An act of class warfare or a bid to ensure "no one is left behind"?
The Labor government's dramatic redesign of the Stage 3 tax cuts has been accused of "pitting one Australian against the other" – and it's clear that there will be winners and losers.
Under the proposed changes, everyone with a taxable income below $146,486 will receive a larger tax cut than under the original plan, while top income earners will walk away with much less than promised.
But which neighbourhoods, occupations and age groups are more likely to win or lose from the revised plan? We've delved into the data to find out how different parts of Australia compare.
Gen Z comes out on top
Australia's youngest workers are the most likely to benefit from the proposed changes, with Generation Z recording the largest share of workers set to receive bigger returns under the new plan.
In the 2021 financial year, about 99 per cent of Gen Z's 1.9 million workers had taxable incomes below $150,000, according to Australian Tax Office figures. (In this data, Gen Z includes those aged 24 and under at the time.)
While $150,000 is slightly above the $146,486 threshold for determining who will benefit under the new plan compared to the original, this is the closest we can get using these statistics. (And economists have assured us it's close, given the difference is minimal for those nearest the threshold figure.)
"This is definitely better for younger workers who are more likely to be in junior positions earning lower incomes. They're more likely to be working part-time, maybe mixing study and work," says director of Impact Economics Angela Jackson.
This is in contrast to Gen X, which has the smallest share of workers set to gain from the changes – although it's still a sizeable chunk. Roughly 88 per cent of Gen X's 4.2 million workers will receive a bigger tax cut under the new plan than the original. In our data, workers in this generation were aged 40-54 in 2021.
Grattan Institute economic policy program director Brendan Coates says that's because Gen Xers are approaching the top of their earning capacity.
"Earnings among Australian workers tend to peak between the ages of 45 and 50. That's when people have the most experience, when they're in management roles that pay more," he says.
"Gen Xers are entering that peak earning phase now so are probably among those who are going to be hit hardest."
More than nine in 10 workers in every other generation stand to benefit from the proposed changes. This includes 92 per cent of Australia's 3.4 million working Baby Boomers (aged 55-74 in 2020-21, the year of the data), 95 per cent of the nation's 5 million working Millennials (aged 25-39 in 2020-21) and 96 per cent of about 560,000 Silent generation workers (aged 75 and older in 2020-21).
Almost all of us work in jobs where most will benefit
More than 99 per cent of workers have occupations in which most people will gain more from the redesign than the original plan.
This chart shows every job worked by one of the 15.1 million Australian residents who submitted a tax return in 2020-21. It includes 439 jobs, ranging from anaesthetist (the highest earners, on a median taxable income of $387,736 a year) and solicitor ($111,387) to truck driver ($66,165) and general sales assistant ($34,353).
The median income is the number at which half of workers earn more and half earn less. This means that more than half of workers in any job with a median taxable income below $146,486 earn above this amount, so stand to benefit from the proposed changes.
In 2020-21, 99.8 per cent of women and 99.3 per cent of men worked in such jobs.
"The original stage 3 tax cuts were essentially very good for very rich men and not so good for everyone else," says Australia Institute chief economist Greg Jericho.
"It really is just surgeons, judges and politicians who benefit, basically … Almost everyone else will be able to look around at the people doing their jobs and know that most will be getting a bigger tax cut under these changes."
Of the 427 jobs that employed women, only nine had a median taxable income above the threshold. The list of nine includes surgeons, psychiatrists and legislators (which includes members of parliament).
For men, 21 out of 435 jobs – including dental practitioner, mining engineer and financial investment advisor – delivered a taxable income above $146,486.
Women are clearly the big winners from the changes, according to Dr Jackson.
"The redesign is really targeting [low and middle income] workers. Women tend to be more likely to work part-time and in occupations with lower average earnings, which is why they're the bigger winners."
This is good news not only from a gender perspective, but for the wider economy, Coates adds.
"We'd expect a bigger economic bang for buck because [the changes] target lower-income workers who … have more capacity to pick up an extra day of work than those working full-time," he says.
"A lot of those classic pink-collar occupations – registered nurse, childcare worker, disabled carer, school teacher – they are among the biggest beneficiaries."
Winners outnumber losers in every neighbourhood
Across Australia's 2,600 postcodes, those who stand to benefit from the redesign outnumber those who miss out, without exception.
The map below shows how much those who will gain outnumber those who will lose. For example, in the Melbourne suburb of Fitzroy (postcode 3065), nearly five times as many workers will benefit as will miss out.
In Puckapunyal, north of Melbourne, there were no reported incomes above $180,000, so we know most people there will benefit from the changes.
Even in neighbourhoods boasting the highest share of top income earners – Peppermint Grove and Cottesloe in Perth (postcode 6011), and Northbridge in Sydney (postcode 2063) – those who benefit from the redesign outnumber those who miss out by a ratio of 1.3.
"Well over 10 million Australians are going to benefit, whereas less than 2 million Australians will be slightly worse off," says Australia Institute senior economist Matt Grudnoff.
"So if we look at geographic areas, it would be very unusual to find such a concentration of high income earners that a majority in that area would actually be worse off."
Tax office statistics don't allow us to hone in on the $146,486 divide at the postcode level. However, they do tell us the number of people in each postcode who will benefit most from the proposed changes (that's those on taxable incomes between $45,001 and $120,000) and the numbers who will miss out compared to the original plan (those on taxable incomes above $180,000).
In two-thirds of postcodes with at least 100 workers in 2020-21, more than 10 times as many stood to benefit than to lose from the redesign.
"Everyone earning in the $45,000 to $120,000 range will see their tax cut increase by about $800 per year," Grudnoff says.
"The biggest losers are those earning more than $180,000. And to be clear, they're getting a smaller cut than they otherwise would but they'll still walk away with a $4,000 tax cut."
According to the data, the majority of postcodes where winners outnumber losers most starkly are in regional and rural Australia.
Jericho says this presents an "interesting dilemma" for the Nationals Party, which as the junior partner in the Coalition, opposes the proposal.
"We can pretty safely say that every Nationals electorate will be better off … because they benefit more low- and middle-income earners, and rural electorates have more [of these] earners," Jericho says.
"These are the types of changes to the tax cuts that the National party should be cheering for."
He says the tax office data exposes the absurdity of criticisms from Nationals Party leader David Littleproud that the revised cuts amount to "class warfare".
"What this really highlights is … that the original [plan] was incredibly skewed to favour the wealthy."
Credits
Data and reporting: Inga Ting
Development: Thomas Brettell and Katia Shatoba
Design: Alex Lim
Digital production: Mark Doman