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A Tax Package to Reduce the Marginal Rate of Income Tax and the Wage Demands of Trade Unions

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  • JOHN CREEDY
  • IAN M. MCDONALD

Abstract

To reduce the level of tax evasion, a shift of taxation away from income tax and towards a consumption tax has been proposed in Australia. This paper shows that for such a shift to maintain revenue but not induce trade unions to raise their wage demands, it is necessary that the income tax threshold be increased. Numerical examples of desirable tax packages are given.

Suggested Citation

  • John Creedy & Ian M. Mcdonald, 1990. "A Tax Package to Reduce the Marginal Rate of Income Tax and the Wage Demands of Trade Unions," The Economic Record, The Economic Society of Australia, vol. 66(3), pages 195-202, September.
    • Handle: RePEc:bla:ecorec:v:66:y:1990:i:3:p:195-202
    DOI: 10.1111/j.1475-4932.1990.tb01722.x
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    References listed on IDEAS

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    1. Carruth, Alan A & Oswald, Andrew J, 1987. "On Union Preferences and Labour Market Models: Insiders and Outsi ders," Economic Journal, Royal Economic Society, vol. 97(386), pages 431-445, June.
    2. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
    3. Lindbeck, Assar & Snower, Dennis J, 1985. "Explanations of Unemployment," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 1(2), pages 34-59, Summer.
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    Cited by:

    1. Juin‐Jen Chang & Chung‐Cheng Lin & Ching‐Chong Lai, 1999. "The Unemployment and Wage Effects of Shifting to an Indirect Tax in an Efficiency Wage Model," The Economic Record, The Economic Society of Australia, vol. 75(2), pages 156-166, June.
    2. James Pemberton, 1992. "Taxation and Wage Bargaining," The Economic Record, The Economic Society of Australia, vol. 68(4), pages 318-327, December.
    3. Xu Zifei & Tang Xiaoxu & Cui Yan, 2009. "The Effect of Tax Policy Choices on the Labor Market on the Perspective of Global Governance," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 16(2), pages 316-327, June.
    4. John Freebairn, 1995. "Reconsidering the Marginal Welfare Cost of Taxation," The Economic Record, The Economic Society of Australia, vol. 71(2), pages 121-131, June.

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