Friday, March 29, 2024
HomeHealthCOVID-19Tax cuts good news for rich men

Tax cuts good news for rich men

The federal government is considering pulling forward $158 billion worth of personal income tax cuts – originally scheduled for mid-2022 and mid-2024 – to boost the country’s COVID-ravaged economy.

Cause for a celebration?

Yes – if you’re a man. A big yes. And especially if you are a male who earns a big salary.

Men stand to gain more than twice as much as women, according to new modelling released by The Australia Institute on Wednesday, despite women being the hardest hit by lost employment during the COVID-19 recession.

The institute based its research on the following:

  • Total employment in March and April fell 3.9 per cent for men and 5.3 per cent for women.
  • Hours worked by men fell 7.5 per cent, while hours worked by women fell 11.5 per cent.

 

If stage two of the tax cut is brought forward in the October Federal Budget, for every dollar of tax cut that women get, men will get $2.28, the research found.

If stage two and three of the tax cuts are brought forward, for every dollar of the tax cut that women get, men will get $2.19.

“Despite women facing a bigger impact from the COVID-19 recession, government stimulus has focused heavily on male-dominated industries such as construction,” said Matt Grudnoff, senior economist at the institute.

“Now, our research has shown that bringing forward these income tax cuts will mainly benefit high income earners who, in Australia, are overwhelmingly male.

“Giving tax cuts to the wealthy will have a very limited stimulatory effect on the broader economy, but it will significantly widen the economic divide that already exists between men and women in this country.

“Rather than spending billions of dollars bringing forward tax cuts that mainly go to men on high incomes, the government could better target that stimulus.”

Mr Grudnoff wants the government to consider investing in employment intensive industries such as healthcare, aged care and education. He says that would be more efficient than bringing forward the tax cuts by creating more jobs for every million dollars of stimulus.

“We haven’t valued those [caring] industries as highly as some others, despite how terribly important they are, which this pandemic has exposed,” he said. “And, typically, those jobs have lower incomes.”

He also pointed out that these industries employed large numbers of women while government stimulus measures have focused heavily on male-dominated industries such as construction.

Last week, The Australia Institute released modelling showing 91 per cent of the benefit from the 2022 tax cuts would go to the richest 20 per cent of Australians, with the bottom 50 per cent of earners receiving just 3 per cent of the benefit.

Under stage two of the legislated cuts, the 32.5 per cent tax bracket would see an increase in the lower threshold from $37,000 to $45,000, while the lower end of the 37 per cent tax bracket would rise from $90,000 to $120,000.

Stage three would ‘flatten’ the tax scales by abolishing the 37 per cent tax rate and lifting the upper threshold of the 32.5 per cent rate to $200,000.

Greens spokesperson for women Senator Larissa Waters said the institute’s modelling showed the government was “ignoring the structural inequalities facing women”.

“Tax cuts that deliver twice as much for men as women entrench the gender pay gap and won’t secure a fair and sustainable recovery,” she told The New Daily.

“Women have been on the front line of our coronavirus response as healthcare professionals, teachers, childcare teachers, disability carers and aged-care workers. This report confirms that these tax cuts won’t help those women.”

Senator Waters said the Morrison government’s attitude and ideas were mired in the 1950s. “Cutting taxes, digging holes and building roads are tired responses that don’t work as economic stimulus in 2020,” she said.

Would you welcome an early start to the legislated tax cuts? Do you believe the stimulus measures to date have largely benefitted men?

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Related articles:
https://www.yourlifechoices.com.au/finance/superannuation/longterm-outlook-for-super-earnings
https://www.yourlifechoices.com.au/finance/news/which-generation-has-it-worse
https://www.yourlifechoices.com.au/finance/banking-and-investment/bank-offers-nointerest-credit-card

Janelle Ward
Janelle Wardhttp://www.yourlifechoices.com.au/author/janellewa
Energetic and skilled editor and writer with expert knowledge of retirement, retirement income, superannuation and retirement planning.
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