Comment (by Noel Whittaker): I believe the article (15% tax on earnings above $1.6 million? Think again) is based on a false premise. A person can earn $18,200 tax-free – once they exceed that they are taxed at 19% until $37,000 a year where tax on the excess becomes 34.5% including Medicare levy.

Therefore the average tax rate is of no relevance.

It makes sense for anybody who is retired to keep sufficient funds outside super until income reaches $18,200 a year. Then if the rest of their earnings are in super, the tax on the excess is a flat 15%.

To me it’s fairly simple. The first $18,200 of income is tax-free – the balance at 15%. That sounds like a money paradise to me.

Answer (By Tony Negline): Respectfully I disagree with your view. Comparing a progressive tax rate system and the rates of that system with a flat tax is not comparing like for like.

For example, a super fund with $18,201 of taxable income will have paid $2,703 in tax. A person with the same taxable income will have paid 19 cents.

You can not turn a flat tax into a progressive tax system (well technically you can, but for comparison purposes it would be silly to do this).

So the only solution is to turn the progressive tax scales into a flat tax scale and the way I chose to do this was by taking an arithmetic average of the total tax paid. I could have chosen a more accurate approach that took into account the time value of money and other similar factors, but I think this would have been too complicated for most people to understand.

Question: I am looking at investing into the US market – do you have any sectors or stocks to suggest?

Answer (by Paul Rickard): Thanks for your question.

The way I approach the USA market is that apart from getting a broad exposure through one of the major ETFs, such as iShares S&P 500 IVV, I then look for sectors/stocks I can’t get exposure to in Australia. The three obvious ones are:

• technology
• healthcare – particularly things like pharmaceuticals
• consumer discretionary

I am not sure that I am really qualified to nominate any individuals stocks, although I wrote some time ago about the FAANGs (Facebook, Apple, Amazon, Netflix and Google (now Alphabet). You can get exposure to these directly, or look at some of the US ETFs.

Locally, Betashares has an ETF that tracks the NASDAQ 100, while iShares has some sector ETFs.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.