Humphreys, J. (2005), Reform 30/30: Rebuilding Australia’s Tax and Welfare Systems, CIS Policy Monograph 70, Centre for Independent Studies, Sydney.
While the announcement of tax simplification by the Government is a step in the right direction, it does not go far enough. A new paper offers a blueprint for where tax and welfare reform should be heading. In this paper titled Reform30/30: Rebuilding Australia’s Tax and Welfare Systems, John Humphreys outlines a radical vision of how the tax and welfare systems could be refashioned to ensure that nobody loses more than 30 cents of any extra dollar they earn.
Humphreys proposes a single (flat) income tax rate of 30% (the Medicare levy would be scrapped). The tax free threshold (TFT) would be increased to $30,000 per person, so nobody would pay the 30% tax until they earned above this amount. Those earning below $30,000 would receive top-ups in the form of a Negative Income Tax (NIT), which would be paid at a rate of 30% (i.e. every dollar of income short of $30,000 would attract a top-up of 30 cents). The NIT would replace all existing welfare payments and tax expenditures.
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