By Stephen Long
The tax cuts announced by Treasurer Scott Morrison flow overwhelmingly to high-income earners, with 70 per cent of taxpayers gaining nothing from the shift in the point at which people begin paying 37 cents in the dollar tax.
The top 10 per cent of taxpayers will gain 75 per cent of the benefit of the moving of the cut-in point for the 37 cents tax bracket from $80,000 to $87,000, combined with the removal of the 2 per cent budget repair levy on those earning $180,000 a year or more.
All the benefits go to people in the top 30 per cent of income earners.
“Scott Morrison and Mathias Cormann might not be smoking cigars tonight like Joe Hockey did so ill-advisedly after his budget, but the top 1 per cent will be,” said Richard Dennis, chief economist at the Australia Institute, which describes itself as a progressive think tank.
Mr Morrison defended the tax changes against allegations they lacked fairness and equity because the benefits were skewed to those on higher incomes.
Speaking to journalists in the budget lock-up, Mr Morrison said lower income earners had already benefited from the retention of the carbon tax compensation scheme despite the repeal of the carbon tax, as well as the retention of a low-income superannuation tax offset, introduced by Labor, that the Government had previously sought to abolish.
“Twenty-five per cent of people on lower incomes are going to be better off when it comes to giving them their tax back, when it comes on what they’re paying tax on their superannuation,” he said.
“Now that’s an important change.”
The Treasurer argues the Government’s changes will “back in” average full-time wage earners and stop them moving into the second highest tax bracket.
“Those earning average wages — full-time or otherwise — should stay in the middle income tax bracket,” Mr Morrison said in his Budget speech.
According to Australian Bureau of Statistics estimates, average weekly earnings are less than $60,000, while the full-time average adult wage is just below $81,000.
However, less than 30 per cent of taxpayers earn above the “average”, which is skewed by the earnings of the high paid.
On the latest available figures, from May 2014, the median full-time wage was about $62,000 and the median wage overall was about $52,000.
This post originally appeared on ABC News.
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Top Comments
Someone on about $40K pays around $3500 in tax and is eligible for who knows what in benefits so actually pay no tax at all - but those on $180K pay well over $50K in tax and are eligible for nothing. So give me a break - there are those who work hard to get ahead and and at the same time contribute to the government coffers to carry those who seem to spend their lives complaining that they don't have enough.
Lot's of people work hard but don't get ahead in the real world. You should get to know some real people some time.
So you don't know what benefits they get, but you know it wipes out their tax bill?
As for the rich, they have access to all-manner of tax-reduction measures the poor really have no access to. The average person on $40K, for example, doesn't usually get to buy a second home and have the mortgage repayments subsidised by the taxpayer. And, last time I checked, even the rich are allowed to send their kids to public schools and drive on public roads and access the public health system.
What I find amusing is that Turnbull once said you shouldn't judge a person's worth or contribution by their pay packet. Of course, he wasn't formulating this budget when he said that.
Heaven forbid we provide incentive to do well in life. Oh no my little Pinkos, we should instead make it easy for those that don't make the effort to help themselves (while making the hard workers toil for no benefit).
How do you know who works hard and who doesn't? I know lot's of people on low incomes who work very hard thank you very much, I also know some well off people that sit around on their lazy a's all day. Don't judge a book by it's cover.
I know someone who just plays the "share market lottery" for a living. He wouldn't know hard work if it hit him with a shovel - but he's not short of a dollar, or a tax benefit.