{"id":101118,"date":"2025-02-06T13:15:00","date_gmt":"2025-02-06T02:15:00","guid":{"rendered":"https:\/\/en.econostrum.info\/au\/?p=101118"},"modified":"2025-02-06T13:11:08","modified_gmt":"2025-02-06T02:11:08","slug":"new-tax-cut-proposal-could-save-australian-couples-thousands","status":"publish","type":"post","link":"https:\/\/en.econostrum.info\/au\/new-tax-cut-proposal-could-save-australian-couples-thousands\/","title":{"rendered":"New Tax Cut Proposal Could Save Australian Couples Thousands"},"content":{"rendered":"\n<p>A new <strong>proposed tax cut<\/strong> could provide a financial boost for certain <strong>Australian couples<\/strong>, but experts argue it might further complicate an already struggling <strong>taxation system<\/strong>. The proposal, put forward by <strong>Pauline Hanson\u2019s One Nation<\/strong>, suggests that couples with children should be able to <strong>split their income evenly<\/strong> across their tax returns, potentially reducing their total tax bill.<\/p>\n\n\n\n<p>Supporters see it as a <strong>win for families<\/strong>, but critics warn it disproportionately benefits <strong>high-income earners<\/strong> and could discourage workforce participation, particularly among women. With<a href=\"https:\/\/en.econostrum.info\/au\/ato-targets-capitalisation-trust-reviews\/\" target=\"_blank\" rel=\"noreferrer noopener\"> Australia\u2019s tax system<\/a> long overdue for an overhaul, is this policy a step forward or a <strong>dangerous distraction<\/strong>?<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How the Proposed Tax Cut Works<\/h2>\n\n\n\n<p>Under One Nation\u2019s plan, a couple could <strong>split their total income<\/strong>, which would allow more of it to be taxed at lower rates. <strong>Jennifer Game<\/strong>, a One Nation candidate, claimed that a couple earning <strong>$120,000 and $30,000<\/strong> respectively would save <strong>$2,022<\/strong> by shifting to an even <strong>$75,000 each<\/strong>.<\/p>\n\n\n\n<p>In reality, due to changes in the <strong>2023-24 tax brackets<\/strong>, the <strong>actual savings<\/strong> would be closer to <strong>$2,100<\/strong>. While that may sound like a good deal for affected couples, the broader implications of such a policy raise red flags among economists.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Who Really Benefits?<\/h2>\n\n\n\n<p><strong>Greg Jericho<\/strong>, chief economist at the <strong>Australia Institute<\/strong>, isn\u2019t convinced. \u201cI don&#8217;t think it has merit at all,\u201d he told <strong>9News<\/strong>.<\/p>\n\n\n\n<p>\u201cThe main problem is it really just benefits <strong>high-income earners<\/strong>, and it also acts as a disincentive for mostly <strong>women<\/strong> to enter the workforce.\u201d<\/p>\n\n\n\n<p>His concern isn\u2019t new. <strong>Income splitting<\/strong> has been debated for years, often criticized for favoring <strong>single-income families<\/strong> while doing little to support <strong>dual-income households<\/strong> or lower earners. In short, it\u2019s a <strong>tax cut that works best for those already doing well<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Australia\u2019s Tax System: Broken for over a Decade<\/h2>\n\n\n\n<p>Australia\u2019s <strong>taxation system<\/strong> has been in <strong>urgent need of reform<\/strong> for over <strong>15 years<\/strong>. In 2009, former Treasury secretary <strong>Dr Ken Henry<\/strong> released a <strong>comprehensive tax review<\/strong>, proposing <strong>138 recommendations<\/strong> for a modernized, fairer tax system.<\/p>\n\n\n\n<p>Almost none of them were implemented.<\/p>\n\n\n\n<p>&#8220;We&#8217;re in a worse position now than we were <strong>15 years ago<\/strong>,&#8221; Henry told the <strong>ABC<\/strong> last year, calling it an <strong>intergenerational tragedy<\/strong>.<\/p>\n\n\n\n<p>Rather than cutting taxes in a way that favors the wealthy, experts argue that a serious <strong>rethink of tax structures<\/strong> is needed\u2014one that ensures <strong>big corporations<\/strong> and <strong>high-income individuals<\/strong> pay their fair share.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The Real Tax Problem: Who Isn\u2019t Paying Enough?