The average net tax on family incomes is $12,914, the sum of the amount that would
be payable if the second earner worked at home, $6,648, and the additional net tax
payable when she goes out to work, $6,266. Thus, if all families had only one earner
or, equivalently, if all second earners withdrew from market work, the average net tax
per family in the sample would fall from $12,914 pa to $6,648 pa, that is, by over 48.5
per cent. The dramatic rise in the family’s tax burden when the second earner goes
out to work is reflected in the very high ATRs on her earnings.
The figure of $6,266 represents an average burden for all second earners. It is very
unequally distributed due to the diverse work decisions of married mothers. Only 29.7
per cent of second earners are employed full time, 36.4 per cent are in part-time work,
and the remainder, 33.9 per cent, are not in the work force. As indicated in Table 2,
much of the tax burden on second earners falls on the 29.7 per cent in full time (FT)
work, and supporting close to the same average number of dependent children as all
families in the full sample. The average burden on second earners employed FT is
$11,639, which is almost twice that of the overall average of $6,266 for the full
sample. Note also that families with a FT second earner are fairly evenly represented
across quintiles, and so the results cannot be driven by primary earnings. While there
are marginally more records in quintile 4 (see row 2), the overall mean of their
primary incomes, at $60,022, is below that of $63,447 for the full sample (see Table
1).17
|
Table 2______Second earner in |
full time work: tax burdens |
by primary income | ||||
|
Quintiles_____________________ |
1 |
2 |
3 |
4 |
5 |
All |
|
1. Primary income $pa___________ |
31775 |
43758 |
54074 |
67583 |
107844 |
60022 |
|
2. % second earner employed FT |
25.4 |
34.6 |
32.2 |
30.8 |
25.6 |
29.7 |
|
3. Second earnings $pa |
20861 |
30771 |
35843 |
41886 |
47441 |
35351 |
|
4. Tax on second earnings $a |
7620 |
10509 |
11376 |
13536 |
15186 |
11639 |
|
5. ATR on second earnings % |
36.5 |
34.2 |
31.7 |
32.3 |
32.0 |
32.9 |
|
Number of dependent children |
1.70 |
1.69 |
1.63 |
1.72 |
1.82 |
1.71 |
The highest ATR on second incomes, of 36.5 per cent, appears in quintile 1. This rate
reflects large FTBs losses and, in addition, withdrawal of the ML exemption on joint
income. For example, a second earner in a family with a primary income near the
17 Note that asset incomes contribute very little to average family incomes across much of the
distribution, and so primary income, shown in row 1 of Table 2, largely represents primary earnings.
10