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Is it fair for the PM to get a weekly tax cut of $349 while a minimum wage worker would receive only $2.15?

Written By: - Date published: 11:46 am, November 2nd, 2022 - 148 comments
Categories: Christopher Luxon, Living Wage, minimum wage, national, same old national, Unions, workers' rights - Tags:

Unfortunately politics far too often involves both sides of an argument talking about completely different subjects.

There has been a classic example occur this morning.

The NZCTU came out with calculations of what National’s tax cut would mean to the wealthy and ordinary workers.  They did this by the usual methods, using Treasury data and relying on National’s proposed

From their press release:

Top income earners and property investors would gain $5.8 billion, more than half of the entire tax cuts proposed by the National Party according to new analysis by New Zealand Council of Trade Unions Economist Craig Renney.

“It’s hard to understand why in a cost-of-living crisis that disproportionately harms the poorest,  you would design a package that is so heavily skewed to those who need it the least. More than half of taxpayers would receive either $2 a week or nothing at all,” said Renney.

“For every dollar in tax cuts that goes to the bottom half of income earners, more than two million New Zealanders, National wants to give ten dollars to the top 5% of income earners and landlords.”

“This is a question of priorities. If the Government is going to spend $11 billion, it should be focusing that money on public services like health, education and housing or on boosting incomes for families who need it, not a tax package focused on the well-off.”

The analysis used National’s proposed tax policies and data from Treasury and IRD to calculate who would receive the benefit of those policies. These policies include the income tax bracket changes, the removal of the top rate of 39% and the property tax changes.

The total cost of these changes in terms of lost revenue is $11 billion over three years.

The proposed tax bracket adjustments and removal of the top tax rate delivers significant gains to those earning over $129,500 – who are the top 5% of income earners.

The top 5% of earners would receive $3.3 billion in  income tax cuts over three years. Property investors stand to gain $2.5 billion from the axing of interest rate deductibility and ring fencing of losses, and cutting the bright line test back to two years.

“When you add it all together top income earners and those who own multiple properties end up with the lion’s share of the income benefits of National’s tax cuts – $5.8 billion or 53% of the gains,” said Renney.

“If Christopher Luxon was Prime Minister he would gain around $54,000 over three years, or $349 a week, quite apart from the gains from the properties he owns. A minimum wage worker would gain $2.15 a week – not enough for a loaf of Tip Top White.

Remember that figure, $349 per week for Luxon compared to $2.15 per week for a minimum wage worker.  I suspect we will hear that comparison regularly during the next 12 months.

Luxon was asked about this figure this morning by Corin Dann on Radio New Zealand.

It was put to him that it was not very fair.  His response was:

I get the Government wants to distract and deflect a lot around what is going on with their economic management but this is a government that has raised $15,000 per household in extra tax and is spending a billion dollars more in government spending each and every week.

Nice attempted distraction Chris.  Accuse your opponent of doing exactly what you are doing even though it is a third party that has raised this issue.

The conversation then went like this:

Dann – Do you accept their numbers?

Luxon – No, but what I say to you is the core part of our tax policies, you and I have been talking about this since February March, is to inflation adjust the tax thresholds …

Dann – And you have made that point many times but it is that top tax rate which is the issue which you are facing criticism, albeit from Unions.  They have looked at your numbers, they have crunched them, they argue that it is going to be $349 per week.

Luxon – Corin what we are talking about is a principle.  We are not changing the tax system in New Zealand.  It is a progressive tax system.  The top ten percent of taxpayers pay over 40% of our income tax in this country.  We are saying in the interests of trying to help New Zealanders immediately with a good idea that other countries around the world have done immediately, just inflation adjust tax thresholds.  With respect to lower income earners just remember tax isn’t the only thing we can do to support those people.  And you have seen that well with respect to working for families, there is the accommodation supplement, there are other tools that the Government has and does use to support those lower income workers.  We’re saying just take the current progressive tax system for goodness sake and do what many developed countries around the world have done.

Dann’s comment “albeit from Unions” speaks volumes.  I wonder if he would say the same thing about commentary from Employers’ organisations.

And Luxon kept talking exclusively about adjusting the tax rates and not about the other part of National’s policy, which has been repeated by him many times and as recently as a month ago, which is to do away with every new tax Labour has instituted including the top tax rate.

The media needs to keep asking him this question and demand that he answers it.

Is it fair for the Prime Minister to get a tax cut of $349 per week while a minimum wage worker would receive only $2.15 per week.

148 comments on “Is it fair for the PM to get a weekly tax cut of $349 while a minimum wage worker would receive only $2.15? ”

  1. Gosman 1

    This is a nonsensical argument. Given the reality of the tax system ANY reduction in tax rates across the board will lead to proportionally more money being retained by the wealthier sections of society than those on lower incomes. That would mean if you didn't want wealthy people to get more money than lower income people you could NEVER call for tax reductions which is plainly silly. Sometimes it makes sense to raise tax rates and sometimes it pays to reduce it. If you want to support lower income people do it via other means such as the welfare system.

    • mickysavage 1.1

      Firstly you can adjust the bottom tax rate and not the top tax rate.

      Secondly why should workers have to rely on the state subsidising their wages. Why shouldn't their wage rates be adequate to live on?

      • Gosman 1.1.1

        But if we don't think the issue is the bottom rate of tax but the overall rate of taxation? For example the French introduced a tax rate of 75% for income over 1 million Euros a year but they dropped it because the evidence was that it had a negative impact on the economy (see https://www.theguardian.com/world/2014/dec/31/france-drops-75percent-supertax). According to your warped logic they should not have done that beacause it only benefited wealthy people.

      • Gosman 1.1.2

        On your second point you perhaps should ask Helen Clark as that is what she decided to do with Working for families.

        • Incognito

          Luxon told Morning Report he did not accept the CTU's numbers and noted the government had "other tools" such as Working for Families and accommodation supplements at its disposal to help workers on lower incomes.

          "Tax isn't the only support we can do to help those people," he said.

          "There's other tools that the government has – and does use – to support those low-income workers."

          The core part of National's tax policy was to inflation-adjust tax thresholds, as many other developed countries around the world did, Luxon said.


