Tax cuts fail to return bracket creep
Whichever party prevails at the May election the vast majority of households will face higher inflation-adjusted income taxes, according to new economic modelling by Australian National University economist Ben Phillips.
Key Points
- Bracket creep will still outweigh tax cuts for most people
- A failure to reform the broader tax system has made governments too reliant on personal income tax
The federal election will be fought over $300 billion of proposed income tax cuts as the Coalition positions itself as the champion of lower taxes against a more re-distributive Labor.
But the reality is under both major parties Canberra will gobble up more of workers' income, extending the trend of the past decade as wage inflation pushes Australians into higher tax brackets despite little growth in real incomes.
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