“More than 900,000 working age Australians will keep less than half of their next dollar of private income, a report shows, and more sole parents and women face higher effective marginal tax rates than they did a decade ago,” The Age reports today.

The Oz is blunter. “The number of people losing more than 50c of every extra dollar earned as a result of tax-take and benefit reductions has almost doubled in the past ten years, with middle-income families suffering the most,” Patricia Karvelas and David Uren write:

Ten years ago, the Government was clawing back more than 50% of every extra dollar earned from 4.8% of the population.

Despite a series of tax cuts and welfare measures designed to ease the transition from welfare to work, that has climbed to 7.1%, or 910,000 people.

Such punishing losses are twice as prevalent among middle-income earners, with almost one in every seven adult Australians earning between $40,000 and $75,000 losing more than half of extra income to the Government.

They’re talking about a report from the National Centre for Social and Economic Modelling that shows high effective marginal tax rates have hit the middle class as they have become eligible for means-tested family benefits.

There are other effects, too. NATSEM says the high effective marginal tax rates paid by almost 13 million Australians may be creating less incentive for women to return to work.

Crikey understand the bolshiness on the backbench over tax reform – not – hasn’t gone away.

The tax reform group recently held discussions with the Real Estate Institute of Australia over the thorny issues of capital gains tax treatment of properties and tax and housing affordability.

But that’s just one front – albeit a very electorally sensitive one the Government is facing political pressure on at the moment.

A job of work remains to be done – and neither the Prime Minister nor the wannabe is prepared to roll up his sleeves.

Peter Fray

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