          Having the tools doesn’t automatically mean using them and Luxon knows that. My reading is that Luxon will not beef up those “other tools” nor lift the minimum wage beyond inflation because he will have already given the great unwashed a generous tax cut of $2.15 a week. He should know that you cannot even a Big Mac for that.

          • woodart

            theres a slogan. "not even a big mac"tax cuts.

            • Incognito

              The Small Mac tax cut (no fries)
              The Luxon Mac tax cut
              The diet tax cut
              The cut tax cut
              The plastic cutlery tax cut
              The poor tax cut

              More creative minds surely can come up with something better!

              • Tricledrown

                luxtons lies and distraction

                $2.15 for the minimum wage worker luxon gets $350 pw plus $1,000s more from his properties.The Big WHOPPER! from the bawled face liar

        • Sacha

          ..perhaps should ask Helen Clark as that is what she decided to do with Working for Families.

          Labour and National have both run neoliberal policies for decades, yes. And here we are.

        • SPC

          No, WFF tax credits are regarded as part of the tax system, and not welfare.

          They are simply a way of reducing tax on low income famjlies.

          • KJT

            WFF, is an employer subsidy.

            Enabling underpaid workers to survive on low wages.

            Which is why it is not applied to those on welfare.

            Paid for by taxes on slightly higher paid employees.

            Not that a tax free threshold on the lower paid, offset by a higher top tax bracket, like Oz, is a bad idea. The "paperboy tax" was always a stupid "revenue grab" to help pay for National's tax cuts for millionaires.

            • SPC

              Urban myth.

              There is no evidence wages would have been higher if there was no WFF tax credits. And the same wages are paid to those who do not qualify for WFF tax credits (those without children).

              It was designed to win an election against National offering across the board cuts. It's effect was, when combined with the existing AS, to enable a higher rent to be charged by landlords – ideally it would have been combined with a home ownership scheme. .

              • James Simpson

                Exactly. An employer doesn't negotiate wages on the basis of what tax, or subsidy the employee will pay or receive. They negotiate on the basis of a cost to the business.

                They wouldn't pay more if WFF disappeared.

                • KJT

                  Absolute bollocks.

                  Without WFF, many employees couldn't afford to work for low paying employers.

                  WFF slowed upward pressure on wage rates.

                  Employers negotiate on the least they can get away with paying, and still get workers.

                  Which is why so many employers are so keen on immigration. Yet another way of getting the rest of us to subsidise their business, by covering the costs of employees.

                  • James Simpson

                    Do you honestly think employers would give everyone a pay rise if WFF disappeared?

                    No chance in hell. They would keep the difference.

            • pat

              Indeed..as is AS….it is not necessarily however wrong headed (certainly not as wrong headed as AS)

              By subsidising (transfering) labour we can maintain a lower cost input to many occupations, particularly those undervalued.

        • Tricledrown

          Jim Bolger brought in rent subsidies and Peter Dunne working for families in a National coalition.So where is all the money coming from to pay the $11 billion shortfall in taxes Austerity!More borrowing , cutting health services,education,policing etc.

          as National always do.

      • cathy-O 1.1.3

        totally agree with your second point. example is the accommodation supplement, which is actually a subsidy to employers because it means they can pay their staff less.

        and they do

      • Chris 1.1.4

        Benefit rates used to be regarded as adequate to live on. That "principle" used to be very strong. Now it's been completely abandoned. Most have probably forgotten,

    • roy cartland 1.2

      For argument's sake, why can't you propose tax reductions on most, but increases on the wealthy? Let the wealthy make their own arguments but deliver the message to the majority who will get the cuts.

      • Shanreagh 1.2.1

        Yes I agree, fix the bracket creep and more for low incomes, then initiate reviews of these new brackets based on CoL.

        Then look at other countries to see the rates their top earners/acquirers are taxed at. Then review those.

        So two separate actions

        1 addressing those in need

        2 the rest.

        There is a great saying that treating unlike people equally does not mean you are treating them fairly.

        • roy cartland

          the rest.

          100%! We should stop thinking of the very rich as 'us'; they don't think of us as them, their disdain is palpable (as is their entitlement, embodied by de-Luxon).

          The propaganda job they do is brilliant, getting us to think that billionaires and royals are 'just like us'. Sure they have eyeholes, earholes and arseholes but economically they are an alien species.

    • Jack 1.3

      Agree Gosman.

      Also fails to point out that on the quoted PM salary, they already pay $164,000 in PAYE compared to someone on the minimum wage who pays just over $5,000 PAYE.

      Funily enough thats how PAYE works … the more you earn the more you pay, but that seems to have escape the CTU and their paid PR firm

      • Incognito 1.3.1

        The PM takes home a solid $307,000 pa (no ACC).

        If your employees pay “just over $5,000 PAYE” you are underpaying them, and you should be prosecuted.

        • Jack

          If you are paying more PAYE on minimum wage you are being ripped off. Chuck it in a PAYE calculator. There are dozens of them. Here’s one


          • Incognito

            Why are you wasting our time here with your BS ‘information’?

            I keyed in the minimum wage and PAYE with an Independent Earner Tax Credit (IETC) of $507.52 applied came to $6,229.28 pa and without IETC it came to $6,736.80 pa.

            I think you are ripping off people on the minimum wage.

            • Jack

              IETC is not PAYE and not all minimum wage earners are entitled to it. Otherwise why not let’s add some other randoms into your reckons. Student loan? ACC? Accommodation supplement anyone. The discussion is about the PAYE thresholds.

              [Ok, troll, why don’t you use your own linked calculator, as I did also, and tell me exactly how much PAYE somebody on the minimum wage pays per annum, i.e., the exact figure from the calculator. FYI, the minimum hourly rate is $21.20. If I can reproduce your number you’ll avoid the sin bin, but if not, I’ll take it as evidence that you’re spreading mis- and disinformation on this site just like Luxon is doing in the MSM – Incognito]

              • Incognito

                Mod note

              • Jack

                And how many hours did you assume in your reckons? You didn’t assume 40 did you, coz that would be wrong. Stats NZ had the average NZ waged employee working 33 hours per week.

