According to analysis prepared by the Parliamentary Budget Office, the removal of the 37 per cent tax bracket would see Australian men benefit at a ratio of nearly 3:1 after coming into effect in July 2024.
This means that male taxpayers would receive $30 billion of the estimated $41.6 billion by 2028.
The analysis, tabled at the Senate economics legislation committee on Wednesday, analysed the impact of the three stages of the Turnbull government’s proposed income tax cuts.
The first stage involves a tax refund for low and middle-income earners, while stage two will see the 19 per cent tax bracket increased to include those earning up to $41,000, and stage three will trigger the removal of the 37 per cent tax bracket, which currently applies to those earning between $90,000 and $200,000.
The removal of this bracket would effectively see those earning $41,000 a year receiving the same marginal tax rate as someone earning $200,000.
“The tabled PBO analysis also shows that the financial benefits of stage three of the package overwhelmingly flow towards men over women at a ratio of 3:1 with $30 billion of the $41.6 billion in stage three tax cuts flowing to men,” shadow treasurer Chris Bowen said on Thursday.
“The evidence on the stage three tax cuts is now in – they’re expensive, the fast growing stage of the package, and they are the most unfair.”
He said the third stage of the income tax cuts are “heavily skewed towards higher income earners”.
Let's break that down
According to the Australian Taxation Office, 85 per cent of female taxpayers earn less than $90,000. For male taxpayers, this percentage is 72 per cent.
The Workplace Gender Equality Agency puts the national gender pay gap at 15.3 per cent, based on the difference between men and women’s full-time base salary earnings. The pay-gap hasn’t changed in a substantial way in the last 20 years, generally hovering between 15 per cent and 18 per cent. It reached a peak in November 2014 (18.5 per cent) and a low in November 2004 (14.9 per cent).
Based on figures from the Australian Bureau of Statistics, women’s full-time average weekly earnings are $1,409.00 ($73,268 a year), while men’s are $1,662.70 ($86,460 a year).
Think tank The Australia Institute echoed Mr Bowen.
Analysis performed by economist Matt Grudnoff revealed the flattened tax system would see tax benefits “overwhelmingly go to high income earners”, with 62 per cent of the benefit received by the top 20 per cent of tax payers.
“Men are over-represented among high income earners. Because high income earners receive the greatest share of the benefits, most of the tax cut will go to men,” Mr Grudnoff said.
“Men will receive 70 per cent of the benefit of the tax cut and women only 30 per cent. For every dollar of the tax cut women receive, men will get $2.32.”
He noted that the parts of the tax plan least likely to pass the senate are also the sections that will overwhelmingly benefit high income earners.
“The government has provided no compelling argument for giving such largesse to so few taxpayers,” Mr Grudnoff said.
Continuing, he said the tax cuts will worsen gender inequality, and called for the government to begin considering the gender implications of policy changes.
‘Ridiculous proposition’: Morrison
Responding to questioning around the analyses, Treasurer Scott Morrison refused to enter into the “premise of the question”.
He argued that journalists inquiring on this topic were “making assessments about what the labour force split and income split will be about men and women 10 years from now”.
Accusing the “higher tax club” of “throwing shoes” at the tax policy, he said, “The tax system doesn't discriminate by gender. It's an absolutely ridiculous proposition. It looks at someone's income, not their gender.
“That's what it does and the more women that we have in higher paid jobs then the more they will benefit from that arrangement.”
Treasury deputy secretary Maryann Mrakovic agreed, telling a Senate inquiry yesterday that the problem actually goes beyond what is a “gender neutral” tax system.
“A man earning the same amount as a woman, pays the same amount of tax as a woman,” she said.
“Those issues go to a much broader set of factors than the tax system.”
Minister for Women, and Minister for Revenue and Financial Services, Kelly O'Dwyer added on Twitter:
The Government’s tax cuts are good for women. About 86% of female taxpayers have a taxable income of $90,000 or less, and that is where the Government’s tax relief is focused.— Kelly O'Dwyer (@KellyODwyer) June 6, 2018
Tax discussion is ‘dominated by myths’: Grattan Institute
Grattan CEO John Daley told the Senate economics legislation committee inquiry that the debate around the proposed income tax cuts has been “dominated by myths”.
He said the question around the overall fairness of the income tax cuts had been obscured by both sides of the political spectrum.
“Those on the right conceal that they want the poor to bear a greater share of the tax burden. Those on the left conceal that they want the rich to bear a greater share of the tax burden,” Mr Daley said.
He said politicians had been working on myths, like the idea that tax cuts are “unfair” because they are generally bigger for high income earners than low income earners.
“Those on higher incomes pay a higher proportion of the tax take, so pretty much any tax change – including a highly progressive change – will give them a bigger tax cut, at least in absolute dollars,” Mr Daley said.
On the other side, he said it’s also a myth that bracket creep hurts high income earners the most.
“It hurts middle income earners most, because they have the biggest gap between their average tax rate and their marginal tax rate,” Mr Daley said.
He said once the myths around the system are dispelled, politicians can “argue openly about whether reducing the extra burden on high income earners, but increasing the proportion of tax paid by middle income earners, is fair”.
Budget needs to consider gender ramifications
The National Foundation for Australian Women, which also spoke at the Senate inquiry, said in an analysis that the budget ignores the unpaid labour of the home, typically taken on by women.
As such, it also ignores the way it limits their work, economic security and empowerment.
“Measures such as equal opportunity and anti-discrimination laws can contribute to alleviate inequality, but a broad policy approach to rethinking the work and care rewards and incentives in our current system is necessary,” it said.
“Government budgets are meant to be gender neutral but in fact they are largely gender biased because they do not assess how policies affect women.”
Labor Senator for NSW, Jenny Mcallister agreed, tweeting: