“Review of the Future of Taxation” in Australia

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Almost one year ago to the day, the Australian government announced its intention to make a comprehensive study and proposal “to deal with the demographic, social, economic and environmental challenges of the 21st century.”  The timeline, agenda and preliminary reports from the project are available here.

 At today’s conference  on gender and tax policy,  Miranda Stewart (Melbourne Law School) shared her initial thoughts on the project.  She pointed out that Dr. Ken Henry, Chair of the Review Panel and Secretary to the (Australia) Treasury has emphasized that inequity is a social policy choice.  In addressing the  Australian Council of Social Service National Conference, Henry said:

How we distribute prosperity is absolutely inseparable from how we create it. This is something parts of the welfare sector have been arguing strongly for some time, and it has been pleasing in recent years to see welfare representatives developing this position further. It’s something I’d like to encourage and I hope what I have to say today adds to this important debate. ***

Leaving fairness solely to the market to determine should be unacceptable to a civilised society. Societies will choose how much inequity they allow according to the institutions, norms, laws, policies and programs they adopt. ***

The tax-transfer system is the principal means of expressing societal choices about equity. The tax-transfer system is a reflection of the kind of society we aspire to be. As far as I’m aware, every major tax review conducted in modern times in any developed country has nominated equity as one of its two or three most important objectives. ***

Henry’s full address is available here.

Usually, when lawyers and economists talk about “equity” in taxation, they mean one of two things:  either vertical equity (a fairness between or among taxpayers of different income levels) or horizontal equity (that taxpayers with the same income should be taxed the same).  To my ear, the equity that Henry envisions for Australia is a very different kind of equity.  He’s talking about an equity in results that most tax systems don’t even attempt.

Is this good for women and other traditionally marginalized groups?  Absolutely.  Would anything remotely like this ever find its way into U.S. tax policy?  Never.  

Let’s stay tuned for more developments on the Australian front.  

-Bridget Crawford

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