The Contribution of Effective Marginal Tax Rates to Work Disincentives

Australian Tax Forum, Vol 22 No 3, pp 117-135, 2007

18 Pages Posted: 14 Dec 2020

See all articles by Brian Andrew

Brian Andrew

University of Wollongong - School of Accounting, Economics & Finance

Chris Evans

University of New South Wales

Binh Tran-Nam

University of New South Wales (UNSW) - School of Accounting, Auditing and Taxation

Date Written: November 9, 2020

Abstract

This paper examines the problems faced by low and middle income earners as,a result of high effective marginal tax rates ('EMTRs'). It is primarily concerned with the negative impact of these high EMTRs on workforce participation. The paper,explores some of the reasons for high EMTRs, caused by the poor meshing of the,tax and transfer systems, and the implications of those high EMTRs. It identifies the benefits that could be achieved through reform of the tax system, but recognises that the EMTR problem cannot be resolved without a more fundamental reform of both the,tax and the welfare systems. This need for fundamental reform is illustrated through the plight of the single parent forced into the workforce as a result of recent changes to social security arrangements. The paper finally identifies an alternative approach, extensively used in some provinces of Canada, that may represent a more positive,way forward

Keywords: Marginal tax rates, Work Discentives, tax system, EMTR, taxation

Suggested Citation

Andrew, Brian and Evans, Christopher Charles and Tran-Nam, Binh, The Contribution of Effective Marginal Tax Rates to Work Disincentives (November 9, 2020). Australian Tax Forum, Vol 22 No 3, pp 117-135, 2007, Available at SSRN: https://ssrn.com/abstract=3727261

Brian Andrew

University of Wollongong - School of Accounting, Economics & Finance ( email )

Northfields Avenue
Wollongong, NSW 2522
Australia

Christopher Charles Evans (Contact Author)

University of New South Wales ( email )

School of Taxation and Business Law
Australian School of Business, UNSW
Sydney, NSW 2052
Australia

Binh Tran-Nam

University of New South Wales (UNSW) - School of Accounting, Auditing and Taxation ( email )

School of Accounting, Auditing and Taxation
UNSW Sydney
Sydney, NSW 2052
Australia
61-2-9348 0049 (Phone)
61-2-9385 6926 (Fax)

HOME PAGE: http://www.asb.unsw.edu.au/schools/Pages/BinhTran-Nam.aspx

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