Posted: September 24, 2006

The logic of Treasury

A recent report released by the Canberra University based research group NATSEM has revealed that increasing numbers of Australian workers are losing more than 50 per cent of any extra earnings they make due to the structure of our (high) taxation regime.

The Sydney Morning Herald reports (September 24, 2006) that the report "found that when seven per cent ... [some 900,000 of working-age] ... Australians earn extra income, they hand back more than half of it to the government ... around two-thirds of these people are couples with dependent children, while the rest are single parents, childless couples and single people."

This is the elaborate response of our Treasurer reported in the same article "Because more parents are receiving family allowances, you can say more parents are subject to the phase out, but if they weren't receiving it in the first place they wouldn't be receiving the phase out ... the only reason there are more people subject to the phase out is because more people are receiving it. That is more people have increased incomes and it shows the ability to pluck a dark cloud out of a silver lining really to say that just because more people are receiving more help more people are subject to the phase out as well."

So the tax revenue is high because it is high. More people are paying high marginal tax rates because more people are paying them. Unemployment is high because there are more people unemployed who cannot find work than in the full employment days. And so it goes. We might prefer an explanation.

Blog entry posted by bill