Should we index tax threshold?

Comments on Peter Anderson “Bracket creep is the budget's real inequity”, 16/05/2011, http://www.theaustralian.com.au/national-affairs/budgets/bracket-creep-is-the-budgets-real-inequity/story-fn8gf1nz-1226056354689

Most of Anderson said is fair and rational in cold comfort.

The point about indexation of the tax free threshold to avoid bracket creeping and preventing over taxation is excellent, though it may benefit from more careful analysis and considerations.

For example, it could be introduced with a partial indexation and a periodical adjustment mechanism to make sure there is enough taxation revenue for government to carry out its basic duties. Maybe it should be a yearly 2/3 indexation with the CPI, and a 3-5 yearly adjustment.

However, one point about equity between family welfares and small business welfares is that if small businesses have low income, their owners are entitled to family welfares if their family income is low as Anderson said to be. Small business owners have dual roles, business and family, and could benefit from both welfares.