Another thoughtful piece from Senator Murray. I hope he can follow up with a more detailed proposal some time.

This topic is dense with jargon. This piece echoes the thoughts that Michael Carmody, former Commissioner of Taxation expressed to the National Press Club in March 2006. I have been unable to find a free transcript.

Reform of the effective marginal tax rates will become more critical as the new regulations around Newstart start to bite. This will be a brutal double whammy for low income workers forced onto punitive AWAs by employers who no longer see a social obligation to provide sufficient work for employees to live in frugal comfort. Whew! more jargon!

A simple example is the Spotlight workers who have all been forced to sign AWAs. These women used to work 40 hours per week and get paid penalty rates for weekends etc . These same women are now getting 3 hours work a week. Could you live on $45 per week when you used to receive $680 per week.

Another example from the same district concerns a church run aged care facilty that hires newly trained nurses and offers them 3 shifts a fortnight. These women have to repay their HECS debt, pay their nurse registration fees, run a car, put food on table and support their children for $450 per week. The same household receives more in welfare payments and the employer expected Centrelink to make up the shortfall in income. The women generally drift into contract cleaning for the large supermarket chains because they get more work.

Employers like these are parasites because they are feeding off their workers.

IMHO the whole issue of income tax needs a thorough review.

I would, personally, prefer to see the differential tax bands removed completely and everything reduced to a single tax rate, a bit like GST presents a single tax rate, replacing a plethora of differential sales tax rates.

Recognising such a "radical" strategy would significantly benefit the high earners versus the low earners, the tax-free threshold could be raised to ameliorate the circumstances of the lower and middle paid and spread the average tax burden closer to how it is levied at present.

No tax system is perfect but what is certain is a complex one will be less perfect that a simple one.

One should also ask, if marginal tax rates at the higher end generate so little tax that it is easy for them to be removed - what is the point in having them in the first place? Unless to assuage some notion of social levelling. However, income tax is a very "blunt instrument" to pretend to shape "equality" with.