                • Incognito

                  I used the default settings of your PAYE calculator and entered $21.20 as the hourly rate. I’m waiting for your exact figure based on ‘some other randoms into your reckons’. AFAIK, a full-time job is either 37.5 or 40 hours per week and not 33 hours.

                  • arkie

                    That does depends on who you ask:

                    Employment legislation doesn’t define what full-time or part-time work is, but full-time work is often considered to be around 35 to 40 hours a week.

                    For statistical purposes, Statistics New Zealand defines full-time as working 30 hours or more per week.


                    • Incognito

                      As I said, I did not make any assumptions about hours worked per week and simply used the default settings of that calculator, which is 40 hours per week.

                      Here’s another link that also appears to assume 40 hours per week: https://www.salaries.co.nz/cd/tax-calculator/minimum-wage (based on 1 April 2021; see note at bottom of page).

                      PAYE is $6,300.

                      If you’re aware of calculators that have 33 hours per week or even less as default setting I’d be most interested to know.

                    • arkie

                      It was a quibble with the shifting definitions used by government and departments, not your calculations or comment.

                      Any reasonable person considers a 40hr week as full time.

                      Only one thinks of the average hours of all waged workers.

                  • Jack

                    Why would you put in some random number when the average waged hours in NZ is 33 per week.

                    Of course if you work more hours you pay more tax. But short of going interviewing every Sally, Bert and Manu in every street in NZ averages are the best we have. That average is 33 hours. Not 37.5, 40 or any other number from the Incognito random number generator

                    [Honest people having honest conversations make honest mistakes. However, you were not upfront about your own assumptions – expecting us to read your mind – that suited your biased and misleading narrative. Yet when challenged, you falsely accused another commenter of making up random numbers and reckons even though they were the default setting in the calculator that you linked to, of stating incorrect facts, and alleging that they were conflating PAYE and IETC. You failed to comply with the Mod note, which was a simple enough request, and started wasting Moderator time. Lastly, you received a Mod note on 14 Oct, which was your warning. Your comments have not improved since then and you add next to nothing of value to this site. See you in a fortnight – Incognito]

                  • Craig H

                    For any government purposes e.g. Social Security Act, Stats NZ indicators, immigration, working for families, full time employment is 30 hours per week although as you say, most people would think of full time work as 37.5 or 40 hours.

                    • Incognito

                      Whether you’re considered to be part-time or full-time depends on how many hours you have to work. Employment legislation doesn’t define what full-time or part-time work is, but full-time work is often considered to be around 35 to 40 hours a week.

                      For statistical purposes, Statistics New Zealand [external link] defines full-time as working 30 hours or more per week. [my italics]


                    • Craig H

                      Can't reply to yours for some reason, but the various government definitions are 30 hours or more, not exactly 30 hours. With companies trialling 4 day weeks for full pay e.g. Perpetual Guardian (which has made it permanent), nobody is really suggesting those jobs aren't full time.

                    • Incognito []

                      The nested threads go only (!) 10 levels deep after which the Reply button ceases to function.

                      Full-time is ≥ 30 h/week according to that link. The default setting in the linked PAYE calculator that I was recommended is 40 h/week. Obviously, it can be changed, but I hadn’t, which is how I obtained those PAYE figures in my earlier comment (as did others). FWIW, at school spitting out a number is not good enough to qualify for full marks and one has to show how it was derived and rightly so; same applies here on TS, to calculations, opinions, and other assertions (reckons), which is why we insist on links, for that matter.

              • Craig H

                IETC is short for Independent Earner Tax Credit, and is definitely a reduction in PAYE as it reduces the income tax portion of PAYE. https://www.ird.govt.nz/income-tax/income-tax-for-individuals/individual-tax-credits/independent-earner-tax-credit-ietc has the specifics.

                Minimum wage earners would be eligible as long as they earned between $24,000-$48,000 p.a. and didn't receive a benefit, Super or working for families. In terms of hours, that's an average of 21.78 hours per week (so 22 with the occasional reduction) up to 43.54 hours per week (so 43.5 realistically).

      • mickysavage 1.3.2

        Also fails to point out that on the quoted PM salary, they already pay $164,000 in PAYE compared to someone on the minimum wage who pays just over $5,000 PAYE.

        Funily enough thats how PAYE works … the more you earn the more you pay, but that seems to have escape the CTU and their paid PR firm.

        You say this as if you believe that really rich people and poor people should pay the same amount of tax.

        • Jimmy

          It always amuses me that the person who has paid PAYE of $164,000 is the one who has not paid their fair share compared to the bloke that has paid for example $10,000 PAYE.

          • James Simpson

            I tend to agree with you there. If the CTU was genuinely wanting to contribute to the debate it would have included the total amount tax paid by earners at each level before and after Luxo's cuts.

        • PapaMIke

          UN Salaries are tax free – like Helen got US$500,000 tax free per annum.

          Hope Jacinda can do that too !

          [A simple fact check shows that the claim about Helen Clark’s UN salary is incorrect, i.e., it is made-up nonsense – Incognito]

          • Drowsy M. Kram

            Didn’t Clark do well! As for Ardern, the UN's top job is up for grabs early 2027 laugh

            • Jack

              That’s a shame. What is she going to do between 2023 and 2027 then? Any openings with her former employer in Matamata?

              • Drowsy M. Kram

                What is she going to do between 2023 and 2027 then?

                She'll carry on being our PM (or do you know otherwise?), using Clark as a role model, rather than the early departed honest John (reckon he lost interest when he couldn't get his preferred flag over the line) – what a legacy laugh

          • Incognito

            [Link required]

  2. Barfly 2

    Did Dann understate it by $100 per week or is that a typo?

    "they argue that it is going to be $249 per week."

    [Typo now fixed – MS]

  3. Chris Luxon is always carefully talking to the wealthy, using deflections and memes.

    His "Govt Tax and Spend cause of inflation"!! Liam did not ask about "Tax cuts causing inflation." Never mind using a fairness test.

    Chris Luxon has been on a listening tour of farming districts, where he has suggested the carbon sink of our sea region should be counted in our carbon sequestering to get a better figure. Wow, what a crock. He is bloody dangerous imo.

    "Creative accounting Chris" is my new name for his actions and suggestions.

