So I saw this tweet:
Analysis of Turnbull’s tax cuts shows for every $ that goes to women, $2 will go to men. (Not to mention less money to fund childcare and health services) It’s a sexist tax package.
— Sarah Hanson-Young💚 (@sarahinthesen8) June 6, 2018
But I couldn’t work out what the story was. Today it is being reported in the Australian.
At the request of Labor and the Greens, the independent Parliamentary Budget Office today published its analysis of Stage Three of the tax cut plan, which would see the 37 per cent income tax bracket abolished in favour of a 32.5 per cent rate for all incomes of between $41,000 and $200,000 from July 2024.
Labor treasury spokesman Chris Bowen highlighted the PBO’s finding that $30 billion of the $41.6bn of Stage Three tax cuts would flow to men, claiming men would benefit over women at a ratio of 3 to 1.
Okay – something to work with.
At present the 37 per cent tax bracket kicks in at incomes over $87,000. If and when that bracket is abolished that means that everyone on an income between $87,001 and $180,000 will retain more of their income by paying less tax. People earning over $180,000 will also benefit. As it turns out there are more men earning higher salaries than women. By definition more men than women will benefit. To demonstrate this point I have plotted cumulative numbers for men and women across taxable income using data from the ATO.
The crossover point is at $89,421 to $91,299 – more or less at the 37 per cent income level. It seems to me that this sort thing sums up the intellectual bankruptcy of the ALP/Greens case against tax cuts. As Scott Morrison explains:
“The tax system doesn’t discriminate by gender. It’s an absolutely ridiculous proposition.
“It looks at someone’s income, not their gender. That’s what it does, and the more women that we have get higher paid jobs, then the more they will benefit from that arrangement.
“You know, you don’t get pink forms and blue forms to fill out your tax return. That’s not how it works. They’re one colour, they assess one thing: what you earn, and you pay tax on what you earn.
Remember – taxation is theft and the government is an equal opportunity thief.
One of the mechanisms used to confuse the public on taxation matters is to highlight trivially true consequences of the underlying maths. This is one of those times.