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Australians are experiencing the perverse situation whereby they have seen the sharpest decline in real wages in living memory, a trend not forecast to improve in the forward estimates.
Yet, despite the purchasing power of their wages falling, they are paying increasing amounts of personal income taxes due to bracket creep.
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In short, the amount of tax paid every year rises because pay rises that don’t even keep up with inflation push people into higher tax brackets, increasing their average tax rates.
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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.