  4. tsmithfield 4

    I think the whole concept of a graduated tax system is silly, and just leads to large amounts of unproductive churn and avoidance.

    The best tax system would be a flat structure that would be simple to implement and difficult to avoid. Hence would be much more efficient and productive in terms of income returned to the government.

    Social objectives could be met through a system along the lines of family support that we already operate. The overall result should be that the poor are better off because there should be more money in the pie to distribute.

    • Incognito 4.1

      Any overseas examples of this "best tax system"?

      • adam 4.1.1

        None that have work without bullets and guns to back it up.

      • tsmithfield 4.1.3

        As Joe90 points out below, there are countries doing it.

        One of the big advantages would be that it would make it easy to set the tax rate according to the laffer curve. This would enable a tax rate to be set for optimal tax revenue generation.

        • tsmithfield

          Another big advantage is that IRD would shrink dramatically, as would the number of tax accountants, thus freeing up a small army to go and do something productive with their lives, and thus help the economy grow, and thereby further increase the tax take.

        • joe90

          Same old Laffer claptrap.



          Whether looking at income levels, unemployment rates, or economic
          output per person, states with “high rate” income taxes have economies
          that equal or surpass those in states lacking an income tax. The
          most commonly cited analysis purporting to show the opposite


          • tsmithfield

            Except I am not arguing for tax cuts as has been suggested and debunked in the article you link to.

            Rather I am arguing for setting a rate at a level that maximises revenue. This may involve increasing the tax rate if that produces the optimal result.

            I realise the Laffer curve is a theoretical concept rather than a precise formula. And, debatably, there may be cases where cutting taxes increases revenue. But for that to apply, the existing tax rates would have to be so high that they impinge on productivity very severely.

            However, as a concept, it seems intuitive that there would be a tipping point so far as tax revenue generation is concerned.

            For instance, if we had zero tax, then we would be flooded with overseas investment, and industry would flourish. But there wouldn't be much in the way of social services. In contrast, if there were 100% tax, then few would put in much effort to innovate or work hard because they would not be any better off by doing so.

            So, it makes sense that there is some optimal midpoint, and I expect that point would be different for different economies.

            In practice, it would take research and fine tuning to find the optimal tax.

            Once the revenue is generated, it can then be distributed for social objectives using methods we are very familiar with now.

            • Sacha

              How do you see wealth taxes – like most countries have – working alongside your flat income tax proposal? Seems fair.

              • tsmithfield

                I really don't like that or see the point. Not that I consider myself a target of such a tax.

                But rather, we actually want to be encouraging wealthy people to invest their money here. If they do that, a flat tax will make it unlikely they can avoid the tax, and everyone benefits from the increased tax take.

                Wealth taxes are likely to disincentivise wealthy people from investing here, hence a net negative for all of us.

                I think we should actually put aside ideological differences and focus on what will produce the best result for the country as a whole. Because, then there will be more available to distribute to the needy.

                Not that I think a flat tax proposal is likely. It wasn't received well when Roger Douglas proposed it back in the day.

                But, maybe it just wasn't sold well. Probably the best way to implement such an idea would be via inter-party cooperation. Again, that would require setting aside ideological differences, and focusing on what produces the best result.

                Probably the starting point would be an inquiry into the most effective tax system for the country, and if the flat tax idea was the winner, then off we go.

                • Sacha

                  Wealthy people do not pay income tax. Nor do they invest more if they are not taxed in other ways. We do not need another inquiry.

                  I do not know why you think a flat income tax would provide the best result for the country.

                  • tsmithfield

                    Think GST. That is something similar to what a flat tax would look like.

                    The beauty of GST is that it is impossible to avoid. Hence, the wealthy are unable to use accountants to devise ways to avoid it.

                    The more simple a tax system is, the more efficient it is.

                    Think about tax accountants for instance. Their purpose for existence is to help people find ways to minimise their tax obligations.

                    Under a flat tax regime, there would be no scope for that sort of endeavour. Hence, the number of tax accountants would decrease, and those who would have been accountants could focus on roles that actually produce something for the economy.

                    Think about the size of IRD, and how many people are involved in enforcing and interpreting the IRD rules. Under a flat tax system, the number of people required for that would also decrease dramatically.

                    Also, businesses would be able to spend a lot less on compliance due to the simplicity of the system, allowing them to invest in more productive areas.

                    So, the net effect would be a lot more efficiency and productivity in the system. So, more tax would be generated as a result.

                    Note, this argument is about the simplicity of the system, not what the tax rate should be set at.

                    • Nic the NZer

                      "The beauty of GST is that it is impossible to avoid."

                      Furnished with this revelation, you'll be wanting to go straight down to IRD, to tell them they can stop prosecuting people for GST avoidance.


                    • tsmithfield

                      There is a big difference between avoidance, which technically is legal, using tax rules to get best advantage, and evasion, which is unlawfully avoiding a tax.

                      Although the word "avoidance'' is used in the article you point to, the activities referred to such as creating false documents etc is much more at the "evasion'' end of the scale, and likely to lead to prosecution.

                      The type of avoidance I am referring to is legal avoidance, where legal means are used to find loopholes and avoid tax. That sort of avoidance is what would be eliminated with a flat tax.

                      I guess any tax is open to evasion by motivated people who are willing to risk arrest to gain tax benefit.

                    • Sacha

                      Income tax is only one source of tax income. Other countries also tax wealth. A transaction tax would be harder to avoid.

                      GST taxes consumption at a flat rate and is regressive like a flat income tax would be.

                      In general, how does simplicity provide a better result for the country than fairness?

                    • tsmithfield

                      "In general, how does simplicity provide a better result for the country than fairness?"

                      My argument is a flat tax, set at the optimal level, will maximise the amount of income available from tax due to the reasons advanced thus far.

                      Thus, if more tax is collected as a result, there is more available for meeting social needs.

                      As per my previous posts, the money would be returned to the needy on a similar basis to how family support is distributed now. If the available pie is bigger, governments have more capacity to help the needy.

                      Simply, the more complexity in the tax system, the more opportunity for avoidance. Thus it becomes a shell game for the IRD trying to shut down each new loophole that is discovered.

