12 Jul 2019 Rebates are distorting the tax system
MEMBER 173 writes:
The use of low-income rebates with various thresholds where they shade in and shade out is causing serious distortions to our so-called progressive tax system.
I have done some number crunching and here are the actual tax scales when the Low Income Tax Offset and the Low and Medium Income Tax Offsets are incorporated:
|Income||Base Tax||Marginal Rate|
Look at the people earning between $90,000 and $126,000. Their marginal rate is 40% plus 2% Medicare. That’s a real disincentive to most people who have to choose between working more or spending time with their families.
A good tax system should meet 5 basic conditions: fairness, adequacy, simplicity, transparency, and administrative ease. The actions of these rebates violate at least three of these conditions.
Has The Tax Institute ever brought this to the attention of the Government?