Peter Whiteford asks the question*
You say “On his watch tax rates for low-income earners will rise – effective marginal tax rates will also increase from next year.”
But no one will experience an increase in average income tax rates, and for low income earners they will fall. Marginal tax rates will rise for some low income earners, but they will fall for others, and stay the same for most people.
In case anyone has actually missed the facts. Here are the proposed tax scales.
If you look, very carefully, you’ll notice that the tax rates for low income earners rises from 15 percent to 19 percent and the 30 percent rate rises to 33 percent. Now that is consistent with my claim that tax rates for low-income earners will rise.
This doesn’t just help people moving from welfare to work.
It also helps women who work part-time as well.
Take a family where the kids are at primary school and mum is working part time earning, say, $16 000 a year. Currently she has no net tax liability. But she does have some tax withheld from her take home pay – and she can’t claim it back until after the end of the financial year. What’s more, if she gets an extra shift or takes on extra regular hours worth, say, an extra $4 000, that’ll lift her over the tax free threshold and cost her $600 a year in tax. Now, because of our tax cuts, she’ll pay no tax at all on that extra income and have very little tax withheld as well.
She’s among half a million people who go from having to pay tax to paying no tax – and of those, three hundred thousand are women. And while forty four per cent of taxpayers are women – sixty per cent of the people who get this tax cut are women.
This is a tax cut for working women.
A tax reform which rewards work.
It rewards work – as long as you don’t get a pay increase or aspire to get a pay increase.
* this is not an invitation to launch into Peter – but rather let’s concentrate on the actual issue – the carbon tax compensation policy creates disincentives through the interaction with the welfare system.