A large number of Australians will baulk at the 49 per cent tax rate being imposed on incomes over $180,000. As a result I do not believe the deficit levy will raise anything like the $3 billion Treasury estimates over the next three years. And that means the government may actually honour its promise and stop the levy after three years.
In the UK they tried lifting the top tax rate and soon found it did not work. In Australia during the 1970s and 1980s, when there were top tax rates at or above the 50 per cent level, dodgy tax schemes boomed.