What Aussies need to earn to be rich

 

Prime Minister Scott Morrison sparked debate this week about what "rich" means after he defended his plans for tax cuts to Australia's highest income earners.

Mr Morrison, who earns over $500,000 a year, has pushed through a controversial plan to give tax cuts to those earning up to $200,000 in 2024.

In particular the plan helps anyone earning over $180,000 a year as they will see their tax rate drop from 45 per cent to 32.5 per cent, saving them $8,640 a year from 2025.

In comparison, someone on $90,000 would save just $2,340 a year.

The government's plan sees the 32.5 per cent tax rate applied to all income between $41,000 and $200,000.

When asked what the government considers to be a "high income", the PM didn't give a specific figure but singled out FIFO workers, who he said deserved a tax cut.

"It's hard work, you're away from your families," he said.

"And you do earn a bit more when you're doing that - but I tell you what, you put a bit of it away, too.

"And I don't think they should be penalised and treated like they're some merchant banker in Sydney.

"They're hardworking people working out on mines and difficult parts of the country. I think they deserve a tax cut. I think they deserve to take more of what they earn."

His comments have sparked debate on what is considered "rich" in Australia.

Figures from the Australian Bureau of Statistics (ABS) shed some light on how much Australians actually earn and how their income compares to others.

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Prime Minister Scott Morrison says FIFO workers deserve a tax cut.
Prime Minister Scott Morrison says FIFO workers deserve a tax cut.

IF YOU LIVE IN SYDNEY

Sydneysiders have some of the highest incomes in Australia but someone earning $180,000 would still be in the top 10 per cent of full-time workers.

The city's top workers earn at least $2600 per week before tax ($135,200), according to 2017 statistics provided by the Australian Bureau of Statistics (ABS).

Insight into who is considered "rich" can also be gained from the ABS's 2017-18 Survey of Income and Housing.

This looks at household income, not individual income, but it reveals that for those on a combined income of $4982 a week before tax ($259,064 a year), they are in the top 10 per cent of wage earners.

A household income of $180,000 would still be in the top 30 per cent of earners.

The NSW figure is a bit more modest as wages in Sydney are generally higher. To be included among the state's top earners, household income needs to be $4493 a week ($233,636 a year).

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BUT WE'RE NOT TALKING ABOUT 'MERCHANT BANKERS'

As Mr Morrison said, he wasn't talking about privileged Sydneysiders, he was talking about hardworking miners.

To these hardworking miners, $180,000 may not be so much.

However, statistics show that even among those in the mining industry, who have the highest full-time adult average weekly ordinary earnings in Australia, someone earning $180,000 would be batting above average.

As of May 2020, the average weekly earnings for someone in the mining industry was $2,697.50 a week ($140,270 a year).

This compares to the average of all employees in Australia, which was much lower at $1,713.90 a week ($89,122.80 a year).

Spare a thought also for those in the industry with the lowest weekly earnings - accommodation and food services - who earn $1,139.30 a week ($59,243.60 a year).

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SO WHAT'S CONSIDERED RICH?

Individual employees who earn $2109 a week ($109,668 a year) or more, are in the top 10 per cent of workers in Australia, according to 2017 statistics from the ABS. However, this includes part-time and casual workers, so the figure is lower than what it would be for just full-time workers.

Anyone earning $180,000 would definitely be one of the country's highest paid workers.

The large majority of workers (about 75 per cent) earn less than $78,624 a year before tax.

Around 25 per cent of employees earn less than $660 per week, and around 50 per cent of employees earn between $660 and $1512 per week.

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If you earn more than $109,668 a year you are in the top 10 per cent of full-time and part-time workers.
If you earn more than $109,668 a year you are in the top 10 per cent of full-time and part-time workers.

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Among households, those that earned $4275 a week before tax ($222,300) were in the top 10 per cent of income earners in Australia, according to the 2017-18 Survey of Income and Housing.

But the amount can vary widely among the capital cities.

To be in the top 10 per cent of earners in Darwin, household income must be at least $5284 a week ($274,768 a year), compared to $3639 ($189,228) in Hobart.

In Sydney the top 10 per cent of households earn $4982 ($249,100), in Perth it's $4923 ($255,996), ACT is $4854 ($252,408), Brisbane is $4400 ($228,800), Melbourne is $4352 ($226,304) and Adelaide is $3946 ($205,192).

 

 

 

 

 

charis.chang@news.com.au | @charischang2

 

Originally published as What Aussies need to earn to be rich


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