artists, Artisans, Farmers etc.
"It wont get off the Ground, Orville" (but They got Us to the Moon and Back)
Imagine, if you will, the kids at school with Orville and Wilber Wright. Everyday the Controller types would persist in trying to have them march to the sound of their drum while the Critics would discourage them with "It wont get off the ground, Orville".
out of Control:
Imagine, if you will, a policeman schooled in the Control of kids and other criminals, almost from birth, progressively becoming a drug Entrepreneur within the criminal industry. Law and order out of Control.
Each attitude or characteristic has it's own fundament rewards.
Controller has a compulsive need for compliance - and most poor people comply or else.
The Critic craves agreement for his argument - and John Laws thanks the poor kindly.
The Creative needs Customers to buy his goods and/or services and so makes a profit.
So! What has this to
do with TaxPlanning?
Way back when, it became obvious to the Controllers of any society that, although it might dispense with most Controllers' desire for compliance and Critics' craving for agreement, it was an ill chosen venture to antagonise those who Create and produced the food and other necessary items not normally found free at arms length or closer.
The obvious would be to give special Tax Minimising treatment to those who
Create the "Goods and Services". Farmers, Manufacturers, Miners, Merchants,
Wholesalers, Retailers, Rentists, Service providers and money lenders all enjoy a special
TaxPlanning treatment in decreasing order.
Sometimes, new Controllers try controlling the Creative element - particularly at election time - but since the days of the cave dwellers they usually find out quickly enough, who puts the meat and potatoes in the pot.
Philosophy of Tax:
The Philosophy of Tax, particularly in Australia, is to tax to the hilt those Controllers and Critics who have large incomes but no Patriotic commitment to Creating the Common Wealth of our Nation.
This has two
effects. It ensures that they are limited in the contribution to enlarging our
International Trade Deficit.
They are also forced to
share their income with those who are unable to work as their commitment to "the
Both are presumed to over indulge in highly taxed social drugs - nicotine, alcohol and petrol - so heavy taxation is a commendable way of reducing the risk of accident, lost quality control and inferior health.
and Taxes: (but only for the Working Class)
The Controllers have installed, not only excise, but also levies (as in Medicare) tariffs, charges, tolls, stamp duties, guarantees (as in Training), fines and compulsory Superannuation, Capital Gains Tax and now, a Goods and Services Tax - VAT and in the future KAP and LTD.
They will continue to do so for these same obvious - and necessary - reasons.
To take from the rich to give to the poor is another Robin Hood Fairy Story for Kids - and the poor.
The function of the Rich is to provide Employment, Accommodation, Art and Consumables - the Goods and Services, etc - not to pay Tax as a Servant.
The function of the poor is to circulate money back to the Government via Excise and GST and to vote for their leaders every 3 years. Also to eat cake and go to the circus.
Taxation, in particular for Government and Treasury Economists, is to control the supply of money by taking money out of circulation. Otherwise it would lead to inflation and we would loose total control of our financial wealth as we have done with our asset wealth.
It reduces the imbalance in International Trade and the subsequent inefficient devaluation of our dollar against others who are more efficient, more technically and socially advanced.
On the other hand the Government, in it's wisdom, offsets the risk taken by Entrepreneurs and Creators, Artists and Sportspersons (politicians) who are willing to Patriotically contribute to the Common Wealth.
It once allowed Sales Tax exemptions and Fuel Rebates to Primary Producers and Miners. Sales Tax exemptions to Manufacturers. These together with most businesses - Sales, Service, Rental and Investment- have "necessary" Tax deductions incurred in producing a Taxable Income, well beyond that available to the no risk employee/servant.
Sponsored Sportspersons are considered Service Providers - just like Politicians (see ATO TaxPack: Supplement Tax Return Item 19) if you have a mind to disagree.
Most of these tax advantages are not available for PAYG Income (Working Class) employees - be they Union Officials, Company Directors, Judges, Admirals of the Fleet, Academics, white collar or other working class heroes.
