Here we go again -- the 'middle class welfare' pink flag is raised to justify cutting payments
which essentially go to women, ignoring the huge tax expenditures, which one could reasonably accurately describe as upper class male welfare. One of my current tasks is writing the Women's Electoral Lobby submission to the Henry Tax Inquiry and the gendered nature of this debate is very clear. There are more female voters than male and cutting our payments while leaving male ones is not a good look!
The assumptions are that payments through the transfer system are welfare and should go to the less well off but tax rebates/deductions are entitlements that legitimately go to high income earners. Yet $5000 in tax saved on salary sacrificing to super costs the government exactly the same loss in revenue as $5000 in the baby bonus.
Super tax concessions on contributions, earnings and payments cost $26B in lost income. Most of this benefit goes to higher income groups (37% to the top 5% of earners). An Australia Institute paper on tax expenditures points out an earner on $300,000 pa with $1 in his super fund gets $37,000 in tax relief! This is three times the Age pension! And someone can retire on a super income of $500,000 and pay no tax! The bulk of such benefits go to high income men, so maybe it is not surprising that these items were not included in the Henry review.
The Baby Bonus, in contrast, costs only $1.4 B and provides income for women at a high cost time. It was offered as a badly designed sop to women when Howard refused to introduce paid maternity leave. Means testing it further just makes it worse. It should be replaced by a taxable parental leave entitlement and a payment for those not in paid work!
Attacking Family Tax Benefits as middle class welfare fails to recognise that child bearing costs women a lot of earned income. New figures by the AMP and NATSEM show that mothers with a bachelor degree earn about 60% of what similar fathers earn. Cutting payments discourages mothers taking up paid work as it increases the effective tax on their earnings.
The hue and cry of middle class welfare is a populist political stunt that interferes with good policy making. For instance, a universal aged pension with no super concessions would be more equitable and cost less than the current concessions.
Savings would leave enough over to pay extra money for the many single older people who couldn't save, who are, not surprisingly, mainly female. Yet universal payments are seen as middle class welfare!
The government could also look at other aspects of the hidden welfare of tax expenditures that includes concessions on capital gains and areas of possible tax such as wealth taxes rather than picking on payments that go mainly to women.
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