Key: out of touch on tax cuts

Written By: - Date published: 10:45 am, February 10th, 2011 - 65 comments
Categories: john key, tax - Tags: ,

Key proved himself bereft of ideas with his speech on Tuesday, and on Wednesday he showed himself to be out of touch. As you know, Key has voted himself $23,000 of tax cuts on his PM salary alone. Labour estimates another $60,000 on his investments – over $1000 a week. Key disputes Labour’s numbers, estimating his tax cut is ‘only’ $15,000.

Labour has been goading Key over his ‘thousand dollar a week tax cut’ since Parliament resumed. And yesterday, Key foolishly bit back saying:

“I am struggling with where the member gets a $1,000 a week tax cut from, because, without going into too fine a point, the last time I looked at the figure from the Remuneration Authority, I saw the Prime Minister of New Zealand earns $400,000 a year. The difference between the top personal tax rate, which was 38c in the dollar, and the new rate of 33c in the dollar is 5 percent, and 5 percent of $330,000 is about 15 grand.”

Oh poor Johnnie only gave himself a $15,000 a year tax cut, eh? Poor, poor Johnnie.

Hmm. Well, first that’s not very good maths for a money trader – 5% of $330,000 is $16,500. And Key hasn’t counted the first round of tax cuts he gave himself or the cuts on his income below $70,000. Add them in and the total tax cut that Key has voted for himself is $22,920 on his $400,500 a year PM salary.

Labour estimates that if he got just a 2% taxable return on his $50 million fortune (ie. another $1,000,000) then that’s a further $60,000 in tax cuts. A grand total $83,000 a year or $1,590 a week.

Oh and he pocketed a $7,500 pay rise this year. So, at least one person living it up on the public dime, I guess.

But, as with the Nats’ distorted net income figures (which count Labour’s tax cuts as their own, are based a skewed average, don’t count the GST hike, only count ordinary time pay for full-time workers, and don’t account for the unemployed), it’s not really the precise size of the tax cuts Key has given himself that matters. It’s certainly huge and unjustifiable.

The fact is that Key has voted for himself massive tax cuts that he did not need and he’s paying for it by cutting our services and selling our assets in a time when we’re back in recession and over a quarter of a million Kiwis are jobless. And now he adds salt to the wound by saying it’s a trivial amount, ‘only $15,000’

Talk about out of touch.

PS. If Key wants to make clear exactly how much of a tax cut he has given himself he could release his tax records like his good buddy Obama has to.

PPS. Oops. Some bad mental division – a 2% return on Key’s fortune is a million, making his tax cut $83,000 a year

65 comments on “Key: out of touch on tax cuts ”

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  1. Lanthanide 1
    10 February 2011 at 11:07 am

    I posted this in another thread, but I think MPs salaries should be indexed to the current tax rate.

    That is, if they reduce the tax rates, then their salaries should be reduced by the appropriate amount so they receive exactly the same after-tax income.

    The reverse should also apply, so if they increase the tax rate, their salary goes up by the appropriate amount so they receive exactly the same after-tax income, however this would be much less popular with the public as it would appear that the MPs are immune from tax rises that they force on the rest of the country.

    Anyway, a policy such as this would ensure there’s no conflict of interest with MPs cutting or raising taxes, and it’d make no difference to them either way – no benefit, and also no pain.

    • Bright Red 1.1
      10 February 2011 at 11:28 am

      agreed. And their base rate (not adjsuted for any subsequent tax changes) should be a factor of the median weekly income, just at benefit levels and the minimum wage should be.

      Does anyone seriously believe that any previous PM or future one would not want the job if the pay was ‘only’ $200,000 – half what it is now? And would we want the kind of person who is in it for the money to be our PM?

      • Colonial Viper 1.1.1
        10 February 2011 at 11:36 am

        For someone doing the job of PM properly I think $200K p.a. is a bit of a short change. And since they’ve probably been an MP for at least 6-12 years before hand how much should MPs get paid, relatively speaking? $80K-100K p.a.?

  2. Sanctuary 2
    10 February 2011 at 11:21 am

    “…I think MPs salaries should be indexed to the current tax rate…”

    I would prefer to index them to the minimum wage. The PM can get six times the minimum wage and then work back from there for the rest of them.

    that way, if they want a pay rise they’ll have to put the minimum wage up.

