Thursday, 19 March 2009

Graphing workers vs bludgers

There are two types of people - producers and consumers. By that I mean most people (the producers) leave home each day, go to work, earn a living, and pay tax. The other mob, the consumers, sit around and leach off the proceeds of the producers.

Some consumers of course were once producers - pensioners. Other consumers are people who will grow up to be producers (hopefully), like school kids and so on. But let me just rant for a minute about those who decline to join the workforce on a fulltime basis when they are capable of doing so, and spend their life taking food from my table - food that I work to put on my table for my family.

The ATO has released a swag of tax statistics for 2005-06. Come, be a nerd, and examine the stats with me.

I grabbed a spreadsheet of tax information for NSW, and sorted it to show which postcodes paid the least amount of tax and which paid the most (mean taxable income). This spreadsheet also included two useful columns showing the number of taxpayers in that suburb and the number of non-taxpayers. I used those two colums to calculate a Ratio of Bludgers. Norfolk Island comes out as the bludging capital of NSW - there are 60 individuals paying tax and 80 not paying tax. It is the only postcode with more consumers than producers.

There are just over 20 where two taxpayers are supporting one bludger.

Of the 605 postcode areas in NSW, 316 have a bludger ratio of less than 4. We've heard about the looming pension crisis - where there will be too few workers to support the growing horde of pensioners. We should dump that idea. What we should be worried about is not a shortage of workers, but a shortage of taxpayers - since they are the ones paying for the pensioners.

The interesting thing is that when you graph the two sets of numbers, you get this:

I put a trend line through it. Don't ask me for the R-squared etc; I didn't calculate it. But there seems to be a reasonable fit to the idea that in areas with a lot of bludgers, incomes are low. When you reach a level of about 6 taxpayers to each bludger, incomes suddenly explode upwards.

There are many explanations for this, but let me put forward a starting point:

Work is rewarded. The more workers you have in your suburb, the richer your suburb will be.

And here is a table to contemplate. This is calculated by postcode area. I sorted it using my bludging index. The bottom 100 postcodes in the bludging index paid a total of $733 million in tax.

The top 100 by comparison (those with the fewest bludgers) paid $13.5 billion in tax.

  • Bottom 100 - $733 million
  • 2nd 100 - $2.13 billion
  • 3rd 100 - $4.32 billion
  • 4th 100 - $6.81 billion
  • 5th 100 - $11.05 billion
  • Top 100 - $13.58 billion
So next time some hairy legged socialist tells you that the rich should pay more tax, you can tell them that they are already paying a pretty big whack. The top 16% pays just a smidgeon less than the bottom 64%. The top 32% are paying 63% of income tax. The bottom 16% are paying less than 2%.

The short answer here really is this - if you don't want to be poor, the best place to start is to get a job.


Anonymous said...

My teeth grind about the attitude to earnings and productivity in this country.

We are now self-funded "consumers" living comfortably, BUT we had every dollar of our assets on the line for 30 years in a business that employed and trained more than 100 people over that period, we paid company, payroll, state and personal taxes as required, and raised and educated a family.

Our superannuation money is still supporting Australian industry and commerce through investment, employment and taxation.

That's why I have brain explosions about ignorant people who believe all jobs can be shifted to unproductive green technology, and that legitimate productive business doesn't count.

See, boab, I can rant as hard as you.

Margo's Maid said...

Excellent post, BOAB, if only our economists spoke so plainly. Most people in western countries now expect welfare, but there are fundamental aspects like this that have to be right for it to work.

Anonymous said...

These are the Facts from one of us that live on Norfolk Island.

1) We are an External territory of Australia but choose not pay any Australian Tax
2) We are not eligible for your Dole or your Medicare.
3) We do not receive any aid money from Australia like your Australian country towns and other Pacific Islands
4) We do not have any unemployment problems on the Island. (This is because we do not have the dole here to support bludgers)

I suggest that you visit the Island and you may be surprised as to how we actually make ends meet without much support from the mother country.

Anonymous said...

re. Norfolk Island.
I think you got this a bit wrong.
No mainland status and benefits, so not the same obligations either.
Otherwise you are spot on with the rest.
Good stuff.

Boy on a bike said...

Thank you for the correction. Sounds like you lot might have it right. Maybe we should be copying you.

My apologies for mis-interpreting the raw stats. But someone is paying tax - who might they be?

kae said...

Why is there not a note with the Norfolk Island stats? That's what there should be, unless somehow someone's lost them... gee, that'd be out of character...

Ben D said...

Probably coming in late with this, but I think what the graph states is quite obvious. Of course with more bludgers to each worker, the median taxable income is going to be less. The jump after the 6 mark though is most likely due to changes in attitudes in those areas. The go getters gather in one place.