Save
Sweeping changes to income tax cop more backlash
A new analysis piece by the Australian Institute raises serious questions about the basis of the Morrison government’s sweeping changes to income tax.
Sweeping changes to income tax cop more backlash
A new analysis piece by the Australian Institute raises serious questions about the basis of the Morrison government’s sweeping changes to income tax.
Bracket creep naturally occurs as inflation pushes wages and salaries into higher tax brackets, which economists believe leads to fiscal drag.
Fiscal drag occurs when the government’s net fiscal position fails to cover the net savings desires of the private economy.
The Morrison government has previously suggested that bracket creep is a key reason as to why the income tax changes need to occur.
Senior economist at the Australian Institute Matt Grudnoff believes these claims are not supported by the data.
“There is no compelling case for an income tax cut to reduce the impact of bracket creep,” said Mr Grudnoff.
“The government’s income tax plan gives most of the tax cut benefit to the highest tax brackets. These high-income individuals are already the most overcompensated,” continued Mr Grudnoff.
Key findings
- The report analysed the impact of bracket creep from 00-01 to 24-25 to create a bracket creep baseline that is a hypothetical tax rate if bracket creep had been removed and compared that to the current rate of tax.
- Comparing the proposed income tax rates in 2024-25 to the bracket creep baseline shows all income levels are overcompensated for bracket creep.
- If the government’s proposed stage 3a tax cuts are implemented, overcompensation would rapidly rise for those earning more than $95,000 per annum.
- Someone earning $60,000 a year is $1,919 a year better off when compared to the bracket creep baseline. Someone on $200,000 is $19,785 better off than the bracket creep baseline.
This email address is being protected from spambots. You need JavaScript enabled to view it.
About the author
About the author
Tax saving
Why fast-tracking tax cuts won’t stimulate the economy
Treasurer Josh Frydenberg has flagged that previously legislated tax cuts could be moved forward in a bid to help stimulate the Australian economy. ...Read more
Tax saving
Last-minute items to check off before 30 June
With the end of the financial year almost here, an accounting firm has outlined key changes with tax returns this year and flagged some last-minute tax strategies to consider before 30 June. ...Read more
Tax saving
Australia’s richest owe the Tax Office $772m
Australia’s elites and private companies fell $772 million in taxes due to miscalculations and deliberate tax avoidance, the Australian Taxation Office has revealed. ...Read more
Tax saving
Do you have to pay taxes on a trust?
Trusts are usually set up for business, estate planning and investment purposes to separate the legal and beneficial ownership of assets held within the structure. ...Read more
Tax saving
Government rebuffs regional allowance and tax concession reform
A review’s findings into the viability of area tax concessions and payments for regional and remote Australians has had its recommendations shut down by the same government who requested the report...Read more
Tax saving
Penalties for tax fraud in Australia
Public taxes are used to fund government projects in relation to health, defence, infrastructure and many other national and local projects that require public funding. ...Read more
Tax saving
Disaster relief payments receive tax-exempt status
The Australian government has made disaster relief payments to bushfire-affected individuals and businesses tax-exempt while extending tax-free financial support to NSW Rural Fire Service volunteers. ...Read more
Tax saving
Are your franking credits working?
Here’s what you need to know about franking credits and how they work. ...Read more
Tax saving
Why fast-tracking tax cuts won’t stimulate the economy
Treasurer Josh Frydenberg has flagged that previously legislated tax cuts could be moved forward in a bid to help stimulate the Australian economy. ...Read more
Tax saving
Last-minute items to check off before 30 June
With the end of the financial year almost here, an accounting firm has outlined key changes with tax returns this year and flagged some last-minute tax strategies to consider before 30 June. ...Read more
Tax saving
Australia’s richest owe the Tax Office $772m
Australia’s elites and private companies fell $772 million in taxes due to miscalculations and deliberate tax avoidance, the Australian Taxation Office has revealed. ...Read more
Tax saving
Do you have to pay taxes on a trust?
Trusts are usually set up for business, estate planning and investment purposes to separate the legal and beneficial ownership of assets held within the structure. ...Read more
Tax saving
Government rebuffs regional allowance and tax concession reform
A review’s findings into the viability of area tax concessions and payments for regional and remote Australians has had its recommendations shut down by the same government who requested the report...Read more
Tax saving
Penalties for tax fraud in Australia
Public taxes are used to fund government projects in relation to health, defence, infrastructure and many other national and local projects that require public funding. ...Read more
Tax saving
Disaster relief payments receive tax-exempt status
The Australian government has made disaster relief payments to bushfire-affected individuals and businesses tax-exempt while extending tax-free financial support to NSW Rural Fire Service volunteers. ...Read more
Tax saving
Are your franking credits working?
Here’s what you need to know about franking credits and how they work. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