                      The more simple a tax system is, the less scope to find loopholes, until the point of a completely flat tax system where (legal) avoidance becomes virtually impossible.

                    • Nic the NZer

                      With this new tax regime we'll be Laffering all the way to the bank.

                    • Sacha

                      a completely flat tax system where (legal) avoidance becomes virtually impossible.

                      Only if there are no other forms of tax. Has any country done that?

                    • tsmithfield

                      "Has any country done that?"

                      Here is a paper that looks at flat taxes in practice, and how it has worked out for countries that have implemented them.

                      The paper looks at the situation mainly from the revenue side of the equation and seems positive about the impact.

                      However, I think, to be politically acceptable, it needs to be coupled with the social expenditure side of the equation, and also prove beneficial in that respect.

                    • arkie

                      The Fraser Institute is a libertarian-conservative Canadian public policy think tank and registered charity.


                  • tsmithfield


                    Yeah, well there isn't that much out there I could see on research. So I guess you would have to consider it on the quality of the analysis rather than the source, as it should always be anyway.

                    • arkie

                      As Joe has already pointed out Gov Sam Brownback of Kansas tried this Laffer Curve theory in real life, saying:

                      [On] taxes, you need to get your overall rates down, and you need to get your social manipulation out of it, in my estimation, to create growth. We'll see how it works. We'll have a real live experiment.

                      It was called the Kansas Experiment and it was a massive failure:

                      Brownback compared his tax policies with those of Ronald Reagan, and described them as "a real live experiment", which would be a "shot of adrenaline into the heart of the Kansas economy", and predicted that by 2020 they would have created an additional 23,000 jobs.

                      By 2017 state revenues had fallen by hundreds of millions of dollars, causing spending on roads, bridges, and education to be slashed. With economic growth remaining consistently below average, the Republican Legislature of Kansas voted to roll back the cuts; although Brownback vetoed the repeal, the legislature succeeded in overriding his veto.


                    • tsmithfield

                      Depends what you mean by Laffer curve theory. If you mean (as theorists propose) that tax rates can be reduced and revenue will increase, then I agree, that is nonsense.

                      But if it means finding the optimal tax rate that generates the most income for a given economy, then it makes sense. It is simply the optimal point between 0 tax and 100% tax.

                    • arkie

                      You propose a flat tax rate. This would mean tax increases on the lowest earners and large taxes cuts for those on higher incomes. You have claimed this flat rate (somewhere between 0% and 100%) could be set to maximise revenue. How is your proposal different from the failed ideas of Laffer?

                      The Laffer curve assumes that no tax revenue is raised at the extreme tax rates of 0% and 100%, meaning that there is a tax rate between 0% and 100% that maximizes government tax revenue.


                    • tsmithfield

                      The problem is that Laffer curve theorists have used the theory to argue for tax cuts.

                      From the link:

                      "The Laffer Curve was used as a basis for tax cuts in the 1980s during the Reagan Administration."

                      However, that is quite different to what I am suggesting which is to find the optimal point for tax revenue generation. That could involve raising or lowering tax depending on the current effective tax rate.

                      The other function that Laffer curve theorists tend to omit is how social objectives can be met within that framework.

                      "You propose a flat tax rate. This would mean tax increases on the lowest earners and large taxes cuts for those on higher incomes."

                      As I have suggested, under the model I am proposing, social needs would be met through extending the family support style of scheme to cover a lot more people.

                      It doesn't mean anyone misses out. Hopefully they would do better if the pie becomes bigger and there is less waste.

                • Shanreagh

                  But rather, we actually want to be encouraging wealthy people to invest their money here.

                  This is said over and again, but how? By making sure they buy shares in NZ based industries, buy bonds. Wealthy people don't give up acquiring wealth once they meet a magical number.

                  Unless the encouragement is water tight, which is hard to do, I favour a a straightforward tax.

                  • tsmithfield

                    I think there needs to be an incentive for them to invest in productive industry rather than property or money in the bank. And that they are incentivised to keep their profits in NZ.

                    • Sacha

                      Other countries incentivise productive investment by taxing unproductive ones like housing and rent-seeking.

                    • Shanreagh

                      T Smithfield I am genuinely interested in this aspect. You always have interesting points of view. I fee las if you have just blown off my queries.

                      What kind/s of incentive?

                      Looking at Sacha’s point is it more a case of taxing unproductive industries rather than providing subsidies or incentives, as a way ensure tax is enhanced.

                      Do these involve subsidies for people already doing very nicely thank you

                      NZ is a signatory to various tax agreements about where and how money is taxed. Would amending some of these be a way forward? ?

                      What sort of industries/sectors do you envisage would be worthy of investment?

                      Failing any neutral way of incentivising is the only real way to ensure tax is paid is to up the rates or adopt a flat tax rate?

                      Would it be possible do you think to have a tax system that was part PAYE and part flat tax ie ll over $180,000 say paying a flat % on the total earnings?

                      What do you think of the idea of treating all but the higher taxpayers first possibly with arresting bracket creep, adjusting for fairness and then making sure the resulting brackets are subject to cost of living increases then looking at the rest?

      • alwyn 4.1.4

        Brunei has what many would regard as the "best tax system".

        Companies pay a Corporate tax at a rate of 22%. That is it.

        There are no personal taxes at all.

        No Personal Income Tax
        No Sales Tax
        No Payroll Tax
        No Export Tax
        No Manufacturing Tax
        No Capital Gains Tax


        Of course they weren't so silly as to ban oil and gas production as we did.

        I was working there at the time they introduced TV. The Sultan simply declared a national dividend and every household was told they could collect a free TV courtesy of the State.

        • Drowsy M. Kram

          Of course they weren't so silly as to ban oil and gas production as we did.

          Did we? Evidently Kiwi gas is still flowing. As for oil production, see page 35:


          Declining, for sure, but ~7 million barrels produced last year. Not bad, depending on your PoV.

          However, it is worth noting that this decline had little to no implications for New Zealand’s energy consumption. New Zealand’s crude oil is almost exclusively exported because the Marden Point Refinery was designed to run on heavier, foreign crude oil. Only 3.4 per cent of the crude oil used by the refinery in 2021 was indigenously produced.

