Tax Reform, Targeting and the Tax Burden on Women
AbstractIn the early 1980’s Australia had a highly progressive, individual based income tax and families received support for dependent children in the form of universal family allowances. The introduction of income tests for child support payments based on family income (now in the form of Family Tax Benefit Part A), together with changes in the rate scale applying to personal income, have had the effect of replacing Australia’s progressive individual based income tax with a system that tends towards one of joint taxation under a rate scale that exhibits an inverted U-shaped profile – the highest marginal rates apply to average incomes, and to the incomes of the second earner in the family. This paper shows how the introduction of this new income tax system has shifted the overall burden of taxation towards families with two-earners on low and average wages and to working married mothers in particular as second earners. The paper proposes a return to a progressive individual based income tax and universal family payments for dependent children, for reasons of both fairness and efficiency, and argues for the elimination of policy instruments that create complexity and serve only to reduce the transparency of tax reform.
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Bibliographic InfoPaper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 609.
Date of creation: May 2009
Date of revision:
Income taxation; Family benefits; Time allocation; Labour supply; Household production; Discrimination;
Find related papers by JEL classification:
- D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
- I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
- J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
This paper has been announced in the following NEP Reports:
- NEP-ACC-2009-08-08 (Accounting & Auditing)
- NEP-ALL-2009-08-08 (All new papers)
- NEP-PUB-2009-08-08 (Public Finance)
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