Personal Income Tax Reform in Australia: A Specific Proposal

Tran-Nam, Binh, Linh Vu and Brian Andrew
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Tran-Nam, Binh: Australian School of Taxation (Atax), University of New South Wales, Sydney Australia
Linh Vu: Australian School of Taxation (Atax), University of New South Wales, Sydney Australia
Brian Andrew: School of Law and Business, Charles Darwin University, Darwin Australia

Economic Analysis and Policy (EAP), 2007, vol. 37, issue 2, pages 163-186

Abstract: Australian personal income tax (PIT) currently faces major problems. Recent calls for PIT reform have been made from many quarters of Australian society. This paper reports on some early findings of an ARC Linkage project on PIT reform. In the first phase of this project, STINMOD, a microsimulation model, is used to construct and test a series of hypothetical PIT packages in order to establish which packages can best deliver the required policy outcomes. Under the principles of revenue-neutrality and incrementality, a preferred PIT package with a broader tax base and a flatter tax rate structure is derived. It is shown that this PIT proposal outperforms the current PIT with respect to all traditional criteria for good tax policy.

Keywords: Income Tax; Revenue; Tax (search for similar items in EconPapers)
JEL-codes: H24 K34 (search for similar items in EconPapers)
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