          • alwyn

            You are quite right. My wording was carelessly expressed. Exploration was banned, not continued production from existing fields. Stupid of course when you look at the amount of coal we now import into the country.

            My link is a bit out of date by the way. It had that lovely graphic of the taxes that I couldn’t resist though. There are still no individual taxes so that bit is still true. The corporate tax rate of 22% may be out of date.

            Did you realise that if we hadn't allowed oil exploration in the 1960's we would have a nuclear power station in New Zealand?

        • Tricledrown

          alwyn being a very large oil producer levies provide the govt funding. you don't get to vote either.

  5. Ad 5

    Labour won't get away with 2023 election without a tax cut. Robertson is getting super-profit benefits but worsening delivery. Give the money back.

    Ideally massive tax cut for those under $50k.

    Not enough to quibble with Luxon's gibberish.

    • arkie 5.1

      Preferably by raising the tax-free threshold so that beneficiaries and those on super would no longer be taxed on their income. It would be a fantastic move to undercut any arguments from the right and would be fully supported by the Greens and TPM.

      • Craig H 5.1.1

        Beneficiaries not being taxed on their income would not lead to an increase in money in their pockets from benefits as tax on benefits is calculated on the net rates and added on so it can be deducted for IRD, not calculated and taken off the gross rates directly.

        It would temporarily increase superannuation, although as superannuation adjustments are also based on net rates, that would eventually be scaled back.

        • Nic the NZer

          Your saying beneficiary after tax income is recorded by MSD and for super its before tax income which is recorded?

          Of course either way its possible to translate between before tax and after tax income, so the question would be why MSD didn't do that.

          • Craig H

            Both are recorded in tax filing as gross amounts and deductions from them. However, in terms of actually calculating and paying that income tax, the Social Security Act requires IRD and MSD to agree an amount based on the M tax code which is then added on and subtracted for recording purposes because the statutory benefit rates are net rates. As net rates, any tax changes have no impact unless Cabinet also puts up the benefit rates by an equivalent amount (which they might do, but they have to take deliberate action).

            The New Zealand Superannuation and Retirement Income Act doesn't do that because the statutory rates actually published are gross rates.

            • Nic the NZer

              Thanks. Think I understand how that outcome happens kind of automatically in that case.

    • Poission 5.2

      Robertson needs to stand firm on this,we are in a balance of payments problem and need to either reduce debt,reduce subsidies to the unproductive sectors,or increase taxes.

      • Shanreagh 5.2.1

        What subsidies do we have left?

        Asking for a friend who wants to restructure his business to take advantage of them.

      • Tricledrown 5.2.2

        poisson if we have a balance of payments problem 90% of the worlds economies are in a far worse situation.NZ has come through the pandemic in relatively good shape. the problem is our export markets are they resilient enough to keep buying our exports. So far so good tourism will bounce back as well.The cost of fuel is the big elephant in the room,

    • Craig H 5.3

      I don't think cutting the total tax take is a great idea as there's still a bit of debt to pay back, but I think rebalancing the tax rates is required – lower taxes at the bottom end and higher rates at the top end.

      • Nic the NZer 5.3.1

        The RBNZ balance sheet contains $49.5 billion of NZ govt debt under the LSAP program. This is debt that the govt clearly owes to its banking department (which is consolidated into the govt balance sheet).


        Once this is consolidated out of the NZ govt accounts it becomes clear that any drain of govt debt payments decreased across the pandemic period.

        • Craig H

          Given the bond rates over the past few years, it's not surprising that our payments reduced, but those rates were unusually low and can't be relied on longer term. Paying down debt is also anti-inflationary since it takes tax out of the economy rather than circulating it further.

          • Nic the NZer

            My point isn't really that the interest rates are lower, but that the govt will be paying the coupon back to its department. This is an outcome of the LSAP program (and other QE programs). Of course the self funding demonstrates that the govt is not dependent on bond markets in its budgeting, even if it typically allows them to set govt bond rates. Ultimately the RBNZ can always step in and set what-ever interest rate it wants on govt debt (including zero or negative rates).

            • pat

              Its dependent if it wishes to purchase outside NZ…and unfortunately almost everything we require is sourced there

            • Poission

              Both the BOE and the FED have QT (bond selling) underway with the BOE to sell 830 b pounds (short end bonds) and the FED a trillion a year (243 b so far) this reduces liquidity and raises debt costs at the short end.

              Debt costs will revert back to their historical means,as the days of easy money and high p/e values are over.

      • Shanreagh 5.3.2

        Agree Craig H.

    • pat 5.4

      "Ideally massive tax cut for those under $50k."

      By all means…and a commensurate hike on incomes over 150k

      • Pat in Australia , the first 18200 is tax free and 19c up to 48000. People on $180000 attract 54000 tax and 45c in the dollar over 180000. Makes our 39c look a bit light.surprise

  6. Mike the Lefty 6

    Why just look at the PM?

    There are many top business executives that earn far more than the PM.

    It would be even better for the CTU to publicise what the rich listers would rake in under National.

  7. mosa 7

    " Dann’s comment “albeit from Unions” speaks volumes. I wonder if he would say the same thing about commentary from Employers’ organisations "

    Of course not because Dann being the typical sympathetic National party media spoke person who always manages to distort or get the boot in by making comments like that.

    That sadly is why we cannot debate any issue without biased questions or comment and always negative reporting from the media when any other government other than the born to rule Tories are in office. Helen Clark can attest to this media environment while she was PM.

    Since Dann , Espineer and others moved onto RNZ from TVNZ they have bought their bias with them which is why the board and management changed under the last National , United Future , ACT , Maori party government to ensure that the right and its attacks and propaganda is always well taken care of.

    • Incognito 7.1

      Stunned silence from Drs Oliver Hartwich and Eric Crampton of the New Zealand Initiative. If they had found any fault in the Union’s numbers after crunching them they would have been on talk-back and Mike Hosking before lunchtime.

      • mosa 7.1.1

        " Stunned silence from Drs Oliver Hartwich and Eric Crampton of the New Zealand Initiative.

        Its hard to compete with cacophony of right wing hysteria and paranoia.

        • Incognito

          Sophistry takes time, even RW sophistry, especially when you use Dr in front of your name and have some kind of corporate fancy job title.

