The key problems in personal income tax are excessive marginal rates and an increasing overall average tax rate as bracket creep goes unchecked. Political objectives aside, there is a sound economic case for tax cuts. The government should give priority to instituting a system of automatic annual indexation of bracket thresholds to average wages and to cutting marginal rates. Going further, more ambitious reform options should be considered, such as abolishing the tax-free threshold in order to cut marginal rates; curbing deductions; and removing distortions in taxation of personal saving. Large income tax cuts are very costly to revenue and the scope is limited over the next few years by the pressing need to bring the budget back into balance and in the longer term by upward pressure on public spending. This constraint reflects the failure of successive governments to wind back expenditure from bloated levels. A more disciplined approach to public spending provides the key to larger medium-term income tax cuts. Until that happens, personal income tax relief is likely to be modest and do no more than check the rising trend in the average tax rate.
Cutting income tax: can we add the bacon to the hamburger and milkshake tax cuts?
15 April 2018 | PP1
05 March 2019 | PP18
Australia’s capital gains tax (CGT) policy has been largely settled for almost 20 years. However, it has come under renewed scrutiny as a result of the Australian Labor Party’s federal election platform proposal to halve the 50% CGT discount and thereby effectively increase the tax by 50%. If the objective of reforming the CGT is to do no more than…READ MORE
19 February 2019 | PP17
The question, whether our civilisation has a future, will sound preposterous to many. Has Western civilisation not overcome many a crisis in its thousand-year history? Has it not — in its modern incarnation of individual freedom, the capitalist market economy and democratic control of government predation — flourished since 1945? Has the West not reached unheard-of levels of longevity, material…READ MORE
12 February 2019 | PP16
Under Australia’s dividend imputation system of taxation, since 2000 taxpayers whose franking credits exceed their tax liability have been paid a cash refund of the excess. The Labor opposition’s policy is to continue with the imputation system but to abolish cash refunds of excess franking credits, subject to a carve-out for some age pensioners. This has aroused a storm of…READ MORE
07 February 2019 | PP15
Reading Recovery is an early intervention program for students in Year 1 who are having difficulty learning to read. It is widely used in Australia, the USA, Canada, England, Ireland, France and Denmark. It is endorsed by many leading educators and teacher professional organisations. Yet numerous studies of Reading Recovery have provided no sound evidence that it has sustained positive…READ MORE
06 February 2019 | PP14
Socialism brings poverty and oppression. The ignorance of so many as to why only a market economy is capable of bringing prosperity and political freedom is a major problem. Too many believe a socialist utopia can be achieved if only the right people took the right actions. In reality, a socialist economy can never provide prosperity and never has. The…READ MORE