Mortality, fertility, and persistent income inequality

Many developing countries are plagued by persistent inequality in income distribution. While a growing body of economic-demographic literature emphasizes differential fertility channel, this paper investigates differential child mortality--differences in child mortality across income groups--as a critical link through which income inequality persists. Using an overlapping generations model in which both child mortality and fertility are endogenously determined by parental choice, this paper demonstrates that differential child mortality and its interaction with differential fertility may generate an "income inequality trap." The trap is characterized by higher child mortality and lower degree of skill formation among the poorer households. The model can also explain the behavior of aggregate fertility and mortality rates for countries at various stages of development, consonant with patterns of demographic transition. The results indicate that provision of public health that raises the productivity of private health spending may be an effective way to reduce income inequality

Not for profit income tax exemption : is there a hole in the bucket, dear Henry?

Australia’s Future Tax System Review, headed by the then head of the Australian Treasury, and the Productivity Commission’s Research Report on the not for profit sector, both examined the state of tax concessions to Australia’s not for profit sector in the light of the High Court’s decision in Commissioner of Taxation v Word Investments Ltd. Despite being unable to quantify with any certainty the pre- or post-Word Investments cost of the tax concessions, both Reports indicated their support for continuation of the income tax exemption. However, the government acted in the 2011 Budget to target the not for profit income tax concessions more precisely, mainly on competitive neutrality grounds. This article examines the income tax exemption by applying the five taxation design principles, proposed in the Australia’s Future Tax System Review, for assessing tax expenditure. The conclusion is that the exemptions can be justified and, further, that a rationale for the exemption can be consistent with the reasoning in the Word Investments case.

Incentivising private health insurance through the income tax regime : Capitalising on behavioural models

The Australian income tax regime is generally regarded as a mechanism by which the Federal Government raises revenue, with much of the revenue raised used to support public spending programs. A prime example of this type of spending program is health care. However, a government may also decide that the private sector should provide a greater share of the nation's health care. To achieve such a policy it can bring about change through positive regulation, or it can use the taxation regime, via tax expenditures, not to raise revenue but to steer or influence individuals in its desired direction. When used for this purpose, tax expenditures steer taxpayers towards or away from certain behaviour by either imposing costs on, or providing benefits to them. Within the context of the health sector, the Australian Federal Government deploys social steering via the tax system, with the Medicare Levy Surcharge and the 30 percent Private Health Insurance Rebate intended to steer taxpayer behaviour towards the Government’s policy goal of increasing the amount of health provision through the private sector. These steering mechanisms are complemented by the ‘Lifetime Health Cover Initiative’. This article, through the lens of behavioural economics, considers the ways in which these assorted mechanisms might have been expected to operate and whether they encourage individuals to purchase private health insurance.

The taxation of multinational banking income : is the traditional rationale correct?

This article argues that multinational banks have characteristics which are unique and distinguishable from traditional multinational entities. The first distinguishing feature is the unique nature of the services and consequent products supplied by multinational banks, which are aimed at meeting client global demand. The second distinguishing feature is the non-traditional organisational structure that is adopted. This structure, also designed to meet client global demand, introduces issues previously not recognised in the traditional taxation system, which is designed for the structure of traditional multinational entities. The unique differences between traditional multinational entities and multinational banks means there may be the need for a distinct international tax regime. It is argued that there are “outmoded economic assumptions” upon which the present tax laws relating to multinational banks are based. An examination of the unique nature of multinational banks leads to the conclusion that the appropriate tax treatment of these banks is different from the appropriate tax treatment of multinational entities generally.

Full compensation no longer sacrosanct : reflections on the past and future economic loss ‘cap’ for high income earners

The civil liability provisions relating to the assessment of damages for past and future economic loss have abrogated the common law principle of full compensation by imposing restrictions on the damages award, most commonly by a “three times average weekly earnings” cap. This consideration of the impact of those provisions is informed by a case study of the Supreme Court of Victoria Court of Appeal decision, Tuohey v Freemasons Hospital (Tuohey) , which addressed the construction and arithmetic operation of the Victorian cap for high income earners. While conclusions as to operation of the cap outside of Victoria can be drawn from Tuohey, a number of issues await judicial determination. These issues, which include the impact of the damages caps on the calculation of damages for economic loss in the circumstances of fluctuating income; vicissitudes; contributory negligence; claims per quod servitum amisit; and claims by dependants, are identified and potential resolutions discussed.

Income Tax : Text, Materials and Essential Cases [8th ed.]

Tax law and policy is a vital part of Australian society. Australian society insists that the Federal Government provide extensive public programs, such as health services, education, social security, foreign aid, legal infra¬structure, regulation, police services, national defence and funding for sports development. These programs are costly to provide and are funded by taxation. The aim of this book is to introduce and explain the principles of tax law and tax policy in plain English. The book contains detailed commentary on tax principles together with extracts from cases and materials that illustrate the application of the principles. The book considers tax policy and the economic and social aspects of tax law. While tax students must develop technical competence in tax law, given the speed with which changes are made to the technical details of tax law, it is also important to grasp tax principles and policy to understand why tax law has changed or why it should change. The chapters are structured to direct readers to the key provisions of the tax law. Each case is introduced by an explanation of the facts, followed by the taxpayer’s arguments, the Commissioner’s assertions and the decision of the Administrative Appeals Tribunal or a court. The commentary guides readers through the issues considered in the judgments. The book contains extracts from: articles; materials dealing with tax policy; and the Commissioner’s rulings. The book also has references for further reading and medium-neutral citations (Internet citations) for cases decided since 1998.

