Reduction in inequality due to the social security and income tax systems
[infogram id="_/GHRuc11fIziNCKG63Wzw" prefix="hTD" format="interactive" title="Fig.6_Reduction in inequality due to the social security and income tax systems"] This tracks the impact of the income support and income tax systems on household income inequality in Australia, using the Gini Coefficient. The bottom lines show the impact on inequality of the social security system – the difference between private income and gross income. The top lines show the impact on inequality of the income tax system – the difference between gross income and disposable income. Social security payments have a greater overall impact on inequality (ranging from a 9.4% to 11.6% reduction in the Gini for weekly income) than income tax does (ranging from a 4.3% to 5.8% reduction). The impact of social security on inequality decreased in the years before 2008 (represented by the rise in the bottom row), increased shortly afterwards (represented by the fall in the bottom row), then declined after 2011. The…
Overall trends in income inequality from 1999 to 2015
[infogram id="_/sfN2lfV06jGgu0YfuMcu" prefix="Qyv" format="interactive" title="Fig.2_Overall trends in income inequality from 1999-00 to 2015-16 (Gini coefficients for weekly & annual income)"]
Level of income inequality in OECD countries
These charts compare overall income inequality in OECD countries, using the Gini coefficient, for which a higher score represents greater inequality. [infogram id="_/zSlYrwklEeO2NV0TWy5e" prefix="bQJ" format="interactive" title="2023: International comparison of income inequality"] 2019-20: The chart shows that income inequality in Australia in 2021 or latest available date is close to the average level for wealthy nations, based on OECD data. 2017-18: The chart shows that income inequality in Australia in 2018 - the latest date for which comparative data is available - was close to the average level for wealthy nations. 2015-16: It shows that income inequality in Australia in 2015 – the latest date for which comparative data is available – was higher than the OECD average. Australia sits between other English-speaking countries, above Canada but below the United States and the United Kingdom; and alongside some countries with lower income levels, like Greece and Portugal. Most…
Trends in average weekly disposable income since 1999-00
[infogram id="_/GBas3Lc2Ku0noMRYn4jm" prefix="kcc" format="interactive" title="Fig.5_Trends in average weekly disposable income 2000 to 2016 (in 2016 dollars)"] This shows how average household incomes grew in ‘real terms’ (after inflation) for the lowest, middle and highest 20% income groups in Australia, as well as the highest 5%. It shows that income growth was very uneven during the boom from 1999-00 to 2007-08. The average income of the lowest 20% grew by 5.6% per year in real terms, compared with 5.9% for the middle 20%, 7.2% for the highest 20%, and 10.3% for the highest 5%. After the Global Financial Crisis, from 2007-08 to 2015-16, household incomes grew much more slowly and less unequally. The average household incomes of the lowest 20% grew by 2.5% per year (aided by a large pension increase in 2009), compared with 0.3% for the middle 20%, 0.8% for the highest 20%, and a decline of 0.6% for the highest 5% (likely due to falls in returns from investments.
Average income tax paid by households
[infogram id="_/Ea6RLDekvwAqZpqCE5ZM" prefix="lWC" format="interactive" title="Fig.6_Average income tax paid by households as a % of gross income, 2015-16"] This shows the average (not marginal) tax rates paid by households (not individuals) in different income groups. Personal income taxes are progressive, so average tax rates increase with income. Households in the lowest 20% pay only 4% of their overall income in income taxes on average (including the Medicare Levy) compared with 15% for the middle 20% and 26% for the highest 20%. However, the progressive impact of income taxes is largely offset by the regressive impact of other taxes such as the Goods and Services Tax and Stamp Duties. Find out more.
Comparison of household disposable incomes
[infogram id="_/TcScbui4fV9kD1qlO8Yg" prefix="y1D" format="interactive" title="Table 1_Comparison of incomes of the bottom 40%, top 1% and top 5% (2015-16)"] This table compares the minimum and average household incomes of the lowest 40% income group, the highest 5% and the highest 1%. In 2015-16, the average household income of the highest 1% was $11,682 per week, over ten times the average disposable income of the lowest 40% , which was $1,022 per week. Their incomes were almost twice that of the highest 5% and almost six times the overall average household disposable income ($2,033). The incomes of the highest 1% of households also increased more rapidly. Between 1999-00 and 2015-16, their average incomes rose 15% faster than the incomes of households in the highest 5%; and 42% faster than the lowest 40%.
Trends in real average household disposable income since 1999-00
[infogram id="_/HBJ5SXNoKbAAq7gJ98cs" prefix="3NF" format="interactive" title="Fig.1_Trends in real average household disposable income from 1999-00 to 2015-16 (in 2016 dollars)"] This shows how average household disposable incomes have grown in ‘real terms’ (after inflation) in Australia between 1999-00 and 2015-16. During the boom period from 2000 to 2008, average household disposable income grew by a remarkable 4.3% per year in real terms. This reflected rapid overall economic growth underpinned by mining and housing booms. However, in 2008, the Global Financial Crisis cut economic growth by half. This reduced average disposable income slightly the following year. Average income then slowly increased, and dropped slightly again in 2015-16.
Profile of each income group by age
This graph shows the make-up of each income group by age. [infogram id="_/eDbRF9QdpI3mCfj46LMV" prefix="Fyc" format="interactive" title="2023-fig2_Profile of each income group by age"] 2019-20: The largest age-group in every income group are 25-64 year olds, as they have a greater share of the population as a whole. However, the lowest income group comprises almost a third of older people, while they comprise only 8% of the highest income group. 2017-18: The largest age-group in every income group are 25-64 year olds, reflecting their greater share of the overall population. However, older individuals are over-represented (66%) in the lowest 40% income group, as are children aged under 15 (45%). Almost half (48%) of people of working age, 25-64 years, were in the highest 40% income group, reflecting that age group’s larger size and greater earning capacity. 2015-16: The largest age-group in every income group are 25-64 year olds. However, older individuals are over-represented (29%)…