![]() ![]() ![]() Compared to other high-income countries in the OECD, Australia’s income tax system is very progressive, yet the overall level of taxes paid by Australians - including high earners - is lower than in most. The more unequal a society, the more the rich should be expected to pay in taxes. I want to argue that the share of tax paid by the highest earners needs to be judged in relation to the share of total income they receive - not simply their proportion of the population. Each seems to have been influenced by the idea that wealthier Australians face an unusually large “tax burden.” Both involve a lighter tax bill for high earners - one more than the other - and one of them adds a cap on overall income tax collections. Both start with cuts for low- and middle-income earners next financial year, and both gradually extend the reductions to higher earners over the following decade. At the centre of this year’s federal budget and Labor’s response are competing plans for changing the income tax scale.
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