The effective marginal tax rate measures the loss due to income taxation and reduction of welfare benefit for every additional dollar of income. The simulation presented in this paper is based in the Western Australian context, was constructed in mid-2024, and assumes the individual is receiving the Disability Support Pension (DSP), is single, aged 21 or older and meets the medical and assets eligibility tests. The results of the simulation are presented and discussed.

Contents

• Section 1 – Introduction
• Section 2 – presents the formulas used to estimate the amount of DSP received at each income level
• Section 3 – details Income taxes, levies, tax offsets and levy reductions
• Section 4 – presents the assumptions and estimates for the benefits associated with the DSP and Pensioner Concession Card, including medical concessions, public transport concessions and the energy assistance benefit
• Sections 5 to 8 – presents and discusses the results of the simulation. Specifically, this includes final income, the effective tax rate, the participation rate and the effective marginal tax rate.