Why the Henry Review Fails on Family Tax Reform
While acknowledging the importance of fairness and the need to avoid creating disincentives in the design of tax reform, the Henry Review recommends a simplified Personal Income Tax and child payments withdrawn on a single family income test. This paper shows that the proposed reforms would consolidate the existing family tax system, which clearly fails in terms of both fairness and disincentives. In the early 1980’s Australia had a highly progressive individual income tax and universal family payments. Since then family income tests on child payments and tax cuts at high income levels have transformed the system into one of joint taxation with the highest marginal rates on low and average wage two-earner families. Under the Review’s recommendations the same families would continue to face the highest tax rates. Data presented indicate strong negative effects on productivity and the tax base due to disincentive effects on labour supply and saving over the life cycle. The paper proposes a return to a strongly progressive individual based income tax and universal family payments.
|Date of creation:||Aug 2010|
|Contact details of provider:|| Postal: +61 2 6125 3807|
Phone: +61 2 6125 3807
Fax: +61 2 6125 0744
Web page: http://rse.anu.edu.au/cepr.php
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Andrés Erosa & Martin Gervais, 1998.
"Optimal Taxation in Life-Cycle Economies,"
UWO Department of Economics Working Papers
9812, University of Western Ontario, Department of Economics.
- Gourinchas, Pierre-Olivier & Parker, Jonathan A, 2000.
"Consumption Over the Life-Cycle,"
CEPR Discussion Papers
2345, C.E.P.R. Discussion Papers.
- Apps,Patricia & Rees,Ray, 2009.
"Public Economics and the Household,"
Cambridge University Press, number 9780521887878, October.
- Richard Blundell & Martin Browning & Costas Meghir, 1993.
"Consumer demand and the life-cycle allocation of household expenditures,"
IFS Working Papers
W93/11, Institute for Fiscal Studies.
- Richard Blundell & Martin Browning & Costas Meghir, 1994. "Consumer Demand and the Life-Cycle Allocation of Household Expenditures," Review of Economic Studies, Oxford University Press, vol. 61(1), pages 57-80.
- Orazio Attanasio & James Banks, 1998. "Trends in household saving: a tale of two countries," IFS Working Papers W98/15, Institute for Fiscal Studies.
- Apps, Patricia & Rees, Ray, 1999.
"On the taxation of trade within and between households,"
Journal of Public Economics,
Elsevier, vol. 73(2), pages 241-263, August.
- Apps, P.F. & Rees, R., 1998. "On the Taxation of Trade Within and Between Households," Papers 337, Australian National University - Department of Economics.
- Orazio P. Attanasio & Martin Browning, 1993.
"Consumption over the Life Cycle and over the Business Cycle,"
NBER Working Papers
4453, National Bureau of Economic Research, Inc.
- Attanasio, Orazio P & Browning, Martin, 1995. "Consumption over the Life Cycle and over the Business Cycle," American Economic Review, American Economic Association, vol. 85(5), pages 1118-1137, December.
- Attanasio, O.P. & Browning, M., 1993. "Consumption Over the Life Cycle and Over the Business Cycle," Papers 9314, Tilburg - Center for Economic Research.
- Attanasio, O.P. & Browning, M.J., 1993. "Consumption over the life cycle and over the business cycle," Discussion Paper 1993-14, Tilburg University, Center for Economic Research.
- Reuben Gronau & Daniel S. Hamermesh, 2003.
"Time Vs. Goods: The Value of Measuring Household Production Technologies,"
NBER Working Papers
9650, National Bureau of Economic Research, Inc.
- Reuben Gronau & Daniel S. Hamermesh, 2006. "Time Vs. Goods: The Value Of Measuring Household Production Technologies," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(1), pages 1-16, 03.
- Apps, Patricia & Rees, Ray, 2001.
"Household production, full consumption and the costs of children,"
Elsevier, vol. 8(6), pages 621-648, December.
- Apps, Patricia & Rees, Ray, 2000. "Household Production, Full Consumption and the Costs of Children," IZA Discussion Papers 157, Institute for the Study of Labor (IZA).
- Christopher D. Carroll, 1997. "Buffer-Stock Saving and the Life Cycle/Permanent Income Hypothesis," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 1-55.
When requesting a correction, please mention this item's handle: RePEc:auu:dpaper:642. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.