Bracket Creep Explained: The hidden tax cutting into your earnings.
Bracket creep chips away at living standards, especially those of younger generations. Australia’s younger workers have the most to lose from bracket creep because bracket creep is regressive and hits harder for those earlier in their careers and making less money. Young people feel the loss of income from a tax increase more acutely than those later in their careers with higher incomes and more wealth. For those who are on lower incomes, even a small increase in nominal income leads to a larger increase in their overall tax rate. Young people have less bargaining power and may struggle to convince their employers to make cost-of-living adjustments to their earnings, let alone the pay rise needed to compensate for both inflation and a higher tax rate due to bracket creep. Periodic tax cuts only help temporarily; they barely scratch the surface in offsetting bracket creep’s insidious impact. To genuinely tackle this issue, Australia needs a long-term solution that does not depend on the whims of politicians. Do you really want to rely on politicians to protect you from tax hikes you didn’t vote for?