– eg, family tax benefits; baby bonus; child care concessions
– see also Assets; Estates; Personal income; Land

Rising Inequality: An Australian Reality

ACTU, September 2017

This report shows  Australia is at risk of becoming an Americanised society of working poor if people are not given a pay rise. 

Rising inequality is forcing working people into poverty, with the number of workers who are now on minimum or award wages rocketing a staggering eight per cent in six years to 2016. 

The ACTU has produced this report because, while the Turnbull Government continues to throw its support behind the big corporations and a group of small elites, Australian workers and families are struggling to pay the bills. 

And while many Australians are struggling to pay the bills, the Turnbull Government is attacking the very people who could help them get a pay rise – unions. 

Unions have been on the frontline of collective change for more than a century and it is only through our work that working people see positive adjustments to their pay and conditions. 

If the Government continues to try to destroy unions, and with them working people’s rights at work Australia will be a fully Americanised society of high inequality and dead end jobs, with long working hours, no holidays, zero job security and poverty pay levels. 


The impact of tax and benefit systems on the workforce participation  incentives of women

Alastair Thomas and Pierce O’Reilly, OECD (December 2016). This paper examines the impact of tax and benefit systems on the incentives for second earners to enter formal employment. The paper highlights how various tax design features create greater participation disincentives for second earners than for primary earners or single individuals. As second earners in OECD countries are more often women, these greater disincentives create significant gender-equity concerns. As second earners are also typically highly responsive to work disincentives, these features are likely to negatively impact economic growth. These disincentives stem from a range of policies including the choice of family-based rather than individual-based taxation, the use of dependent spouse tax credits and allowances, and the use of tax credits and benefits based on family rather than individual income. Reform options to address these issues will depend on countries’ existing tax policy design choices. For countries where individual-based taxation is combined with some family-based provisions, reform of these family-based provisions to lessen their impact on second earner work disincentives may be warranted. For countries with family-based tax systems, the introduction of some individual-based provisions could be considered to mitigate the negative effects of family-based taxation on second earner work incentives.

Gender equity in the tax transfer system for fiscal sustainability

Patricia Apps, Tax and Transfer Policy Institute (August 2016). In the 1980s the Australian Personal Income Tax was highly progressive and family payments were universal. The system ranked well in terms of gender equity and female labour supply incentives. During the Howard years the progressivity of the rate scale declined dramatically despite rising inequality in wages, income and wealth, and the individual as the unit of taxation for families was replaced by a system of “quasi-joint” taxation. As a result many partnered mothers as second earners now face effective marginal tax rates that are well above the top rate on personal income. At the same time, many face high child care costs in a largely privatised system. In addition, women, typically on lower pay, cannot gain equally from tax advantaged superannuation. This paper presents an analysis that highlights the counterproductive effects of the gender discrimination in these policies on female labour supply, household saving and the tax base, and argues for policies that promote gender equity for fiscal sustainability in an economy undergoing the far-reaching effects of demographic change.

Increasing family complexity and volatility: the difficulty in determining child tax benefits

Sara Edelstein, Elaine Maag and Elizabeth Peters, Urban Brookings Tax Policy Center (March 2016). The American family is changing. Individuals marry later, divorce more frequently, or live together without being married. Non-marital births, complex custody arrangements, and multiple generations of families living together are more common, but the tax system has not kept pace. Although tax benefits are an important pillar of support for children, understanding who in a complex family should claim them can be difficult. This paper documents demographic trends and explains their importance with respect to tax filing and eligibility for child related benefits such as the earned income tax credit, child tax credit, dependent exemption and others.

The EITC and CTC Greatly Reduce Poverty; Congress must act to strengthen these programs

Citizens for Tax Justice (September 2015). In the US, two of the most significant programs helping families living in poverty are provided through the tax code – the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). Together, these two tax credits (excluding the non-refundable part of the CTC) lifted 9.8 million people out of poverty, including 5.2 million children, in 2014.

Proposed Expansion of EITC to Childless Workers Would Benefit 10.6 Million Individuals and Families

Citizens for Tax Justice (March 2015). On March 4, 2015, Senate and House Democrats proposed the “Working Families Tax Relief Act of 2015,” a bill that would improve the Earned Income Tax Credit (EITC) for childless workers. The bill would provide an average annual tax benefit of $604 to 10.6 million low-income working individuals and couples across the United States through boosting the maximum credit and expanding eligibility to more childless workers.

Making the EITC and CTC Expansions Permanent Would Benefit 13 Million Working Families

Citizens for Tax Justice (February 2015). One of the most effective ways in which the American Recovery and Reinvestment Act (ARRA) helped increase economic opportunity was through expansions of the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). The temporary improvements to the credits have helped working families get ahead at a time of growing income inequality. Without congressional action, however, the credits’ expansion will expire at the end of 2017.

Living standards, poverty and inequality in the UK: 2012
Jonathan Cribb, Robert Joyce and David Phillips, The Institute for Fiscal Studies

How have household incomes evolved since the onset of the financial crisis? What is the gap between rich and poor? Who was hit hardest by the recession? How many people are there in poverty? Which groups are most likely to face poverty? These questions are fundamental to understanding the living standards available to individuals across the UK.

How marginal tax rates affect families at various levels of poverty
Elaine Maag, C. Eugene Steverle, et. al. (December 2012)

High marginal tax rates can make moving above poverty very difficult for low-income families. These high tax rates result from increasing direct taxes and decreasing transfer payments. This paper shows how sensitive marginal tax rates are to assumptions about state of residence, earning patterns, and program participation.

Tax Forum offers opportunity to restore balance and fairness to the welfare system
National Welfare Rights Network (2 October 2011)

The National Welfare Rights Network puts forward and proposes solutions to the issues regarding the welfare system it would like addressed at the National Tax Forum.

Equal Rights Alliance Statement of Reform Priorities
Marie Coleman and Ruth Medd (September 2011)

Equality Rights Alliance’s statement of taxation reform priorities in preparation to the Tax Forum 4-5 October 2011.

Taxation, Social Justice and Economic Development
Julian Disney, Director – Social Justice Project (3 April 2009)

Paper delievered at the Australian Council of Social Service (ACOSS) National Conference. Includes workers, families, housing, transport, savings.

Tax Cuts Favour the Rich
The Australia Institute (1 July 2009)

Media statement that discusses how the July 2009 tax cuts are highly skewed towards the rich.

Progressive Tax Reform: Reform of the Personal Income Tax System
Australian Council of Social Service (November 2009)

This report advocates strengthening the personal income tax system in order to achieve progressive tax reform. It covers topics such as personal income tax rates, consumption taxes, company income taxes, taxation and saving, taxation and the transfer system.

Back to Basics – Simplifying Australia’s Family Payments System to Tackle Child Poverty
ACOSS (August 2013).  New modelling unveiled by ACOSS that details a path for making Australia’s Family Tax Benefit system fairer, by better targeting payments to families that need support the most and simultaneously reducing poverty.