Federal budget tax cuts for rich Australians worth five times handouts to the poor


High income workers earning $200,000 a year are set to score a $9,000 tax cut next year, but you wouldn’t know it if you read the budget papers.

The giant secret in the budget was the $69 billion that Treasurer Jim Chalmers is set to shovel into the pockets of high income earners over the next four years.

The stunning figure is five times the $14 billion cost-of-living relief that the Treasurer plans to hand out to the poor over the same period.

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Perhaps that helps explain why the budget was so tight-lipped on the issue.

Instead of singing loud and proud about the blockbuster tax cuts, the Albanese Goverment’s vow of silence in the budget only served to attract attention to the issue.

Determined to focus on the hip-pocket help in the budget, the budget was curiously silent on the decision to abolish the 37 per cent marginal tax rate.

There were no tables spruiking who gets what, no glossy cameos of how someone earning $200,000 will score a $9,000 tax cut.

Instead, the Stage 3 tax cuts emerged as the Voldemort of the federal budget; the tax cuts that the government dared not refer to by name.

The only thing the government wanted to talk about was the $500 energy rebate targeted at families earning under $120,000.

So tight-lipped were the Treasury officials, that they refused to even tell journalists what the revised figures in the budget revealed about how much the tax cuts will be worth

In the lead-up to the October budget the Treasurer said the tax cuts were worth $41 billion over the four years. But how much are they worth now? Treasury couldn’t say.

Voldemort tax cuts

Questioned by news.com.au in the budget lock up about the generous tax cuts, the Treasurer was finally forced to let the cat out of the bag.

The revised estimate, which does not appear in any budget papers, is eye-watering.

“$69 billion over the forward estimates,’’ the Treasurer said.

But he insisted that there was nothing surprising about the tax cuts not appearing in the budget because they weren’t a new measure.

“We haven’t changed our position on the Stage 3 tax cuts,’’ he said.

“They would not ordinarily be itemised in the budget.”

Dr Chalmers could not immediately recall how much the tax cuts will be worth in 2024-25 but it was not much more than the previous estimate of $20 billion. His office later qualified it’s now estimated to be worth $21.5 billion.

Most of the revised $69 billion figure reflects the fact that the forward estimates over four years now includes another year of the tax cuts which kick into gear next year.

What are the stage 3 tax cuts?

The Stage 3 tax cuts abolish the 37 per cent marginal tax bracket completely and lowers the 32.5 per cent marginal tax rate to 30 per cent.

The changes will also raise the threshold for the 45% marginal tax rate, meaning everyone earning between $45,000 and $200,000 will pay the same 30% marginal tax rate.

Who gets the tax cuts?

If you earn $40,000 a year you get nothing from the Stage 3 tax cuts. If you earn $50,000 a year you score a piddling $125. That’s over an entire year.

But the Stage 3 tax cuts start to kick into gear once you reach six figures. If you earn $100,000 you will get a $1,375 tax cut next year. But the news is even better if you earn $130,000. You are set to score a $2,750 tax cut.

The news is even better if you earn $160,000. You’re in line for a $4,675 tax cut.

But the big winners are workers earning over $200,000. You’re going to get a $9,000 a year tax cut – twice the value of the increased payments to single mums who earn under $30,000 a year.

Could the Albanese Government tinker with the tax cuts?

Despite fears the Stage 3 tax cuts could fuel inflation, the Treasurer insists he’s not going to dump them.

But he says the vulnerable will be getting relief first.

“We’ll be helping the vulnerable this year, in this budget,’’ Dr Chalmers said.

“The tax cuts you raise, they don’t come in for more than a year now. They haven’t been a focus of our discussions for this budget. But we can help the most vulnerable people in our community and in our country this year.”

What happens if I am a single mum on welfare?

Single parents on welfare are billed as among the biggest winners in Tuesday’s budget, one which will confirm sole parents will be able to receive the single parenting payment until their youngest child turns 14 – up from the current age of eight.

That will deliver a $4,576 a year windfall to eligible families.

The decision overturns one of Julia Gillard’s most controversial policies by allowing single parents to stay at home for four more years without being moved to JobSeeker.

Eligible single parents currently on JobSeeker as a result of the changes are also winners under the changes and will secure an increase to payments of $176.90 per fortnight.

These parents get a current base rate of $922.10 per fortnight (95 per cent of the Age Pension), until their youngest child turns 14.

That works out to be around $23,972 a year or $461 a week.

Sounds like a winner? Perhaps, until you meet the worker earning $200,000.

What happens if a worker is earning $200,000?

Compare the single mum scenario to a worker earning $200,000 a year.

Under the Stage 3 tax cuts they will receive a whopping $9,075 tax cut from 2024-25.

That means they will secure a tax cut worth a stunning $175 a week.

That’s the same boost that a single parent on welfare will get a fortnight if they have teenage children.

The difference is the worker on $200,000 has an income that’s around ten times that of a single mum.



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