    It is called leadership, innit.

    • Colonial Viper 2.1
      10 February 2011 at 11:30 am

      and likewise, CEO’s pay should be limit indexed to a multiple of what their median full time employee gets. Maybe 15x. Median employee is on $50K p.a. CEO pay is capped at $750K p.a. etc

  3. Colonial Viper 3
    10 February 2011 at 11:26 am

    Wondered where that $1K p.w. figure LAB was tossing around came from.

  4. sally 4
    10 February 2011 at 11:55 am

    The Prime Minister is paid $400,000 a year – I’m not so sure this one earned it.

    • pollywog 4.1
      10 February 2011 at 1:37 pm

      Apparently the belief is he doesn’t draw a salary as it all goes to charity…

      • the pink postman 4.1.1
        10 February 2011 at 3:49 pm

        Well that’s what the Nats say , but who would believe that lot of money grabbers ? Anyway since when was charity the best way to help the underpriviledged ? I prefer people to be paid decent wages and for the unfortunate to have decent benefits.I look around and see a number of people who live like Lords and do very little for it whilst others who have three or four jobs and are paid peanuts. On top of this these highly paid types pay little if any tax. Its time there was change over this infair system.

  5. Bill 5
    10 February 2011 at 12:32 pm

    …the gross unemployment benefit for a single adult will actually be cut by $5 a week to offset the tax cuts and keep the increase in the net benefit to just 2.02 per cent – up from $194.12 a week to $198.04.

    Gross benefit rates will also be cut to keep the net increase to 2.02 per cent for sickness, invalid and domestic purposes benefits and student allowances.

    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10646498

    $690 000 not being given to some 138 000 unemployed tax payers. And so the gap widens between the poorest in society and the rest. Meanwhile inflation has risen above that 2.02%, meaning that unemployed people are decidedly worse off this year than last year. Good, innit?

    Now, wouldn’t it be nice if politicians adjusted their gross income to ensure that they too were paid in line with last years inflation rate?

    • Lanthanide 5.1
      10 February 2011 at 1:35 pm

      I think the idea is that benefits always suffer from inflation, and this year most of the inflation was caused by the GST hike. They were compensated for the GST hike, but remain uncompensated for normal inflation.

      • Bill 5.1.1
        10 February 2011 at 2:07 pm

        Yeah. Inflation decreases the value of a benefit. That’s a reality, not an idea. And benefits are adjusted retrospectively, so that they ‘catch up’ with inflation before slipping in value until the next ‘catch up’. Meanwhile, the government decreases the actual dollar amount of a benefit whenever it cuts taxes ’cause, like it would be a bad thing to allow the poorest in society the merest whiff of a good thing.

  6. Bright Red 6
    10 February 2011 at 1:29 pm

    $23,000 a year. It’s a jaw-dropping amount. What did the median Kiwi get?

    • Colonial Viper 6.1
      10 February 2011 at 3:02 pm

      A big unpolished tube up the nether regions.

      • Bright Red 6.1.1
        10 February 2011 at 3:10 pm

        $5 a week from two years of tax cuts, after the GST hike, by my count.

        That means Key’s tax cut of $83,000 is the same as that of 15,500 median income earners.

  7. randal 7
    10 February 2011 at 1:31 pm

    leae poor johhnboy alone.
    he gunna give his salary away doncha know.
    so 23,000 divided by two means 46 people will get 500 each or 96 poeple will get 250 each and thats not all.
    see when he runs out of dough then everybody else wil get nothing.
    howzatt?

  8. Kevin Welsh 8
    10 February 2011 at 1:55 pm

    I do not have a problem with how much they earn as I think it is about right.

    What I would do, though, is I would link MP’s pay rises to the minimum wage, so this time round they would have received the equivalent of 25c per hour increase. Much fairer, I think.

    What also seems to be forgotten when MP’s incomes are discussed is that what they are doing is Public Service, therefore the expectation that their remuneration should somehow reflect what could be earned in the Public or Provate Sector is wrong. IMHO of course.

