fat cats may be taxed 50pct under new plan

Any fat cats on HC?

AAP

Fat cats earning $1 million or more would have their earnings taxed at 50 per cent under a plan that has the backing of senators holding the balance of power in the federal parliament.

The plan had the backing of the Greens, independent MPs and some Labor backbenchers and could raise $US435 million for federal coffers, News Limited newspapers reported on Tuesday.

The proposal comes amid the federal government's taxation review and follows Prime Minister Kevin Rudd's call for an attack on "extreme capitalism".

The top tax threshold - 48 per cent - comes in at $180,000.

An Australia Institute report found 5,600 people earned $1 million-plus in 2006 but on average paid less than 20 per cent in tax.

Australia Institute executive director Richard Dennis told News Limited the proposed 50 per cent tax would increase tax revenue and make the taxation system more equitable.

"It is unclear why someone earning $180,000 per year should pay the same marginal tax rate as someone earning $1.8 million per year or, as in the case of some CEOs, $18 million," Dr Dennis said.

Greens leader Bob Brown said average Australians would think the plan was "a very fair re-adjustment now that harder times are coming", while independent senator Nick Xenophon said it was fair to "skim a bit more" off "the creme de la creme".