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Trends in Effective Marginal Tax Rates in Australia from 1996–97 to 2006–07

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  • ANN HARDING
  • QUOC NGU VU
  • ALICIA PAYNE
  • RICHARD PERCIVAL

Abstract

This article reviews trends in effective marginal tax rates (EMTRs) from 1996–1997 to 2006–2007 for working‐age Australians. Although sweeping income tax cuts reduced effective tax rates for many taxpayers, the extension of income‐tested welfare payments and tax concessions worked in the opposite direction. The proportion of working‐age Australians facing EMTRs of more than 50 per cent increased during the period, from 4.8 to 7.1 per cent, representing some 910,000 Australians. This article also provides the first international comparisons of how the distribution of EMTRs for earners in Australia compares with those prevailing in Europe.

Suggested Citation

  • Ann Harding & Quoc Ngu Vu & Alicia Payne & Richard Percival, 2009. "Trends in Effective Marginal Tax Rates in Australia from 1996–97 to 2006–07," The Economic Record, The Economic Society of Australia, vol. 85(271), pages 449-461, December.
    • Handle: RePEc:bla:ecorec:v:85:y:2009:i:271:p:449-461
    DOI: 10.1111/j.1475-4932.2009.00592.x
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    References listed on IDEAS

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    1. Guyonne Kalb & Thor O. Thoresen, 2007. "The Case for Labour Supply Incentives: A Comparison of Family Policies in Australia and Norway," Melbourne Institute Working Paper Series wp2007n27, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    2. Ingles, D, 1997. "Low Income Traps for Working Families," CEPR Discussion Papers 363, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    3. Ann Harding & Quoc Ngu Vu & Richard Percival & Gillian Beer, 2005. "Welfare-to-Work Reforms: Impact on Sole Parents," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 12(3), pages 195-210.
    4. Peter Whiteford, 2006. "The Welfare Expenditure Debate: ‘Economic Myths of the Left and the Right’ Revisited," The Economic and Labour Relations Review, , vol. 17(1), pages 35-77, September.
    5. Patricia Apps, 2006. "Family Taxation: An Unfair and Inefficient System," CEPR Discussion Papers 524, Centre for Economic Policy Research, Research School of Economics, Australian National University.
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    Cited by:

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    2. John Freebairn & Diana Warren, 2010. "Policy Forum: Saving for Retirement: Retirement Incomes and Employment Decisions of the Mature Aged," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(3), pages 312-320, September.
    3. Ann Harding & Robert Tanton, 2014. "Policy and people at the small-area level: using micro-simulation to create synthetic spatial data," Chapters, in: Robert Stimson (ed.), Handbook of Research Methods and Applications in Spatially Integrated Social Science, chapter 25, pages 560-586, Edward Elgar Publishing.
    4. Nicolas Herault & Francisco Azpitarte, 2014. "Recent Trends in Income Redistribution in Australia: Can Changes in the Tax-Transfer System Account for the Decline in Redistribution?," Melbourne Institute Working Paper Series wp2014n02, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    5. Peter Whiteford, 2010. "The Australian Tax‐Transfer System: Architecture and Outcomes," The Economic Record, The Economic Society of Australia, vol. 86(275), pages 528-544, December.
    6. Jinjing Li & Hai Anh La & Denisa M. Sologon, 2021. "Policy, Demography, and Market Income Volatility: What Shaped Income Distribution and Inequality in Australia Between 2002 and 2016?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(1), pages 196-221, March.

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