Jane Galt at Asymmetrical Information has an interesting post on her experience with paying an effective marginal tax rate of more than 50% on her freelance work.
In Australia the top marginal rate is 50%. Actually it's 48.5% including a dodge called the Medicare levy which has about as much intellectual, fiscal and political integrity as the US Social Security Trust Fund, which is to say none, but for me that's psychologically indistinguishable from 50%. What's truly amazing though is that this rate kicks in at around $US50,000.
Think about it. For every dollar you earn over 50K you give half back to the Federal government in income tax, when you spend the other fifty cents you give another 10 cents to them as GST (consumption tax or VAT) and much of the other 40 cents is clawed back by all the other taxes, levies and charges that Federal, State and Local governments impose.
Talk about your indentured servitude. It's like a giant version of one of those mining towns in the remote Amazon rain forest where the workers end up spending their entire salary at the company store and become, in effect, nothing more than slaves.
As an expatriate Aussie I should point out that this is one of the reasons I left, and pretty much every Aussie professional I've met working offshore has told me the same thing. Can anyone in the Australian Government spell "brain drain"?
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