One basic maxim of tax policy is “tax luck but don’t tax hard work”. Another is “broad bases, low rates”. And yet we don’t. With that introduction the Director of the Tax and Transfer Institute (Crawford School, ANU) Robert Braunig, introduces a smorgasbord of the Institute’s latest offerings.
See below for further details.
One of the frustrating things about spending a lot of time thinking about tax policy in Australia is how we seem to perversely insist on doing the exact opposite of what well-established public finance theory would suggest.
One basic tax maxim is, “tax luck but don’t tax hard work”. The reason is obvious…taxing hard work produces a negative behavioural effect. Taxing luck produces no behavioural effect. Yet we insist on high tax rates on income derived from work (whether personal or corporate) and we don’t tax land at all. So individuals who have amassed millions of dollars of wealth in housing simply through the luck of the draw (or even worse, because of government infrastructure that simply benefited them at the expense of others) get off without paying tax. This is unfair, inefficient and makes no sense.
Another maxim is, “broad bases, low rates”. Yet, Australia’s approach is to have narrow bases, high rates and dizzying complexity, which creates opportunities for individuals and companies to narrow the base even further. The top three per cent of taxpayers pay over 30 per cent of all personal tax and 10 companies pay 25 per cent of all company tax. Both of these tax bases have gotten narrower over time and we increasingly rely on a smaller and smaller number of individuals and companies to pay more and more tax. Again, this is patently unfair and it threatens the sustainability of our system.
Let’s fix things.
There are a variety of media articles and podcasts available on our website.
We have four new Tax Facts available to download.
- Tax Fact #19: What is a progressive tax?
- Tax Fact #20: What is a progressive tax and transfer system?
- Tax Fact #21: Dimensions of tax fairness
- Tax Fact #22: Principles of international tax
Dr Alfred Tran and Wanmeng Xu will present a seminar on Friday 6 August 2021, A study of profit shifting using the Hines and Rice approach. More details and event registration is available on our website.
On Friday 9 July 2021, Paul Tilley held a seminar at Crawford School, 2000: A new tax system. The event was audio recorded and is available on our webpage under the ‘downloads’ tab.
There are three new working papers in our TTPI series.
- Paul Tilley: 2000: A new tax system
- Thomas Abhayaratna, Shane Johnson, Andrew Carter: The ATO Longitudinal Information Files (ALife): Individuals – A new dataset for public policy research
- Alfred Tran, Wanmeng Xu: A study of profit shifting using the Hines and Rice approach
On Austaxpolicy blog, we continue to present a variety of outstanding articles.
- Carina Neisser: What do we know about taxpayer responses to tax changes?
- Kay Cook: Poverty by design: How single mothers’ benefits are reduced without them knowing
- Miranda Stewart: Accounting for care: The intergenerational report fails to value parenting
The 2021 Intergenerational Report (IGR) looks forward 40 years to project future trends in Australian economic and fiscal sustainability.
…by ignoring why women are having fewer babies and failing to count the cost of care, the IGR only tells us half the story about future economic and fiscal risks.
In measuring economic growth, the IGR is blind to goods and services delivered within families, or households. …
Robert Breunig – Director
Tax and Transfer Policy Institute – Crawford School of Public Policy
Australian National University