Claims of tax gender bias are absurd - The Centre for Independent Studies
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Claims of tax gender bias are absurd


The sheer absurdity of claims that the Turnbull government’s income tax cuts are gender biased will hopefully represent the apex of the current obsession with redistributive fairness.

The fact that men might receive a larger portion of the benefit of tax cuts doesn’t mean the cuts are sexist, any more than the fact that men pay much more tax on aggregate than women means the system as a whole is biased against men.

Even if you accept there are systemic factors at play in the gap between men’s and women’s wages, there is no reason whatsoever to think this has, or should have, anything to do with the tax system.

The problem is economic policy analysis has degraded to such an extent that the only relevant factor to be considered is how progressive a tax or spending measure is. Important considerations like increasing efficiency in the tax system, boosting economic growth, or allowing greater freedom of choice all fall behind the supposed master objective of ensuring no benefit ever flows to ‘the rich’.

Even more flawed is an approach where each individual element of the system is assessed and reassessed for progressivity: what matters is the progressivity of the system as a whole, not that each component is as progressive as can be.

Facts, like the fact that high income earners already pay the overwhelming majority of income tax or that Australia’s system is as progressive as any in the world, have little impact against emotive claims the rich ‘don’t pay their fair share’.

It is also ironic that this belief has gained currency at the same time our income tax system has become more and more progressive. When added to the fact that total federal and state government spending continues to break records, and living standards are as high as they have ever been, this narrative should never have become unquestioned truth so quickly.

Unfashionable as it is in the current debate, it is time to fight back against this one-dimensional view of fairness. There is more to fairness than a binary assessment of whose income is the lowest.

For almost the entirety of modern Western civilisation, it would have been thoroughly uncontroversial to claim that a person has a greater moral right to the proceeds of their own labour than the government.

But it is seemingly now heresy to suggest high income earners even have an equal right to their own income as the beneficiaries of government spending.

As bracket creep continues to eat away the incomes of all taxpayers, it is not unfair to hand some of that stealth tax back. In fact it’s unfair not to do so. And it’s not only unfair to low income earners.

It is also important to note that this is not a fight about poverty, at least not in any objective or meaningful sense. One big problem with the current obsession on who stands on the far side of the punitive taxation line of ‘rich’ is that we’ve stopped thinking about where to draw the line of ‘poor’, where support is really needed.

The areas of the biggest, sustained growth in spending have been universal services like health and education, as well as very loosely means-tested welfare payments like childcare and age pensions. Growth in payments to the truly poor, like unemployment benefits, has actually been quite restrained.

There is little doubt this context has played a role in the re-emergence of inequality as a unifying force on progressive politics. Solving inequality doesn’t just involve redistribution from the very top to the very bottom, it’s the insertion of government at every level to attempt to equalise outcomes for the lower middle class and the upper middle class.

This also explains where the increasing focus on outlandish policies such as a universal basic income or a maximum income comes from. In both cases marginal tax rates are raised to truly punitive levels, not because they will solve poverty (they won’t) but because dragging down the rich reduces inequality.

The average Australian just wants themselves, their kids, and their neighbours to get ahead. They don’t need government to stand behind them pushing, they just need it not to stand in front blocking the way.

Maybe it’s time to ask if our system is really about lifting people up or tearing them down.

Simon Cowan is research director at the Centre for Independent Studies