Incoming chairwoman of the Productivity Commission Danielle Wood says the tax on employment income will penalise younger generations unless the federal government takes the lead on reform.
Tax on employment income will be stretched to “breaking point” and penalise younger generations unless the federal government leads on tax reform, the incoming Productivity Commission chairwoman, Danielle Wood, says.
“The degree of age segregation in the current tax system, where a retiree household on $100,000 pays half the income tax of a younger household on the same income, is neither defensible nor sustainable,” the outgoing Grattan Institute chief executive said. “More and more, questions of sustainability and intergenerational fairness are raised about our current tax mix.Intergenerational ‘tragedy’
“These poor buggers are also going to be the ones who are facing ever-increasing average rates of income tax,” he said.Most of the 138 recommendations in Dr Henry’s 2009 landmark review remain unimplemented after a proposed resource super profits tax was abandoned and contributed to the ousting of prime minister Kevin Rudd.
Ms Wood also took aim at the tax planning enabled under the current system through vehicles such as trusts.“Australia’s complex system of carve-outs offers considerable leeway for individuals to massage their taxable income to avoid high marginal tax rates.
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