Analysis by Deloitte’s Chris Richardson suggests that about 50,000 people with annual income of more than $1 million will contribute 6.9% of the increased revenue from the proposed 0.5% rise in the Medicare levy. By contrast, 1.3 million Australians with the lowest incomes will account for only 1.6% of the additional revenue. From The Australian:
High-income earners will carry most of the burden of the Turnbull government’s proposed increase in the Medicare Levy, which will largely exempt those on low incomes…
Estimates by Deloitte show the top-earning 0.5 per cent of taxpayers — those with incomes of $700,000 and more — will pay a larger share of the increased Medicare Levy than the lowest-earning 25 per cent of taxpayers.
Deloitte partner Chris Richardson said: “People may not realise the extent to which the present tax burden does fall on the top end”…
Deloitte’s estimates show that millionaires will cover 6.9 per cent of the cost of the Medicare levy increase, although they represent only 0.4 per cent of taxpayers…
The Deloitte analysis shows that 18.3 per cent of taxpayers earn more than $100,000 a year, and they will pay 46.5 per cent of the additional Medicare levy.
Deloitte’s analysis of the impost of the Medicare Levy is all well and good, but it does ignore that high income earners – those earning more than $180,000 a year – would also receive a 2% income tax cut from the expiry of the Budget Repair Levy. Thus, should these Budget measures get passed, high income earners will in fact receive a net 1.5% tax cut, whereas everyone else bar the lowest income taxpayers will be slugged with a 0.5% tax increase.
As noted separately in the article:
Someone earning $1m would face a tax liability of $459,600 now. The removal of the deficit levy and the addition of the Medicare levy increase would lower this to $448,230.
Therefore, high income earners will in fact be winners from this Budget.
