Skip to main content
padlock icon - secure page this page is secure

Towards a Negative Income Tax System for Australia

Buy Article:

$52.00 + tax (Refund Policy)

The undue complexity of the Australian tax-transfer system is outlined as are the associated high effective marginal tax rates for many individuals and families. A negative income tax system is a possible solution to these problems.

The most radical version of negative income tax is a ‘basic income/flat tax’ system which combines universal tax credits (that vary according to presence of children, disability etc.) and a flat tax rate on private income. Using NATSEM’s microsimulation model STINMOD it is found that to ensure that no current social security beneficiaries become worse off under such a system would either be very expensive to introduce or require a tax rate that is likely to be unacceptably high. Less radical versions of negative income tax are also costed, incorporating the possibility of varying tax rates, the tapering out of tax credits, and placing some restrictions on the granting of tax credits. This makes negative income tax look more feasible.

The analysis does not incorporate behavioural responses. Since the motivation for a negative income tax system is largely to achieve such responses (for example, labour supply responses), this feasibility analysis might have been unduly harsh. Research is required to incorporate behavioural responses into the analysis.
No References
No Citations
No Supplementary Data
No Article Media
No Metrics

Document Type: Original Article

Affiliations: 1: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, 2: National Centre for Social and Economic Modelling, University of Canberra

Publication date: September 1, 1998

  • Access Key
  • Free content
  • Partial Free content
  • New content
  • Open access content
  • Partial Open access content
  • Subscribed content
  • Partial Subscribed content
  • Free trial content
Cookie Policy
X
Cookie Policy
Ingenta Connect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more