Dunne: feathering his own nest

Written By: - Date published: 12:40 pm, April 28th, 2008 - 12 comments
Categories: tax - Tags:

Peter Dunne is once again touting his plans to introduce income splitting.

It’s a policy aimed at helping out the wealthy. New Zealand Institute of Economic Research senior economist Patrick Nolan tells us that “80% of the tax gains of income-splitting would go to the top 20% of taxpayers”.

Dunne was reportedly “not bothered” by the criticism that top earners would do best out of the policy.

No surprise there.

Remember that Dunne’s tiny party hangs on to power only because of his safe seat of Ohariu – coincidently, an electorate with the highest median personal income levels in the country and the fifth highest family incomes.

12 comments on “Dunne: feathering his own nest”

  1. roger nome 1

    Let’s not forget transmission gully either – Peter Dunne’s $2 billion pork-barrel project. His entire political career is dependent on his seat of comfortable upper-middle class voters. So they’re the only ones that can expect to gain from his being in parliament. Stay puft has to go!

    http://upload.wikimedia.org/wikipedia/en/2/20/Stay-puff-marshmellow-man-original-toy.jpg

  2. Catherine 2

    Currently income tax in New Zealand is assessed on an individual basis regardless of your partnership status, and with no allowance made for and dependent children.

    Yet Income Support is jointly assessed. So if you are the non-employed partner on your household, you can’t apply for a benefit in your own right since your partner’s income would be taken into account. This is discrimination on the basis of marital status.

  3. mike 3

    “Remember that Dunne’s tiny party hangs on to power only because of his safe seat of Ohariu”

    A bit like that fossil of a man Jim Anderton.

    As Catherine says why are we jointly assessed when it comes to dishing out money but individually assessed when it comes to taking it away?

  4. randal 4

    ah sweet mystery of life…why is the sky blue>

  5. reltih_a 5

    Income splitting, all PD is doing is looking after his constuituents then, that is what an MP is supposed to do I thought. Nothing wrong with this concept. Unfortunitely my wife and I earn more than $120K so it will not affect us unless the top tax band is lifted. However my wife also has secondary tax for a second job. This is theft.

  6. burt 6

    Have any of you read the discussion document ?

    see: IRD Policy Advice Division

  7. burt 7

    Labour needs to learn a little bit about simplicity when looking at tax and welfare.

    If there was a zero rated bottom end (perhaps $10K) and income splitting was available to families then WFF would be redundant and shown up for how wasteful and inequitable it really is.

  8. Matthew Pilott 8

    Burt – how would that deiver targetted tax credits to people with children? You know that’s the point of WfF right?

  9. burt 9

    Matthew Pilott

    Did you not read what I said above “and income splitting was available to families”.

    This (allowing income splitting) is the targeting families, a non taxed bottom income bracket delivers ‘tax free’ status up to $20k for families if 50/50 splitting is allowed.

    Depending on other tax brackets and thresholds it’s impossible to tell how this would compare to WFF in therms of benefits across a range of incomes. It’s simply partisan to say it won’t deliver the goods without having some numbers to work on. Additionally tax free thresholds could be simply extended in welfare calculations making a much simpler system to understand and administer. Remembering tax payers fund all the systems which are currently designed around popular concepts with little though for pragmatic solutions and unintended consequences.

    Either having children (increasing population inside NZ rather then through immigration) is something the govt wish to encourage and support or it is not? If the govt only wish to encourage and support it for low income families then that’s just madness (which is no surprise from a social engineering govt like Labour).

    WFF is encouraging people who have the least ability to support their own children to have more while giving no incentive for people who can support and provide opportunities to do so. WFF will deliver the population bulge of lower income earners that will ensure Labour govt’s are popular for ever – but is this the type of society we really want to engineer? Is it really in NZ’s best interest to do this?

  10. Matthew Pilott 10

    Burt, as I said, the point of WfF is to help those with children bring them up – it’s not cheap, so I’m sure every cnt helps. It was simply an assumption on your behalf that a lower minimum tax rate and income splitting would render WfF redundant – and it is a subjective matter, not fact as you assert.

    I think income splitting wouldn’t be a cakewalk to implement either, at least as difficult as WfF. I’m not simply being partisan – I think WfF is better that income splitting. I’m all for the suggeste lower tax thresholds at the lower level though.

    Do you think people are more likely to have a child because of WfF? Doubtful, since when has childbirth been a purely financial transaction? “population bulge” eh? It’s not quite the end of WWII I’m afraid burt, that sounds like hysterical fearmongering to me.

    Have you ever, on any blog, complained that WfF is ‘middle class welfare’ or that it targets people with too high an income? Because income splitting gives the greatest benefits to higher income people – this is worse than middle class welfare. Is this the type of society you want to engineer? Cash for the rich and the Devil (or the streets) take the hindmost?

    As a footnote – I’m not entirely comfortable with WfF but believe it was a better alternative to a tax cut (because kids are expensive).

  11. burt 11

    Matthew Pilott

    Have you read the discussion document?

    2.14 In every country where joint taxation is allowed, income can be split between partners who do not have children. This is because the general rationale for taxing on a family basis is one of increasing fairness in the taxation of households with different compositions of income. In other words, why should two different couples with the same aggregate income pay different amounts of tax?

    Imagine what a difference that could make to the savings culture in NZ.

  12. Matthew Pilott 12

    Yes burt – the savings culture of the rich, as they would benefit more from income splitting. Rrom the herald:

    Families in which one parent earned $120,000 or more a year and the other had no income would gain the most. Splitting the income 50/50, the family could cut its annual income tax by nearly $9000.

    When one parent had an income of $60,000 a year and the other had none, the tax saving to the family would be just over $3000, assuming the same 50/50 split. If one parent earned $60,000 and the other $30,000 the family would save about $960. Submissions close on June 30.

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