The e61 Institute has today released a new interactive tool for calculating Australian workers' tax rates and welfare payments.
The calculator reveals how the tax and transfer system affects the incentives particular Australians have to work an extra hour, earn an extra dollar, or enter the workforce.
In some instances, working extra hours results in workers losing money due to taxes paid and benefits withdrawn.
For example, a single parent of two children earning $40 an hour is better off working 34 hours a week than 35 hours.
From around eight hours a week to around 32 hours a week, they lose 60 cents of every dollar they earn from receiving less of the Parenting Payment (Single) and paying more income tax.
Users of the e61 calculator can model different scenarios by typing in someone's hours worked, hourly wage, and other details such as whether they have children.
"Our calculator highlights how the Australian tax-transfer system can create disincentives for people to work, particularly for single parents with dependent children," said e61 Institute Research Manager Matt Nolan.
"A major feature of our calculator is that we can identify "notches" where someone's income goes down despite them working more. It then explains why this is the case.
"We hope this will be a useful tool for policymakers, journalists and the general public to better understand the incentives created by our tax and transfer system."
