Trends in Effective Marginal Tax Rates in Australia from 1996–97 to 2006–07*

Abstract

This article reviews trends in effective marginal tax rates (EMTRs) from 1996–1997 to 2006–2007 for working‐age Australians. Although sweeping income tax cuts reduced effective tax rates for many taxpayers, the extension of income‐tested welfare payments and tax concessions worked in the opposite direction. The proportion of working‐age Australians facing EMTRs of more than 50 per cent increased during the period, from 4.8 to 7.1 per cent, representing some 910,000 Australians. This article also provides the first international comparisons of how the distribution of EMTRs for earners in Australia compares with those prevailing in Europe.

Policy Forum: Saving for Retirement: Retirement Incomes and Employment Decisions of the Mature Aged

“…However, as shown by Apps andRees (2009) andHarding et al (2009), the secondary income earner faces relatively higher EMTRs at low income levels, in part because of withdrawal of the dependent spouse tax offset in addition to the components shown in Table 3. Table 4 shows the contributions to the EMTR of the marginal tax burdens of the headline tax rate schedule, the Medicare levy and the SATO, plus the withdrawal of the age pension for a single person of age pension eligibility age.…”

Des cousins pas si éloignés: les prestations familiales au Royaume‐Uni et en Australie

“…Cela étant, si l'apporteur secondaire de revenu gagne le revenu supplémentaire, la FTBB est aussi soumise à un taux dégressif distinct de 20 pour cent. En conséquence, une famille biparentale sur sept et une famille monoparentale sur cinq se trouvent face à un taux d'imposition marginal effectif de plus de 50 pour cent en raison du retrait des avantages fiscaux accordés aux familles (Harding, Vu et Payne, 2006).…”

Improving Work Incentives and Incomes for Parents: The National and Geographic Impact of Liberalising the Family Tax Benefit Income Test*

“…Over the decade to 2006–2007, there were significant changes in the EMTRs of Australians. Despite income tax cuts, 7.1 per cent of working‐age Australians faced EMTRs of 50 per cent or more in 2006–2007, up from 4.8 per cent in 1996–1997 (Harding et al. , 2006a).…”

“…The proportion of working‐age parents living in families having couple with children facing such high EMTRs tripled. Sole parents were similarly affected, with one in every five sole parents in 2006–2007 set to keep less than half of their next dollar of wages (Harding et al. , 2006a).…”