An income tax holiday

The cost of Mr Rudd’s stimulus package is expected to be $97 billion over four years. What could be achieved if a tax cut was offered instead. How about a one year tax holiday:
If the Rudd government had implemented a one-off income tax cut the average Australian taxpayer would have received a one-off tax cut of more than $8,200 in 2008-09, according to new research released today.

The total size of the Rudd government’s fiscal policy decisions taken during 2008-09 is expected to be $97 billion over four years. If the government instead gave a one-off personal income tax cut equal in size to this, the average individual Australian taxpayer would have paid $8,228 less in tax last year.

Alternatively, for about the same total cost, the government could have cut income tax to zero for everyone, except the richest three per cent of taxpayers….
Off course there’s one big problem with such a plan. The government wouldn’t be able to pork barrel  marginal seats.
The IPA paper is here.

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