Means testing the baby bonus
I had vowed to not say another word on the baby bonus but the renewed speculation that something might be done has drawn me out. The talk now is of means testing it. As Andrew Leigh notes, this would have to be done with plenty of care but nonetheless would be a good step forward.
So let me recount how this might be done.
(ii) the government moves the bonus as a tax rebate rather than a straight out payment.
(iii) then the government puts a gradient on the baby bonus based on income level reducing it to $3,000 for the highest income earners (on the same basis as other child-based payouts) with a straight line based on income back to $4,000 for those paying no tax;
(iv) then, from 1st July, 2009, it starts reducing the income threshold.
