The business and tax community say rather than raise the top marginal tax rate, the Abbott government would be better off targeting a host of tax breaks that advantage the rich.

Australia’s high personal income tax rate is a key reason Patrick Grove left Australia for Asia years ago. “To know that almost half of my income will go towards tax is scary,” he said. “It almost makes you not want to work.”

Australia’s wealthy aren’t taking home any more than they did 10 years ago. Credit:Dominic Lorrimer

Melbourne University analysis published this week shows the share of national income going to Australia’s top 1 per cent of earners has levelled out for the best part of a decade, defying a trend in other developed countries.

The Abbott government’s debt levy has taken the top marginal tax rate to 49 per cent. It is one of the highest in the Organisation for Economic Co-operation and Development and ­entrepreneurs say that deters foreign investment and leads to talented Australians moving offshore. Instead of raising the top tax rate, the Abbott government should have eliminated tax breaks that benefit the rich, they said.