Fairfax has reported today that the Turnbull Government is considering to lift the 80,001 37% marginal tax bracket to $100,001 in a bid to counter so-called bracket creep.
The problem is, most taxpayers earn significantly less than $80,001, meaning that it would represent another giveaway to higher income earners. As Peter Martin explains:
Most earners get nothing like the average wage. Right now the average full-time wage is $78,000, but the typical full-time wage is nearer $65,000. The average is pushed up by a comparative handful of high-earning megastars. In the real world three quarters of us earn less than that “average”.
Most are at no risk of crossing into the second-highest tax bracket.
In fact, according to analysis of Treasury data by The Australia Institute, if the Coalition went ahead with its proposal, it would benefit the wealthy up to 10 times more than average wage earners, and women would benefit the least:
For someone for whom a recent inflation-adjusted pay rise has taken them to $82,000, the benefit of a new $100,001 threshold for the 37 cent rate is extremely small – less than the price of a cup of coffee per week at $1.70 or $90 annually. For someone earning above $100,001, the benefit will be tenfold at $17 a week or $900 a year…
Those earning above $100K would get an annual tax cut of 10 times the benefit of someone who, for example, had just tipped over into the second highest bracket with an income of, say, $82,000.
And because women take up more lower-paid jobs in the labour force, including more part-time positions, the benefit to them, in many cases, will be nothing at all.
The progressive think tank’s modelling shows the cost to the budget would be in the order of $1.7 billion annually, of which women will get about a quarter of the benefit, or 27 per cent – compared to men with 73 per cent.
Once again, we have ourselves another Abbott-lite policy aimed squarely at upper income earners that would significantly erode equity at the same time as wrecking the Budget.
No policy compass, no policy process, total tin-ear.
