Australian Economic Review, Vol. 43, No. 2, pp. 1-25, 2010
36 Pages Posted: 8 May 2010 Last revised: 23 Oct 2010
Date Written: May 5, 2010
Over recent decades Australia's highly progressive, individual based taxation of families has been replaced by a system that tends towards joint taxation with an inverted U-shaped rate scale. The reform has been implemented by introducing family income targeted child payments (now Family Tax Benefit Part A) and by lowering tax rates on higher incomes. The new system has shifted the burden of taxation towards two-earner families on low and average wages and, in particular, to working married mothers as second earners. For reasons of fairness and efficiency, we propose returning to more progressive individual taxation and universal family payments, and the elimination of tax instruments that create complexity in order to reduce transparency.
Keywords: Income taxation, Family benefits, Time allocation, Labour supply, Household production, Discrimination
JEL Classification: D91, H24, H31, I38, J16, J22, K10, K30, K34
Suggested Citation: Suggested Citation
Apps, Patricia F. and Rees, Ray, Australian Family Tax Reform and the Targeting Fallacy (May 5, 2010). Australian Economic Review, Vol. 43, No. 2, pp. 1-25, 2010; Sydney Law School Research Paper No. 10/44. Available at SSRN: https://ssrn.com/abstract=1601088