Category: Articles

_{Published in The Spectator Online on 26 October 2022 under the title “Tax changes our behaviour“.}

Most people resent paying tax. Though it’s a sentiment just about everyone can relate to, the economic argument against tax does not stem from empathy for taxpayers, but rather from our understanding that tax often causes people to change their behaviour. For the worse.

The simple – and simplistic – view of tax is that it’s a transfer from taxpayers to the government, which then funds welfare, the military, corporate subsidies, and public service wages. This perspective boils the debate about tax down to one over the relative merits of letting taxpayers keep their wages versus letting politicians spend more on government programs. The focus is on redistribution.

_{Published in The Spectator Online on 19 September 2022 under the title “The most important reform in 20 years“.}

Stage three income tax cuts represent Australia’s most important piece of microeconomic reform in 20 years. From 2024, the marginal tax rate will shrink from 32.5 per cent and 37 per cent down to 30 per cent for most taxpayers, creating a simpler, more efficient tax system that will help boost productivity and promote long-term wage growth.

The Liberals should be applauded for introducing this tax reform and Labor should be applauded for promising to keep it. Unfortunately, there is now a concerted campaign to pressure Labor into backtracking on this promise. This campaign is coming from left-wing media, Greens, and Teals, the union movement, welfare groups, and rogue Liberal [sic] backbencher Russell Broadbent.

_{Published in The Canberra Times on 27 October 2019 under the title “Truth is, not all tax cuts are created equal”. Written in my capacity as Research Associate at the Centre for Independent Studies.}

TREASURY’S flawed tax model has caused the government to underestimate the benefits and overestimate the budget cost of their long-term tax reforms. This has influenced the government to pursue the wrong tax policy and delay a lever that could give productivity a much-needed boost.Their static tax model – which assumes people don’t change their behaviour at all in response to cuts – has led to the government’s structural reforms being estimated to cost $90 billion more than they actually will, and to be scheduled much later than they should be.

In reality, people respond to different tax rates in a number of ways. They may decrease their amount of saving and/or investment, shy away from new ventures, change how much they work, pursue tax minimisation schemes – or even be tempted into tax evasion.

_{Published in The Australian on 25 October 2019 under the title “Canberra needs to discover ‘secret’ tax cuts bonus”. Written in my capacity as Research Associate at the Centre for Independent Studies.}

Australia’s tax debate needs a reset. The government’s recent tax reform is to be commended but it was based on flawed Treasury modelling that ignored productivity and over-estimated the budget cost of tax cuts by $90bn.

The debate about tax in Australia is often framed as a contest between tax cutters and big spenders. The tax cutters argue that workers should be able to keep more of their own income and that tax cuts provide important stimulus. Their opponents insist that we need more government spending instead of tax cuts and that spending also provides important stimulus. Both sides frame their argument through the prism of stimulus. This is a mistake.