Australia's Tax System Criticized for Rewarding Wealth Over Work Amid Inequality

The top 1 per cent of taxpayers forked out nearly one-fifth of personal tax revenue in 2021–22.

By international standards, Australia already imposes a high top marginal personal income tax rate of 47 per cent, which kicks in at a relatively low multiple ($190,000) of average earnings.

There is something fundamentally wrong with a system where extreme wealth keeps skyrocketing while so many people are struggling to afford the basics, and governments claim there is not enough money for housing, healthcare, climate action and essential services.

The Budget included some welcome measures to ease pressure on households and begin reforming unfair tax settings, but it did not go far enough to address the scale of wealth inequality growing in Australia.

While modest, reforms to Capital Gains Tax and negative gearing are important steps towards a fairer tax system. Australia should not continue rewarding wealth accumulation more generously than work, particularly at a time when so many households are under pressure.

While misinformation and misplaced fears about small business and aspiration continue to dominate debate around these reforms, the reality is that the wealth of the super-rich continues to grow while poverty persists. Without structural reform to the tax system, that divide will only deepen.

A fairer approach to taxing extreme wealth would help ensure governments can properly invest in affordable housing, healthcare, climate action and support for communities doing it tough here and abroad.