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Tax and social security reform: An analysis of equity and disincentive effects paper

Published on 01 Jan 87 by Australian Tax Research Foundation

This paper examines the equity and disincentive effects of changes to tax and social security which involve reducing the progressivity of marginal tax rates on income and switching to the combined income of couples as the basis for taxation and targeted transfers. The results suggest that tax-transfer schemes containing less progressive marginal rates and joint income targeted transfers would lead to much less progressive average tax rates and cause a substantial shift in the tax burden to working married women.

Similar findings are obtained for joint taxation and income splitting schemes of the kind proposed by the Federal Opposition. The analysis of disincentive effects indicates that the schemes would also be extremely costly in terms of losses in earnings and government revenue.

Author profile

Patricia APPS
Patricia Apps is Professor of Public Economics in the Faculty of Law, University of Sydney, Adjunct Professor in the Economics Program, Research School of Social Sciences, Australian National University, Canberra, Adjunct Professor at the University of Technology, Sydney, and a Research Fellow at IZA
Current at November 2013
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