Your shopping cart is empty

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
21,885 0.15    19%
37,000 2,872.00 27%
48,000 5,787.00 34%
66,666 12,133.45 32.5%
90,000 19,717.99 40%
126,000 34.117.00 37%
180,000   54,097.00   45%


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?


Media Release Search
Eg. TD 2005/D52 ALL words EXACT phrase WITHOUT words Date range
From To