Estimates of the incidence of and redistribution through the Australian tax and transfer system over a lifetime

Tax and transfer systems redistribute both across individuals, but also intertemporally for individuals across lifetimes, which annual cross-sectional analysis can fail to capture. I provide measures of the net incidence of taxes and transfers relative to income for individuals in Australia over multiple years based on 20-year panels of administrative and survey data. I then extend these periods of analysis by generating a synthetic, person-level panel of Australians to 2070 to estimate overall lifetime incidence based on annual policy settings. This dynamic model is generated using two open-source microsimulation models: the Simpaths (Richiardi et al, 2023) dynamic microsimulation framework adapted to Australian benchmarks, coupled with the Treasury Capita static model to create heterogeneous individual lifecourse simulations. This shows that due to changes in economic conditions and policy over time there is a great deal of heterogeneity of outcomes for lifetime net tax rates even for individuals of comparable lifetime income, which reflects evolving implicit and explicit policy goals for redistribution through the tax and transfer system. A lifecourse lens on redistribution through the tax and transfer system can provide additional insight into the role of the tax and transfer system in addressing intergenerational inequality.