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Australian Family Tax Reform and the Targeting Fallacy

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  • Patricia Apps
  • Ray Rees

Abstract

Over recent decades, Australia's highly progressive, individual‐based taxation of families has been replaced by a system that tends towards joint taxation with an inverted U‐shaped rate scale. The reform has been implemented by introducing family‐income‐targeted child payments (now Family Tax Benefit Part A) and by lowering tax rates on higher incomes. The new system has shifted the burden of taxation to two‐earner families on low and average wages and, in particular, to working married mothers as second earners. For reasons of fairness and efficiency, we propose returning to more progressive individual taxation and universal family payments.

Suggested Citation

  • Patricia Apps & Ray Rees, 2010. "Australian Family Tax Reform and the Targeting Fallacy," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(2), pages 153-175, June.
    • Handle: RePEc:bla:ausecr:v:43:y:2010:i:2:p:153-175
    DOI: 10.1111/j.1467-8462.2010.00590.x
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    References listed on IDEAS

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    Cited by:

    1. Patricia Apps & Ngo Long & Ray Rees, 2014. "Optimal Piecewise Linear Income Taxation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(4), pages 523-545, August.
    2. Mari, Gabriele & Keizer, Renske, 2021. "Do high-income households 'label' family cash transfers? Evidence on family expenditures from Australia," SocArXiv ucyzb, Center for Open Science.
    3. Anna Kurowska & Michał Myck & Katharina Wrohlich, 2017. "Making work pay: increasing labour supply of secondary earners in low income families with children," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 11(2), June.
    4. Hayes, Phillip & Redmond, Gerry, 2014. "Could a universal family payment improve gender equity and reduce child poverty in Australia? A microsimulation analysis," EUROMOD Working Papers EM3/14, EUROMOD at the Institute for Social and Economic Research.

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