A little knowledge

Written By: - Date published: 7:46 pm, January 21st, 2010 - 17 comments
Categories: blogs, tax - Tags:

David Farrar on Kiwiblog says

When Labour reduced the top tax rate from 66c to 33c in the 1980s, the amount of tax paid actually increased.

Wasn’t that because they introduced GST as a new tax?

17 comments on “A little knowledge”

  1. I would have assumed in was taking about income tax.

    • Marty G 1.1

      You should know better than to assume anything like that when given a bald factoid like that. Especially from Farrar.

      In fact, we would expect the tax take to go up even without GST. After all, only a very small portion of the tax take ever came from the 66% threshold. There was growth and inflation to push up the tax take. And others have noted that rates were increased at the bottom end.

  2. Macro 2

    Yes this is the new spin on reducing the top tax bracket. Even though HALF of those in the topic income stream pay less tax than those who earn less – or NO tax at all if they can get away with it! NAct want to give them more! JK tonight says we want to encourage them to pay tax by lowering the top tax bracket – yeah right! Why change a good thing – you can see all the greedies lining up to divest their trusts and “so called” loss making companies to pay more in taxes can’t we! JK at the front no doubt..
    Oh yeah! we will collect more in taxes – from those who can least afford it by raising GST!
    Now that is the way to stimulate the economy Bill! Good work.

    capcha “misled” – now that is spookie!

  3. Farrar is great at the dog whistle stuff. He comes out with simple sentences that the wingnuts will agree with totally but you get the impression that if you engaged him in debate then he will agree with much of what you say.

    When Labour introduced the 39c top bracket the total tax take also increased.

    Sweden with an effective social welfare system is much higher. Denmark is the
    most taxed country in the world.

    There should be rioting in the streets in Scandinavia. Instead most first world countries wish they were doing as well as Denmark and Sweden.

    We should have a comparison of highly taxed but civilised countries and others where tax is low but the country sucks.

  4. Clarke 4

    As one of the people who was there at the time, I vividly remember the changeover from the dead hand of Muldoon to the Lange government. The chief reason for the higher compliance was that practically all of the deductions and exemptions that had accreted over the years simply disappeared overnight.

    Under Muldoon you could claim the cost of your suit as a legitimate business expense, for instance, and anything that even vaguely smelt of R&D was more than 100% deductible, IIRC. The economy was a rats-nest of exemptions, special cases and controls – I recall traveling down to Wellington in order to procure some import license because a friend of a friend knew an MP who was mates with the Minister.

    Farrar won’t remember any of this stuff, of course, because he was in short pants at the time.

  5. Daveosaurus 5

    Farrar forgets to mention that the lower tax brackets were increased substantially (for a while, people were taxed at 24% from the very first dollar they earned). GST itself replaced most existing sales taxes, changing the philosophy from taxing luxuries to taxing almost all expenditure.

    • Pascal's bookie 5.1

      Forgets, doesn’t know, or cares not to?

      Th eternal question. Who are these people, and why are they saying these things?

  6. Jenny 6

    In fact Roger Douglas brought in the flat tax GST first. Which, then allowed him to give his rich mates their tax cuts.

    Earning him the nickname “the Robin Hood in Reverse”.

    The mental image of of Roger Douglas as “The Robin Hood in Reverse”, saw him depicted by cartoonists of the day wearing Lincoln Green and a crenelated cap with a pheasant feather in it.

  7. roger nome 7

    I’d prefer a feathered peasant.

  8. Wasn’t that because they introduced GST as a new tax?

    No.

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