Can we please stop talking about the budget’s tax cuts as applying to high and middle income earners? I know it’s hard for most of the (personally affluent) commentariat to grasp, but there’s barely anything here for middle income earners.
Here is the annual pre-tax income distribution for adults (aged 18-64 with positive incomes), and the corresponding tax cuts in the budget.
- Poorest 25%: $6,830 per year ($80 tax cut)
- Median: $29,890 per year ($312 tax cut)
- Richest 25%: $49,000 per year ($312 tax cut)
- Richest 10%: $70,000 per year ($1752 tax cut)
- Richest 5%: $90,000 per year ($2752 tax cut)
- Richest 1%: $162,000 per year ($4502 tax cut)
These income figures are from the 2003 HILDA survey, so you might want to add a couple of thousand to them, but the picture will be essentially unchanged today.* In sum, you need to go to the top 10% before you find individuals who are getting thousands rather than hundreds of dollars from this tax package, and into the top 1% before you find the folks who are getting nearly $5000.
I’m hoping that Natsem or the Melbourne Institute can work out what fraction of the tax cuts are going to the richest 10% and to the top 1%.
In case it’s of interest, this is the presentation I did on the budget this morning.
* They’re also based on individual incomes, and you could play around with the figures to work out the fraction of families in each group. However, this won’t produce a substantively different result.