Effective Marginal Tax Rates in Australia

H. F. Campbell and K. A. Bond
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H. F. Campbell: University of Queensland
K. A. Bond: Cambridge University

Economic Analysis and Policy, 1997, vol. 27, issue 2, 151-158

Abstract: The households included in the l988-89 ABS Household Expenditure Survey were grouped according to size, degree of labour force participation, and weekly household private income. Households at similar levels of income were then compared to determine the effect on disposable income of a small increase in labour market earnings, resulting in higher taxes paid and lower benefits received. A wide range of direct and indirect taxes and direct and indirect benefits was included in the calculation. Effective marginal tax rates were calculated as the ratio of increased taxes plus reduced benefits to the postulated increase in earnings. Effective marginal tax rates were found to be generally higher for households in the bottom half of the household disposable income distribution than in the top half.

Keywords: Tax; Taxes (search for similar items in EconPapers)
JEL-codes: H24 (search for similar items in EconPapers)
Date: 1997
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