May 14, 2004 | Graham

Forgotten men

One group that consistently shows up in our research as being deeply dissatisfied with both political parties is separated and divorced males paying child support. Initial reactions to the budget suggest that voters are attracted by it, according to Roy Morgan’s latest poll . This is probably an announcement response coupled with many people calculating that they will be either better off or no worse off. The real test will be in a couple of weeks as those who were given nothing start envying those who were. These men are likely to be at the forefront of complaint, and with good reason.
The groups who have most reason to envy the beneficiaries of this budget are those earning less than $52,000 p.a. who have no children – they miss out on the tax cuts and the family hand-outs. This envy is likely to be magnified for male non-custodial parents. Here is why.
In the first place these men pay a huge effective tax rate because of child support payments. Now I am not suggesting that they should not be paying child support, but the child support rate is calculated on gross income, not net income. A man with three children will pay 32% of his gross income to the residential parent, irrespective of his marginal rate of tax. Between $21,601 and $52,001 that means that the tax man and the mother of his children between them collect 62% of the income he earns, a significant amount, and one that it is very sensitive to changes in tax rates. They would gain more than most if the lower tax thresholds had been adjusted up, and therefore have more reason than most lower earners to resent missing out on tax cuts.
But there is a factor that amplifies that resentment, and that is the way that the Family Tax Benefit is paid. Irrespective of the fact that the Child Support Act is drafted on the assumption that each parent pays toward the care of the children in proportion to their means, the Family Tax Benefit paid to each is calculated on the amount of time that the children spend with each of them. What that means is that, even in a family where the parents are earning roughly the same and therefore contributing roughly equally, the non-custodial parent will only see a fraction of the Family Tax Benefit, representing a windfall to the custodial parent.
So, for our father of three, not only is he contributing half the cost of raising the children, but he has been missing out on most of the Family Tax Benefit. Now under this budget not only will he miss out on tax relief, but he will see his former wife pocket another $3,600 tax free in the next twelve months. When Latham is working out his promises later this year he might consider making a pitch for this voter by at least ensuring that the FTB is divided in proportion to financial contributions, not time spent with each parent.
Many of these men were in the group of former One Nation voters so crucial to John Howard’s success last election. Looking after them might have quite an effect on how that group votes this election. All of them will have family and friends who may also be influenced as well.

Posted by Graham at 12:22 am | Comments (1) |
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1 Comment

  1. The neglected sector

    I’m not big on budget analysis, which is probably part of the reason I’m always running out of money. But Graham Young’s take on Tuesday’s Australian Budget presentation attracted my eye, because it dealt with a commonly neglected group: divorced…

    Comment by Evil pundit of doom! — May 15, 2004 @ 6:18 pm

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