publication . Research . Preprint . 2002

The effect of a reduced allowance and pension taper rate: Policy simulations using the Melbourne Institute Tax and Transfer Simulator

Guyonne Kalb;
  • Published: 01 Nov 2002
This paper presents the results of two policy simulations for couples with and without children. The first policy involves a reduction of the highest withdrawal rate from 70 to 60 per cent. The second policy reduces all withdrawal rates of 70 and 50 per cent to 30 per cent. A comparison is made between the two policies to determine the magnitude of the impact on government expenditure and labour supply responses. Both policies have the effect of increasing the net income of those who are either partly relying on benefit payments or whose pre-reform income is just above the pre-reform cut-out points. Other people are unaffected, which means that overall governmen...

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