New Analysis: 95% of Stage 3 Tax Cuts go to high income earners
New Australia Institute analysis of stage three of the government’s income tax plan show high-income earners will get 95% of the benefit, while three-quarters of taxpayers get no benefit at all.
Today the Senate has rejected stage 3 of the government’s income tax plan, which removes the 37 per cent tax bracket completely, resulting in people earning $200,000 facing the same marginal tax rate as someone on $41,000. If passed, stage 3 is not due to come into effect until July 2024.
- New analysis shows 94.9% of the benefit of stage 3 income tax cuts go exclusively to top 20%, while 75% of taxpayers get no benefit at all.
- The top 10% of income earners receive 68.6% and the next 10% receive 26.2% of the benefit.
- The total cost of Stage 3 to the Budget when implemented in 2024-25 is $6.3 billion, and $42 billion over the first five years of implementation.
“There is no compelling case for stage 3 of the income tax plan to be passed,” said Matt Grudnoff, Senior Economist at The Australia Institute.
“The Senate has rightly chosen to reject stage 3 that goes to the very top-end of taxpayers. Stage 3 represents over $6 billion per year going to just the top 25% of taxpayers.
“The progressive nature of Australia’s income tax system has been an important feature for decades.
“Flattening income tax reduces the tax take from high income earners, which ultimately means either less government services or high taxes on middle and low income earners.”