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Improving Work Incentives and Incomes for Parents: The National and Geographic Impact of Liberalising the Family Tax Benefit Income Test

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  • ANN HARDING
  • QUOC NGU VU
  • ROBERT TANTON
  • YOGI VIDYATTAMA

Abstract

The effective tax rates and possible work disincentives created by Australia's tax and welfare systems have been receiving extensive policy attention in recent years. Family Tax Benefit-Part A (FTB-A) is one of the key causes of high effective marginal tax rates for many families. This study uses national and spatial microsimulation models to evaluate the national and local impacts of a possible FTB-A reform option, which involves reducing the income test withdrawal rate associated with the FTB-A income test. The modelling suggests that the option would be an effective way to reduce high effective marginal tax rates for around 415,000 parents of FTB-A children, would benefit around 850,000 families, and would deliver additional assistance to middle income families living on the outskirts of our cities. Copyright © 2009 The Economic Society of Australia.

Suggested Citation

  • Ann Harding & Quoc Ngu Vu & Robert Tanton & Yogi Vidyattama, 2009. "Improving Work Incentives and Incomes for Parents: The National and Geographic Impact of Liberalising the Family Tax Benefit Income Test," The Economic Record, The Economic Society of Australia, vol. 85(s1), pages 48-58, September.
    • Handle: RePEc:bla:ecorec:v:85:y:2009:i:s1:p:s48-s58
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    Cited by:

    1. Yogi Vidyattama & Riyana Miranti & Justine McNamara & Robert Tanton & Ann Harding, 2013. "The Challenges of Combining Two Databases in Small-Area Estimation: An Example Using Spatial Microsimulation of Child Poverty," Environment and Planning A, , vol. 45(2), pages 344-361, February.
    2. Karyn Morrissey & Cathal O'Donoghue, 2011. "The Spatial Distribution of Labour Force Participation and Market Earnings at the Sub-National Level in Ireland," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 3(1), pages 80-101, July.
    3. 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.
    4. Yogi Vidyattama & Maheshwar Rao & Itismita Mohanty & Robert Tanton, 2014. "Modelling the impact of declining Australian terms of trade on the spatial distribution of income," International Journal of Microsimulation, International Microsimulation Association, vol. 7(1), pages 100-126.
    5. Robert Tanton, 2018. "Spatial Microsimulation: Developments and Potential Future Directions," International Journal of Microsimulation, International Microsimulation Association, vol. 11(1), pages 143-161.
    6. Robert Tanton & Yogi Vidyattama & Justine McNamara & Quoc Ngu Vu & Ann Harding, 2009. "Old, Single and Poor: Using Microsimulation and Microdata to Analyse Poverty and the Impact of Policy Change among Older Australians," Economic Papers, The Economic Society of Australia, vol. 28(2), pages 102-120, June.
    7. Rachel Ong & Gavin Wood & Melek Cigdem, 2013. "Work incentives and decisions to remain in paid work in Australia," Bankwest Curtin Economics Centre Working Paper series WP1312, Bankwest Curtin Economics Centre (BCEC), Curtin Business School.
    8. 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.
    9. Cathal O'Donoghue & Karyn Morrissey & John Lennon, 2014. "Spatial Microsimulation Modelling: a Review of Applications and Methodological Choices," International Journal of Microsimulation, International Microsimulation Association, vol. 7(1), pages 26-75.
    10. Robert Tanton, 2014. "A Review of Spatial Microsimulation Methods," International Journal of Microsimulation, International Microsimulation Association, vol. 7(1), pages 4-25.

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