Stop the Stage 3 Tax Cuts for the Rich

Save Our Schools today called on the Albanese Government to ditch the Stage 3 tax cuts for the rich. SOS National Convenor, Trevor Cobbold, said the tax cuts are indefensible when public education and other services face a funding crisis. “New economic studies show that the tax cuts will only serve to boost inequality without any economic benefit”.

“The tax cuts will cost $243 billion over the next ten years according to new estimates by the Parliamentary Budget Office and over $150 million will go to the top 20% of income earners. This massive windfall for the richest people in Australis will exacerbate inequality and those most in need will be denied key services.

“At present, public schools are massively under-funded at only 87% of their Schooling Resource Standard (SRS) while private schools are funded at about 104% of their SRS. Under current arrangement, public schools will be under-funded indefinitely. There is no plan to get public schools to 100% of their SRS. Public education will be under-funded by about $53 billion from 2022 to 2029. Other services such as aged care, the NDIS and health care face a similar funding crisis.

Mr. Cobbold said there is no evidence that tax cuts for the rich deliver any economic benefits: “All they do is increase inequality as many recent authoritative economic studies have shown.”

He pointed to a recent study of all major reductions in taxes for the rich across 18 OECD countries from 1965 to 2015. It found that they tax cuts increased income inequality and failed to increase economic growth or reduce unemployment. The study included the Reagan and Thatcher tax cuts and cuts to the top marginal rates in Australia in 1987. It concluded:

“Overall, our analysis finds strong evidence that cutting taxes on the rich increases income inequality but has no effect on growth or unemployment.” [p. 541]

Another recent study analysed the impact of reductions in tax rates on high income earners in Australia in 1987, New Zealand in 1989 and Norway in 1992. It found that the income share of the top percentile increased by between 20 and 50 per cent in the three countries and the share of the top 0.1 percentile increased by between 50 and 100 percent. The tax reductions had no significant impact on economic output or other economic efficiency indicators.

Mr. Cobbold said this is compelling evidence to stop the Stage 3 tax cuts.

“The studies comprehensively refute claims that tax cuts for the rich increase economic growth and employment. There are no trickle-down economic benefits, only more inequality.

“The $243 billion over the next ten years would be better spent to fund much needed human services including public education. Investing in public education is a much better option than tax cuts for the rich.

“Increasing the proportion of disadvantaged students who complete Year 12 or its equivalent and reducing the vast achievement gap between rich and poor will deliver is a much better public investment than tax cuts for the rich. Money matters in education (also here). Apart from improving the life chances of disadvantage students and increasing equity in education, it would also boost productivity and economic growth as many studies show.” “The Government should ditch tax cuts for the rich and invest in human services such as public education for Australia’s future prosperity”.

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