TAX REFORM: A DIFFERENT VIEW

The mainstream view of tax reformers in Australia is that dropping our top personal tax rate closer to our corporate rate is the best way to use persistent budget surpluses in order to promote national prosperity. Yet the international evidence suggests that dropping our corporate rate would be more effective in lifting output and wages. Prominent tax reformers have tended to go along with recent measures that will shield the elderly from most direct taxation. Further down the track, however, questions will arise about whether the young are bearing an inordinate share of the tax burden.