  8. Adrian 8

    Try to avoid using the “ Luxon as PM” line on these issues, it just gives credibility to the narrative that the Nats want to run, say “ Ardern as PM” , that reinforces a fact that pisses them off.

    • Incognito 8.1

      It gives credibility to the idea that Luxon would suck at being the PM and that National would be a shambles being the figurehead party of ACT in Government.

  9. observer 9

    Micky S (and Corin) are right, the Luxon line is tired and not working. It's always …

    Interviewer: "Abolish top tax rate?"

    Luxon: "The thresholds, the thresholds!"

    Interviewer: "We get that. Now, about the top tax rate …"

    Luxon: "The thresholds, the thresholds!"

    He knows (everyone probably does) that 'bracket creep' issue could win votes but the top tax rate issue will lose them. So he thinks he can bluster it away, and for a while he was right. But no longer.

    The McDonalds stunt was terrible optics for him.

    • mickysavage 9.1


      The Mcdonalds stuff was weird given what he had been saying about fair pay agreements.

    • Shanreagh 9.2

      The McDonalds stunt was terrible optics for him.

      Not only that but the Nats are always belabouring the PM having worked in a fish & chip shop. I think I read that he said he had worked in McDs as a youth.

  10. Stuart Munro 10

    So much nonsense is talked about tax.

    NZ is much less taxed than many comparable economies – tax cuts should therefore be absolutely ruled out – in fact increases for the unproductive rich – speculators, and the new ineffectual civil service mandarins that claim technocrat salaries their results do not justify, are decidedly overdue low-hanging fruit.

    Nor is tax properly graduated – people receiving $10 million per annum can afford to contribute a little more than those only getting $1 million.

    As for Luxon, trying to breathe life into Truss's failure is no more likely to succeed than his period running Air NZ – absent government bail-outs he'd've broke it.

    • alwyn 10.1

      You did notice that the document you provided a link to was dated November 1999?

      Or didn't you?

      Am I allowed to suggest that New Zealand is grossly overtaxed in that the maximum tax rate is 66% on all income over about $25,000/annum.

      Well it was, in 1983. That is only marginally less relevant than your paper from 1999

      • Stuart Munro 10.1.1

        Aaach – you're an ACToid – you imagine you're overtaxed even when we pay you.

        1999 is recent enough to be valid – 1983 is just a transparent attempt to muddy the water, as expected from those without a leg to stand on.

        How about you break out of your shameful intellectual idleness and give us some rational basis for deciding the fairness or otherwise of tax?

      • Tricledrown 10.1.2

        alwyn Muldoon / National increased the top tax rate from 48 cents in the dollar to 66cents in the Dollar around 1980. Hardly anyone paid that amount as they had many ways of dodging it ,I worked in inland revenue back then. I have studied taxes in countries around the world most countries average tax on the average income is 50%.Some countries have low income taxes but have high land taxes ,GST VAT or other taxes. But OECD research shows lower taxes and bigger wealth gaps mean less economic activity, less job security,more poverty.

    • alwyn 10.2

      " absent government bail-outs he'd've broke it"

      What government bail-outs were those Stuart? To the best of my knowledge there may have been bail-outs before he was running the company and there may have been a bail-out a few years after he left but during his time at the Airline it was very profitable and was very highly rated for service by its customers. Why don't you provide some evidence for your rather wild assertion about what you seem to imagine happened.

      • Stuart Munro 10.2.1

        AirNZ is a perennial beggar – always going cap in hand to govt. – and Luxon is no safe pair of hands – anything but.

        To the best of my knowledge

        I get it – you want me to dig up sources, (which you will ignore), but you expect us to trust your rabid and untrustworthy far-right reckons.

        If you truly must, dig up some factual support for your contention, and I will consider your request.

        • alwyn

          You are the one who made the claim Stuart. It is up to you to prove it, or admit you really don't know what you are talking about. You really shouldn't have to go to any trouble "digging up sources". When you make a claim like that you should already know what these supposed "sources" are

          It would seem that you don't have any idea whether your claim is true or not.

          • Stuart Munro

            Your objection is premised on your 'to the best of my knowledge'.

            If you can't be bothered to do better than that, I'm not concerned to provide links for a bad faith commentor like you.

            • Jack

              You're happy to accept a link to 1999 but not 1983 Stuart. What do you reckon is the right cut-off – 1984,85,86,87,88,89,90,91,92,93,94,95,96,97,98 or 99? Would love to know for future reference. Thanks.

              • Stuart Munro

                The relevant point is NZ tax rates as compared to the OECD. For those purposes, 1999 in NZ is pretty relevant – but 1983, ie prior to the criminal insanity by which Roger Douglas impoverished our country, is not.

                But then you and your laughable fellow traveler already know this. Why is it that you don't want a real discussion on tax – Is it a case of "I'm alright Jack?"

      • Tricledrown 10.2.2

        Luxon managed the airline when air travel expanded the most rapidly and the most profitable of anytime in world history.Had it not been bailed out by Labour govts {National have never bailed out Air NZ National criticised Michael Cullen for bailing out Air NZ saying it should have been allowed to fail}Luxon wouldn't have job.Luxon is a bawled faced liar.

    • Planet Earth 10.3

      Stuart, re your assertion that “absent government bail-outs”Luxon would have “broke” Air NZ, he was CEO from 2012-2019. Over that period the company paid two dividends every year TO the government, except for 2014 and 2016 when it also paid a third, special dividend.

      It’s not only tax that “so much nonsense is talked about”, Stuart.

      • Stuart Munro 10.3.1

        Yeah whatever – just another deflection from discussing tax – must be a significant weakness.

        • Planet Earth

          Stuart, 1. You brought it up (deflecting?), and 2. You were completely wrong

          • Stuart Munro

            Completely wrong am I?

            Just how much does Air NZ presently owe the taxpayer, Planet Earth? And why is this perennial beneficiary not treated with the ritual humiliation of applying to Winz every time it can't make ends meet?

            Does this look like a stellar performance to you? And, does Luxon not bear any responsibility for this long legacy of failure and freeloading off the long-suffering citizens of New Zealand?