    • Bright Red 8.1
      10 February 2011 at 2:21 pm

      even if you are happy with his wage, you’ve got to admit that the $23K tax cut he has given himself is extraordinary and unjustified given what other families are going through.

      His talking down the size of the cut to ‘just’ $15,000 is completely out of touch with reality.

      • Kevin Welsh 8.1.1
        10 February 2011 at 5:53 pm

        Yes, I agree BR. And his flippant remark that it was around “$15 grand”, just reinforced the fuckwits arrogance, to me.

  9. bobo 9
    10 February 2011 at 2:15 pm

    Talking about Mr Key being out of touch watch this performance from MRNEWSguerillamedia
    http://www.youtube.com/watch?v=ggG7osLea1U&feature=youtu.be&a squirming when asked about his shares in bank of america by Penny Bright.

  10. Cnr Joe 10
    10 February 2011 at 4:03 pm

    Hey Marty g – you write “Oh and he pocketed a $7,500 a week pay rise this year.”

    crikey

  11. Tanz 11
    10 February 2011 at 9:17 pm

    He does donate part of his salary though, so kudos for that. Yes, he makes it back with the interest on his funds in the bank etc, but never mind, at least someone else also benefits. He doesn’t have to donate a cent.

    • Lanthanide 11.1
      10 February 2011 at 10:17 pm

      Yeah, but he doesn’t say to whom, or how much. It could be $5,000 to the Young Nats for all we know.

    • Marty G 11.2
      10 February 2011 at 10:19 pm

      There’s no proof he donates any of his money to charity. Just his word – like when he said he didn’t own those Tranzrail shares.

      And it doesn’t change the fact he has given himself $23,000 a year in tax cuts (at least, probably more like $83,000) and got a $7,500 payrise.

    • lprent 11.3
      11 February 2011 at 7:26 am

      It is like everything else about Key. Sounds good, but no substance. He said a long time ago that he was donating to charity. To date it has never been shown that he does.

      I haven’t heard of any charities congratulating the PM. Have you? It would seem like PR win-win for both sides. And yet it hasn’ happened. I suspect that if he is donating, then we will find the bulk of it in the donation returns for the National party.

      • orange whip? 11.3.1
        11 February 2011 at 9:21 am

        He said a long time ago that he was donating to charity.

        It’s even less concrete than that actually – he said he was going to.

        And I think we all know how firm that is, coming from Key.

  12. NX 12
    10 February 2011 at 9:59 pm

    AT $400k, John Key pays around $140,000 tax.

    So compared to his total income & total tax, Key’s tax cut of $15-20k is comparatively small.

    What’s important is what JK does with that money – whether he invests it, or saves it, or whatever. Even if he buys share overseas it still helps NZ i.e. foreigners buy our exports!

    • Lanthanide 12.1
      10 February 2011 at 10:18 pm

      I would rather the $23,920 from his tax cut went to the government and was used to fund ECE, rather than buy shares from foreigners.

    • Marty G 12.2
      10 February 2011 at 10:21 pm

      Why does it matter what his tax bill is? The point is he gave himself a $23,000 tax cut on his PM salary alone, maybe another $60K on this investment returns.

      He didn’t have to do that, and every dollar of it means we have to borrow another dollar from overseas in government debt or cut spending, or keep someone else’s taxes higher, someone who would benefit more from the money than Key.

      • NX 12.2.1
        10 February 2011 at 10:44 pm

        @Marty – if Key can’t be trusted to know what to do with a $400,000 income (minus $140,000 tax), then cut his pay (John Minto has suggeted a total pay of $120,000).

        @Lanthanide – $20K invested = business growth = more employment = more tax for the govt = more spending on health and education.

        • Marty G 12.2.1.1
          10 February 2011 at 10:49 pm

          this isn’t about his pay packet. It’s about him choosing to give himself a $23,000 pay cut.

          It seems to me you’re just trying to avoid the fact that he chose to structure the tax cuts in such a way that he got this huge pile of cash (a tax-free bracket, for instance, would have given him the same cut as everyone else)

          • Crashcart 12.2.1.1.1
            10 February 2011 at 11:04 pm

            You can’t argue with those who believe in trickle down. They forget that that tax cut would have partly gone to over seas holidays or a nice new car. They love to make you think it all goes intot hte economy which it just doesn’t.

