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An analysis of the impact of tax and welfare reform measures on effective marginal tax rates in Australia 1982-2002

Author

Listed:
  • Alfred Michael Dockery

    (Curtin University)

  • Paul Flatau

    (Murdoch University)

Abstract

This paper uses a microsimulation model that permits interactions between taxes, government benefits and housing assistance parameters and data from various releases of the Survey of Income and Housing Costs to illustrate how the distribution of effective marginal tax rates has varied between the years of 1982, 1996, 2000 and 2002. The policy impact of changes in the tax-benefit system on effective marginal tax rates is then assessed by applying the real tax-benefit parameters from 1982, 1996 and 2002 to the household composition and income data from a base year (2000). The findings indicate that effective marginal tax rates have increased over the long-term. Even when the impacts of tax-benefit changes are isolated from changes in the composition of the population, policy changes have been insufficient to counteract increases in effective marginal tax rates that have been caused by compositional changes.

Suggested Citation

  • Alfred Michael Dockery & Paul Flatau, 2008. "An analysis of the impact of tax and welfare reform measures on effective marginal tax rates in Australia 1982-2002," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 11(3), pages 203-226.
    • Handle: RePEc:ozl:journl:v:11:y:2008:i:3:p:203-226
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    References listed on IDEAS

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    1. Ann Harding & Josh Polette, 1995. "The Price of Means‐Tested Transfers: Effective Marginal Tax Rates in Australia in 1994," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 28(3), pages 100-106, July.
    2. Kell, Michael & Wright, Jane, 1990. "Benefits and the Labour Supply of Women Married to Unemployed Men," Economic Journal, Royal Economic Society, vol. 100(400), pages 119-126, Supplemen.
    3. Alan Duncan & Mark N. Harris, 2002. "Simulating the Behavioural Effects of Welfare Reforms Among Sole Parents in Australia," The Economic Record, The Economic Society of Australia, vol. 78(242), pages 264-276, September.
    4. Gillian Beer, 1998. "The State of Play of Effective Marginal Tax Rates in Australia in 1997," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 31(3), pages 263-270, September.
    5. Guyonne R. Kalb, 2000. "Labour Supply and Welfare Participation in Australian Two-Adult Households: Accounting for Involuntary Unemployment and the 'Cost' of Part-time Work," Centre of Policy Studies/IMPACT Centre Working Papers bp-35, Victoria University, Centre of Policy Studies/IMPACT Centre.
    6. Chris Giles & Paul Johnson & Julian McCrae, 1997. "Housing benefit and financial returns to employment for tenants in the social sector," Fiscal Studies, Institute for Fiscal Studies, vol. 18(1), pages 49-72, February.
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    Cited by:

    1. Nicolas Hérault & Guyonne Kalb, 2022. "Understanding the rising trend in female labour force participation," Fiscal Studies, John Wiley & Sons, vol. 43(4), pages 341-363, December.
    2. Nicolas Herault & Francisco Azpitarte, 2014. "Recent Trends in Income Redistribution in Australia: Can Changes in the Tax-Transfer System Account for the Decline in Redistribution?," Melbourne Institute Working Paper Series wp2014n02, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    3. Rachel Ong & Gavin Wood & Melek Cigdem, 2013. "Work incentives and decisions to remain in paid work in Australia," Bankwest Curtin Economics Centre Working Paper series WP1312, Bankwest Curtin Economics Centre (BCEC), Curtin Business School.
    4. Simon Feeny & Rachel Ong & Heath Spong & Gavin Wood, 2012. "The Impact of Housing Assistance on the Employment Outcomes of Labour Market Programme Participants in Australia," Urban Studies, Urban Studies Journal Limited, vol. 49(4), pages 821-844, March.

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    More about this item

    Keywords

    Welfare and Poverty: Government Programs; Provision and Effects of Welfare Programs; Labor and Demographic Economics: General; Personal Income and Other Non-business Taxes and Subsidies; includes inheritance and gift taxes;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J00 - Labor and Demographic Economics - - General - - - General
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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