<\/h2>\n\n\n\n<p>Jericho argues that Australia\u2019s tax system relies too heavily on <strong><a href=\"https:\/\/en.econostrum.info\/au\/tax-move-save-3300-grow-superannuation\/\" target=\"_blank\" rel=\"noreferrer noopener\">personal income tax<\/a><\/strong>, while businesses and the ultra-rich enjoy <strong>loopholes and exemptions<\/strong>. He points to areas like:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Superannuation tax concessions<\/strong><\/li>\n\n\n\n<li><strong>Capital gains tax discounts<\/strong><\/li>\n\n\n\n<li><strong>Fuel tax credits<\/strong><\/li>\n\n\n\n<li><strong>Private trust loopholes<\/strong><\/li>\n\n\n\n<li><strong>Luxury car tax exemptions for utes<\/strong><\/li>\n<\/ul>\n\n\n\n<p>Then there\u2019s the <strong>petroleum resources rent tax (PRRT)<\/strong>, which Jericho calls <strong>\u201ca joke\u201d<\/strong> due to the <strong>loopholes<\/strong> allowing <strong>massive gas and mining companies<\/strong> to avoid paying their fair share.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Is Australia Really Overtaxed?<\/h2>\n\n\n\n<p>Despite popular belief, Australia is <strong>not a high-tax nation<\/strong>. A <strong>2024 report<\/strong> shows Australia\u2019s <strong>tax-to-GDP ratio<\/strong> is <strong>29.4%<\/strong>, far below countries like:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Denmark (43.4%)<\/strong><\/li>\n\n\n\n<li><strong>Finland (42.4%)<\/strong><\/li>\n\n\n\n<li><strong>Norway (41.4%)<\/strong><\/li>\n\n\n\n<li><strong>Luxembourg (40.9%)<\/strong><\/li>\n<\/ul>\n\n\n\n<p>Even compared to the <strong>OECD average of 33.9%<\/strong>, Australia lags behind. Jericho argues that if Australia simply taxed at the <strong>OECD average<\/strong>, the government could <strong>raise an extra $135 billion a year<\/strong>\u2014money that could be used to <strong>reduce poverty, improve healthcare<\/strong>, and <strong>boost public services<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Will Meaningful Reform Ever Happen?<\/h2>\n\n\n\n<p>Tax reform in Australia has been <strong>politically toxic<\/strong>, with successive governments avoiding serious changes. However, last year\u2019s <strong>revamped Stage 3 tax cuts<\/strong> proved that political courage <strong>can<\/strong> win public support.<\/p>\n\n\n\n<p>&#8220;If the government was to say, \u2018We\u2019re reducing tax loopholes for the richest 10% to fund <strong>dental care in Medicare<\/strong>,\u2019 that\u2019s a political winner,\u201d Jericho said.<\/p>\n\n\n\n<p>But for now, <strong>major reform remains a distant dream<\/strong>. Instead of addressing <strong>systemic problems<\/strong>, new tax cuts like <strong>One Nation\u2019s proposal<\/strong> risk making <strong>inequality worse<\/strong>, rather than fixing the system for all Australians.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A new tax cut proposal promises to put more money in the pockets of Australian couples\u2014but not everyone is celebrating. Critics warn it could worsen inequality and discourage workforce participation. <\/p>\n","protected":false},"author":5,"featured_media":101123,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[29],"tags":[],"class_list":["post-101118","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-taxation","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33","no-featured-image-padding"],"_links":{"self":[{"href":"https:\/\/en.econostrum.info\/au\/wp-json\/wp\/v2\/posts\/101118","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/en.econostrum.info\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/en.econostrum.info\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/en.econostrum.info\/au\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/en.econostrum.info\/au\/wp-json\/wp\/v2\/comments?post=101118"}],"version-history":[{"count":5,"href":"https:\/\/en.econostrum.info\/au\/wp-json\/wp\/v2\/posts\/101118\/revisions"}],"predecessor-version":[{"id":101124,"href":"https:\/\/en.econostrum.info\/au\/wp-json\/wp\/v2\/posts\/101118\/revisions\/101124"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/en.econostrum.info\/au\/wp-json\/wp\/v2\/media\/101123"}],"wp:attachment":[{"href":"https:\/\/en.econostrum.info\/au\/wp-json\/wp\/v2\/media?parent=101118"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/en.econostrum.info\/au\/wp-json\/wp\/v2\/categories?post=101118"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/en.econostrum.info\/au\/wp-json\/wp\/v2\/tags?post=101118"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}