Tax gam­ble hits most work­ers


The mag­ni­tude of La­bor’s huge gam­ble on tax pol­icy is re­vealed by ta­bles re­leased yes­ter­day show­ing in 2024-25 all wage earn­ers on more than $39,105 are bet­ter off un­der the govern­ment than La­bor, with the govern­ment’s ben­e­fits ex­tend­ing across the low and mid­dle in­come range.

A sim­i­lar trend but not as pro­nounced is re­vealed in 2022-23 show­ing that wage earn­ers above $90,012 — about $79,000 in the cur­rent fi­nan­cial year — are bet­ter off un­der the Coali­tion than La­bor. This in­cludes much of the mid­dlein­come range.

The ta­bles re­leased by the Coali­tion yes­ter­day con­tra­dict claims that stage two and stage three of the Mor­ri­son govern­ment’s tax cuts do not as­sist mid­dle and low­in­come Aus­tralians.

In 2024-25, the gains un­der the Coali­tion com­pared with La­bor are sub­stan­tial. At $80,000 in­come, the tax gain un­der the govern­ment com­pared with La­bor is $875 yearly, at $100,000 it is $2125 yearly and at $140,000 it reaches $5705 yearly.

By op­pos­ing stage two and stage three of the govern­ment’s tax plan — and re­fus­ing to of­fer any com­pa­ra­ble La­bor re­form to the rate scale — La­bor is con­sign­ing mid­dle-in­come earn­ers to higher mar­ginal rates and higher taxes. This gives the Mor­ri­son govern­ment a po­tent elec­toral weapon.

La­bor’s gam­ble is that the pub­lic will ac­cept its claim that stage two and three are on the nev­ern­ever, two elec­tions away and should be dis­counted. Yet the en­tire util­ity of the govern­ment’s pack­age de­pends upon three stages that sees the av­er­age wage earner on a mar­ginal rate of 30c in the dol­lar.

Un­der La­bor in 2021-22, av­er­age full-time wage earn­ers move into the sec­ond-high­est bracket of 37 per cent.

La­bor’s claim that the bulk of the tax cut funds go to high in­come earn­ers is cor­rect — but this re­flects the pro­gres­sive na­ture of the sys­tem where high in­come earn­ers are pay­ing far more tax in the first place.

Un­der the govern­ment’s com­pleted pack­age, the bet­ter-off con­tinue to pay the over­whelm­ing bulk of tax­a­tion, with the top 1 per cent of tax­pay­ers pay­ing 17 per cent of to­tal tax and the top 20 per cent of tax­pay­ers pay­ing 60 per cent of to­tal tax. It is hard for La­bor to sus­tain its “never-never” ar­gu­ment when the stage two tax cuts in 2022-23 come at the end of the next par­lia­men­tary term. By any mea­sure, that is rel­e­vant. It is even harder for La­bor to sus­tain this ar­gu­ment when it is pledged to re­peal the stage two and stage three of the $144 bil­lion leg­is­lated tax cuts from the pre­vi­ous bud­get.

In the im­me­di­ate 2018-19 year un­der La­bor, work­ers earn­ing less than $48,000 will be bet­ter off than un­der the Coali­tion. La­bor es­ti­mates this at 3.6 mil­lion work­ers. The su­pe­rior La­bor ben­e­fit, for a worker on $40,000 a year, is about $70 a year or about $1.50 a week. In sum­mary, the thresh­old points in the ta­ble re­leased by the govern­ment yes­ter­day are: in 2022-23 an in­come of $90,012 above which peo­ple are bet­ter off un­der the Coali­tion and in 2024-25 an in­come of $39,105 above which peo­ple are bet­ter off un­der the Coali­tion.

The govern­ment ta­bles high­light the ex­tent to which La­bor is pre­pared to back its strategy that the pub­lic wants more funds spent on ser­vices, no­tably health and ed­u­ca­tion, as op­posed to tax cuts.

The ex­tent to which it is pre­pared to ex­pose it­self on the tax cut front is sub­stan­tial.

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