at 12:40 pm on December 21, 2020 | 16 comments
International research suggests that the next stage of the federal government’s tax reform agenda may increase income inequality and do little to boost productivity.
From mid-2024, the government proposes to introduce a flat income tax rate of 30 per cent for people earning between $45,000 and $200,000.
Researchers Enrico Rubolino and Daniel Waldenstrom examined previous reductions in the top marginal tax rates in Australia, New Zealand and Norway, and concluded that while they had positive benefits for people on the highest incomes, there was very little financial benefit for people on lower incomes.
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Treasurer Josh Frydenberg has said the changes will maintain the progressive nature of the tax system, reward effort and “encourage aspiration”.
Top end tax cuts fail economy and boost inequality: studies
Top end tax cuts fail economy and boost inequality: studies
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The Morrison government s plan to flatten the tax system and cut taxes for high income earners may increase inequality and fail to boost productivity, ground-breaking international research suggests while leaving a future government with a multibillion-dollar budget headache.
Based on analysis of past cuts to Australia s top marginal tax rate and to rates in developed nations, the research raises doubts whether the government s plans will help boost economic activity enough to cover the costs left by the pandemic recession.