Australia's disabling income support system : tracing the history of the Australian disability income support system 1908 to 2007 : disablism, citizenship and the basic income proposal

The present study examined the historical basis of the Australian disability income support system from 1908 to 2007. Although designed as a safety net for people with a disability, the disability income support system within Australia has been highly targeted. The original eligibility criteria of "permanently incapacitated for work", medical criteria and later "partially capacitated for work" potentially contained ideological inferences that permeated across the time period. This represents an important area for study given the potential consequence for disability income support to marginalise people with a disability. Social policy and disability policy theorists, including Saunders (2007, Social Policy Research Centre [SPRC]) and Gibilisco (2003) have provided valuable insight into some of the effects of disability policy and poverty. Yet while these theorists argued for some form of income support they did not propose a specific form of income security for further exploration. Few studies have undertaken a comprehensive review of the history of disability income support within the Australian context. This thesis sought to redress these gaps by examining disability income support policy within Australia. The research design consisted of an in-depth critical historical-comparative policy analysis methodology. The use of critical historical-comparative policy analysis allowed the researcher to trace the construction of disability within the Australian disability income support policy across four major historical epochs. A framework was developed specifically to guide analysis of the data. The critical discourse analysis method helped to understand the underlying ideological dimensions that led to the predominance of one particular approach over another. Given this, the research purpose of the study centred on: i. Tracing the history of the Australian disability income support system. ii. Examining the historical patterns and ideological assumptions over time. iii. Exploring the historical patterns and ideological assumptions underpinning an alternative model (Basic Income) and the extent to which each model promotes the social citizenship of people with a disability. The research commitment to a social-relational ontology and the quest for social change centred on the idea that "there has to be a better way" in the provision of disability income support. This theme of searching for an alternative reality in disability income support policy resonated throughout the thesis. This thesis found that the Australian disability income support system is disabling in nature and generates categories of disability on the basis of ableness. From the study, ableness became a condition for citizenship. This study acknowledged that, in reality, income support provision reflects only one aspect of the disabling nature of society which requires redressing. Although there are inherent tensions in any redistributive strategy, the Basic Income model potentially provides an alternative to the Australian disability income support system, given its grounding in social citizenship. The thesis findings have implications for academics, policy-makers and practitioners in terms of developing better ways to understand disability constructs in disability income support policy. The thesis also makes a contribution in terms of promoting income support policies based on the rights of all people, not just a few.

Bailing out the FEG : is the Fair Entitlements Guarantee (formerly GEERS) approaching its own fiscal cliff?

This article discusses what recent statistics and public reports reveal about the funding of GEERS (now the FEG) and its bottom line. The article examines (1) whether there has been a “blowout” in the scheme which guarantees the recovery of employee entitlements in liquidations and (2) what might be done to put the scheme on a firmer fiscal footing.

The CGT small business concessions : recent evidence from the perspective of the tax practitioner

On 21 September 1999 Division 152 was inserted into the Income Tax Assessment Act (1997) (ITAA 1997). It was subsequently subject to amendments in 2006. Division 152 contains the small business CGT concessions, which enables eligible small business taxpayers to reduce the amount of tax payable on capital gains arising from certain CGT events (including the sale of the small business itself) that occur after 11:45 am on 21 September 1999. One of the stated principal objectives of the legislation was to provide a concessionary regime for small business owners who did not have the same ability to access the concessionary superannuation regime (particularly the superannuation guarantee charge) generally available to employees. The then Federal Treasurer, Mr Peter Costello, when announcing the introduction of the concessions, specifically stated that the object of Div 152 was to provide “small business people with access to funds for retirement or expansion”. The purpose of this project is to: one, assess the extent to which small business taxpayers understand the CGT small business concessions, particularly when considering sale of their business; two, determine which of the four small business CGT concessions are being adopted and/or recommended by tax advisors to clients; and three, determine whether the recent superannuation changes announced by the Federal Government in relation to the capping of the concessional superannuation thresholds have had an impact on the use of the small business retirement concession. It is anticipated that the results of this study will reveal that that small business owners are reliant on their tax advisors to explain the operation of Division 152. It is plausible that give the complexity of the CGT concessions, most small business owners are completely unaware of the four small business CGT concessions contained in Division 152 and do not understand how these concessions apply. Our study will also reveal the extent to which each CGT small business concession has been adopted (and reasons why). In particular, emphasis will be placed on the adoption of the small business retirement concession contained in Subdivision 152-D (and specific reasons for its adoption). This study also seeks to understand whether the recent (and impending) changes to the concessional superannuation cap has resulted in the retirement concession being more widely adopted (or recommended) by tax advisors. We would expect that the results of our study to confirm this to be the case, particularly coupled with the recent economic downturn, which has led to lower superannuation fund balances. By providing accounting firms with this information, small business owners will benefit from the information, becoming better placed to be long-term self funded retirees, providing not only financial benefits to the individuals and the country, but a significant increase in social self-assurance by these members of the community.