On the other hand, if or when any one feeling particularly Creative or Patriotic, wishes to moonlight and contribute to the Common Wealth then he is able to TaxPlan - within Part IVA - to his heart's content.
"Who's Afraid of the Big Bad Wolf?"
TaxPlanning may be morally offensive to those who are afraid to TaxPlan. But, it is not only within the Law. It is a Patriotic Duty - like Politics.
(A quick phone call to the Australian Tax Office with the question "Can I, Patriotically, install a Flag Lieutenant Flagpole with our Australian National Flag, on my front lawn as a Tax Deduction" will soon establish the moot point on who is Patriotic and who is not)
"Ask not 'What this country can do for me'.
Rather 'What can I do for my Country?'"
John F. Kennedy
The Cash Economy:
Not all the people, who earn an income from their own toil and financial investment, are judged by the Australian Tax Office to be "in business" or Business Class. There are limits set that they have to measure up to to be considered "Business Class" rather than pursuing a pastime or "Hobby".
The Average Australian Small Family Business:
A Creative Average Australian Family of five in a Small Family Business has the option of a non-Taxable Income of close to $70,000/annum with an additional $50,000 per annum normal family overhead costs for Deduction and Depreciation (not normally available to Working or Servant Class)
(A very close inspection of the ATO Tax Pack Supplement will show this in some detail. If you have a son at Uni doing Tax Law even better (I hope) A glance at the Australian Master Tax Guide would help more. Or a rash of requests for ATO Private Rulings - using "Taxese" as basic language would help most. Call your local bookkeeper - accountant - could give a clue. Best of all - a two weeks' Tax Planning Seminar on the Gold Coast for the whole family might be the best)
The Classless Society:
In our classless society, it is only on the 1st July each year when the Individual Tax Return is to be completed is there any compulsion to differentiate between "Working Class" and "Business Class".
need for a Tax Philosophy.
And a Tax Philosiphy, to remind the Controllers and the Critics of their special obligation to those who would risk their own money and credibility to Create the Common Wealth, including the Goods and Services (Accommodation and Employment etc.) for all.
Income Tax Returns: (includes the Level Playing Field)
Working Class file Items 1 to 10 on the ATO Individual Tax Return. Business Class Items 11 to 19 on the Supplement Return known as the Level Playing Field. It is called the Level Playing Field for the Small Family Business owners file the same information as Kerry Packer - only the $ amounts differ.
is as Good as His Master:
But can only be a spectator/critic when the Rich Masters play on the "Level Playing Field" (ATO TaxPack Supplement)
The Voters: The Rich - the Poor - and the Ugly.
Then again, in an Election year, the poor, the rich and the ugly are bribed and threatened outlandishly, with promises that the creative rich and possibly, wealthy, will again be made to pay more tax - promises that never have been, and cannot be kept.
This seems to appeal to some until the day comes when they realise what happens when more of the rich flee the country for better investment off shore and leave the poor to fend for themselves.
This is called unemployment for Australians and investment for patriotic Asian workers.
"The Choice Principle" (within ATO Part IVA anti-Avoidance Legislation?)
It seems a shame that the Freedom of Choice is shared only by the few when it comes to the "Choice Principle" - the underlying basis of the Australian Taxation Philosophy.
Currently, Kerry Packer is in the High Court of Australia pursuing his "Choice Principle" against the possible assumption that the Political Part IVA anti-Avoidance Legislation, pursued by the Tax Commissioner in this case, is legally unconstitutional.
Fortunately, Kerry Packer, will always be "in the High Court" defending our Tax "Choice Principle" while Union Officials and other critics will continue to try to deny, steal or sell it - or take it to the "bottom of the harbour"
When there is no Philosophical Choice:
(1) Nobody gets paid until something is sold.
(2) There never was, never is, never will be, a "free lunch" ---- but it can be Tax Deductible.
(3) "Nothing is good - nothing is bad - but thinking makes it so" Shakespeare.
(4) No one has the
Choice to take away from another, the Freedom of Choice. No one!
For Information on Taxation don't hesitate to check with the Australian Taxation Office Web Site:
infoline Ph 13 61 40
The Gold Coast
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