Cutting the top tax rate is wrong

By Joe Montero

The new bipartisanship on taxation policy will prove to be a disaster for Australia. This is about cutting tax for the wealthiest 10 percent of Australians. It means that the bipartisanship extends to making us an even less equal nation.

In real life, rather than number churned out by government agencies, the economy is failing millions. Then there is the impact of the pandemic on top of this. Ignoring this looks mean.

Tax cuts mean lower tax revenues d this means government services will be cut. These services functioned as another to address inequality. Reduce them and  inequality rises. The tax cut therefore impacts from two directions.

Before Covid-19, we were got the mantra abut a necessary budget surplus. This was used to justify service cuts and the selling of public assets. One of the consequences was to undermine the government’s ability to raise revenue. The problem has a rising revenue crisis and not too much spending.

The graph below from the Australia Institutes, shows most of the benefit of the total income tax cuts go to those, predominantly males, with the biggest

Income distribution of the tax cuts by gender in 2024-25 (source:

The of the Coalition’s tax cut may not due be to take effect until 2024. But people are already hurting.

The bipartisanship will do further damage to the credibility of the political system and those who are within it.

This adds to a similar approach towards large scale corporate tax evasion and use of tax free havens.

The tax cut will mean the continuation of neoliberalism. Its foundation of redistribution of income upwards, justified with the promise of the trickle down effect. According to calculations by the Parliamentary Budget Office, the cost of the cuts will be $184 billion.

Labor’s strategy is clear. It is to appeal to the Liberal Party support base in the marginal electorates. Public relations consultants used they say this is the path to victory. Add men and women have taken over election campaigning. Their weakness is that they are advertisers and not political players. Their business is to create an illusion. It might work for laundry detergent. But the reality of political life it is much less certain.

Rising dissatisfaction over the political system is the result of its failure to deliver. Part of the problem, although not the only one,  is that the advertisers have taken over election campaigns.

A bigger problem is dependence on the profile presented by big media and financial contributions from the corporate world.

It is obvious that this will force compromises suitable to the media and corporate barons. These barons have long been calling for tax cuts for themselves.

Aside from the personal human cost, the top end tax cuts will contribute to undermining the economy. There will be a continuation of the dampening of the market and the fall in investment leading to better economic performance. The graph below shows the decline of the Real Gross Domestic Product through the twenty first century. This is before the pandemic.

Source: ABS, AMP Capital

We can now expect more of the same.

This is not necessary. There is an alternative. Part of it is using the tax system and other levers to redistribute income downwards. This would stimulate markets, help stabilise the economy,  and create better overall conditions for investment.

Details on how this can be achieved is another story.

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