            But this an aside – the point is tax policy – which the ACToids are notably reluctant to discuss. That might have something to do with tax cuts (over which they are rubbing their paws like so many raccoons) are exceptionally bad policy:

            We both tried tax cuts and tax increases and it’s never happened. The Reagan tax cut led to big deficits. George W. Bush’s tax cut led to big deficits. Trump’s tax cut led to big deficits,” Krugman said. “Bill Clinton raised taxes and, you know, Republicans predicted disaster. It goes on and on.”

            “This is a theory that has – nothing has been tested as often as this one. And yet, when the Trump tax that was passed just about every Republican in Congress said, ‘Oh, I’m sure this will pay for itself,’” he said.

            So why does that theory persist? And did Republicans really believe it would pay for itself?

            Krugman has a blunt answer.

            “With politicians, do they actually believe in anything?” he quipped. ”The answer is, look at the people whose taxes are cut. A lot of zombie ideas, not all of them, but a lot of zombie ideas are basically kept shambling along eating people’s brains by billionaires.”

  11. woodart 11

    any time luxons minders let him near a microphone, "SHOW US THE MONEY , CHRIS" do it loud enough and long enough , and we will see luxons "threshold". let someone at the top of the pyramid explain the principles of pyramids, to the peons at the bottom, AND the nonames in the middle. luxon cant, hes not smart enough.willis will give it a go, but her eyes disappear when she lies, not a good look….

  12. logie97 12

    Aren't our public services all crying out for recruitment drives, training, and more money.

    Why aren't Labour promising big payments to these sections (Health/education/security etc…). They have 9 months 'til the election. Let's see the Right try to claw it back if they were to win the election.

    The fact is that public salaries have to be paid from taxation. It's the only source of income. So cut the tax loopholes and soak the rich.

  13. pat 13

    "Is it fair for the PM to get a weekly tax cut of $349 while a minimum wage worker would receive only $2.15?"

    Obviously not…but tax is not necessarily fair…it serves a purpose.

  14. Brigitte 14

    Clearly cutting any tax rate will mean that ALL taxpayers earning more than that tax bracket will get a tax cut. Those above the top of that bracket will all get the same (maximum) amount of tax cut.

    Looking at the various solutions offered, I wonder if we could move to a two rate system. The first is a 0% bracket (or tax-free allowance) and the next is a top rate of 39%. With the tax free allowance being set so that the tax at 180k is unchanged from now. That would result in everyone earning less than that amount will get a tax cut with the maximum amount being at the tax free allowance.

  15. Mark 15

    Rich people, when is enough enough? How many zeros in your bank account is required for you to stop that greed issue you have?

    Everything a poor person makes is taxed, everything a rich person makes isnt yet greed constantly takes over and who cares about the poor.

    Rich pricks already got a tax cut last time under Key, now they want another?, fuck off.

  16. Maurice 16

    If you make $180,000 a year living in New Zealand, you will be taxed $52,314.

    Your average tax rate is 29.1% and your marginal tax rate is 39.0%.

    Earning The Adult Minimum Wage per year before tax in New Zealand, your net take home pay will be $34,721.76 per year.

    Your average tax rate will be 16.53% Your marginal tax rate will be 17.50%

    On The Adult Minimum Wage annual salary you will pay $6,300.00 PAYE tax and $607.36 ACC

    Perhaps moving to lower tax steps and leaving the upper %ages in place?

    • Brigitte 16.1

      Based on my suggestion @14.0 above, that would allow for a tax free allowance of $45,862. As the rest to $180k of $134,138 at 39% would result in $52,314 tax.

      So that would include well over a full time minimum wage rate worker.

      • alwyn 16.1.1

        I may not be understanding what you are saying correctly Brigitte but I don't think you are allowing for the fact that there are a lot more low income earners than those on high incomes.

        If we had only 2 people, one earning $45,000 and one earning $180,000 the tax collected would total $52,314.

        If we had 1,000 people earning $45,000 and a solitary individual earning $180,000 the total tax that would be collected would still be only $52,314.

        With a million people on $45,000 and still only one on $180,000 then the state would still only take in $52,314.

        I don't think that is really what you mean but that is how I read what you are saying. Am I wrong in my interpretation, and if so how?

        • Brigitte

          No, it's just a way to give tax cuts to the lower paid whilst minimising the tax cuts to higher paid. Noting that other tax cuts will propagate through to the highest earners. Which for many people seems to outweigh the benefits of tax cuts to the lower paid.

          In this case all the lower earners get a 100% tax cut (no tax payable) and then the 39% top tax rate cuts in. Which is higher than the current marginal rate (obviously). Although that still means everyone earning under 180k gets a tax cut (the $ amount reduces as you approach 180k) and those at or over the 180k have no change in tax payable.

          You are right that the total amount of tax collected by the govt is reduced. I can’t say whether that reduction is more or less than the increased tax take from bracket creep since the last adjustment. But the option remains to adjust that 39% rate upwards meaning the equal tax to now $ earnings will be lower. And more tax payable from that point.

  17. Jimmy 17

    When people argue "It's not fair that higher earners get more back with tax cuts", I always think of this story / example.


    • Jack 17.1

      Its a good story Jimmy. I think some of those responding to this OpEd would argue that the restaurant owner is a rich prick and should give the remaining 9 dinner for free now that the rich friend has left (presumably migrated to Australia)

      • Tricledrown 17.1.1

        jack and jimmy poor people can't afford to eat let alone go to a restaurant .The rich friend blows yours dumb argument out of the water. Australia 's top tax is 45 cents in the Dollar plus there are state taxes and big city rates much higher than NZ rates on top of that.So which country is your rich person going to migrate to now the UK higher taxes.

  18. Mike the Lefty 18

    The tax cuts I think are most fair and feasible are a cut in GST or removal of GST on fruit and veges. I do not buy the argument that it is too difficult, other countries seem to be able to do it on their GST alternatives.

    Labour would do well to look at doing this, it would provide a complete contrast with National and ACT who, despite their claims of being low tax parties, won't do that.

    • Craig H 18.1

      Agree with general lowering of GST, but not specifically on fruit and veges. I don't trust the supermarkets to actually pass on specific reductions.

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