Tax cuts proposed in Australia will benefit men on high income most
Men on high incomes would be the main beneficiaries if already legislated tax cuts are brought forward as flagged by the federal government, new modelling suggests. The study by the Australia Institute think tank found if the tax cuts scheduled from 2022/23 are introduced earlier, for every dollar of a tax cut that women would get, men would get $2.28. If at the same time tax cuts planned from 2024/25 are also brought forward, men would get $2.19 for every dollar a woman would get. Previous modelling by the institute showed higher earners would benefit more from these tax cuts, and are more likely to save the benefit than spend it.
Treasurer Josh Frydenberg has indicated these tax cuts could form part of his delayed 2020/21 budget, which will be handed down on October 6. There are several changes due in the 2022/23 tax cuts, including an increase in the threshold of the 32.5 cent bracket from $37,000 to $45,000 and the threshold of the 37 cent bracket from $90,000 to $120,000. In 2024/25, the tax cuts reduce the 32.5 cent rate to 30 cents.
The institute’s senior economist Matt Grudnoff said, Giving tax cuts to the wealthy will have a very limited stimulatory effect on the broader economy, but it will significantly widen the economic divide that already exists between men and women in this country. Despite women facing a bigger impact from the COVID-19 recession, government stimulus has focused heavily on male-dominated industries such as construction. Rather than spending billions of dollars bringing forward tax cuts that mainly go to men on high incomes, the government could better target that stimulus. Investing in employment-intensive industries like healthcare, aged care and education will be more efficient than bringing forward the tax cuts, and would create more jobs for every million dollars of stimulus. These industries also employ large numbers of Australian women who have been disproportionately affected by the COVID-19 recession.
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