Why the five economists' plan for a "wage-tax trade-off" is a mistake for Australia
This paper presents an analysis of the Five Economists’ plan for a “wage-tax trade-off”, combining an EITC program with a freeze on award wage increases, as a policy package for reducing unemployment. The study identifies the changes in effective tax rates implied by the EITC program and shows that, when combined with a wage cut for the low paid, the proposed plan will increase inequality. Drawing on the findings of empirical research on behavioural responses to taxes, the study then goes on...[Show more]
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