          • NX 12.2.1.1.2
            10 February 2011 at 11:08 pm

            Of course it’s related to pay packet.

            I’ve just crunched some rough numbers. The % of tax you pay on the following incomes.
            $26k = ~15% (excluding WFF)
            $42K= ~18%
            $400k= ~35%

            You want higher earners because they pay more tax. If just one higher earner stays in NZ because of the lower rate, that pays for Key’s ‘bonus’ x10 over.

            Also, with a lower more simplified tax rate higher earners are less inclined to restructure finances to hide income = more tax for the govt.

            • Marty G 12.2.1.1.2.1
              10 February 2011 at 11:15 pm

              John Key did not have to give himself a $23000+ tax cut.

            • Crashcart 12.2.1.1.2.2
              10 February 2011 at 11:18 pm

              higher earners were not leaving NZ because of tax. Simple. They were restructuring so they didn’t have to pay. The loop holes weren’t fixed so they will still be doing that. The fact remains that since the tax cuts the governments tax take has reduced. Where are all these extra taxes we are getting from the extra earners?

              • NX …
                10 February 2011 at 11:23 pm

                @Marty – “If just one higher earner stays in NZ because of the lower rate, that pays for Key’s ‘bonus’ x10 over. ”

                @Crashcart – National has actually changed the trust laws to stop sheltering of income. You’d know this if you read the news (why Labour never changed this is beyound me).
                Lower tax = less tax avoidance. Ask Phil Goff – he has voted for it.

                • Crashcart …
                  10 February 2011 at 11:31 pm

                  Why was it nessisary to lower the tax rate then? The excuse that Key and English both trotted out was that it wasn’t being paid so if they lowered it then it would be.

                  Oh we just forget that because they want people to forget they wanted to reward tax evaision.

                  you also haven’t explained why the tax take has gone down?

                • Marty G …
                  10 February 2011 at 11:40 pm

                  If that high earner went to Australia or nearly any other developed country, their tax would be higher on the same income even without the Key tax cuts. people were not and are not going overseas because of tax, it’s pay rates

                  which is why it’s actually mostly low-income people who are going to Aussie (a labourer in Brisbane will get twice what they do here – check out this adhttp://www.seek.com.au/Job/general-labourer-brisbane-metro/in/brisbane/18973540 , $21.52 for general labouring! You get minimum wage, $12.75, here )

                  • NX …
                    10 February 2011 at 11:53 pm

                    @Marty – it’s not just trades people, it’s IT, medicine – you name it.
                    There are many reasons why people choose to live in NZ, but if John’s tax cuts can convience even a small percentage of people to stay in NZ, particuarly high earners, then they pay for themselves!!

                    Plus, it’s not just about balancing the books. Higher earns general business which creates wealth & more taxs.

                    @Crashcart, have you been living under a rock – GEC

                    • NX …
                      11 February 2011 at 12:21 am

                      Okay, look at it this way – why didn’t Cullen introduce a 45% tax rate which kicks in at $120,000 – you know, the mega rich pricks. Why hasn’t Goff proposed it…?

                      Even your leftie leaders know why – tax avoidance goes up, it’s scares off big business, & it’s an economic impediment. End result = less tax take than you started with. The only people who end up paying it is you’re average GP who has a student loan to pay off.

                    • Crashcart …
                      11 February 2011 at 12:23 am

                      See this is the problem I have. These tax cuts are supposed to help us recover from the GEC. They were suppose to stimulate investment in NZ and help us “Agressivly come out of ressesion” just like other countries allready have. At the same time they were supposed to be Tax neutral due to the increase in GST.

                      Even the national party aren’t trying ot push that it was tax neutral any more. We have not seen recovery yet. Unemployment is sky rocketing so I guess buisness owners are not investing their tax cuts in employing new people. Probably machinery to increase their workers productivity whilst still paying them the same (very few middle to low income earners got pay rises in the last year). All of which is designed to increase their own wealth at the cost of workers.

                      It amazes me when people claim that buisness owners are the only ones who can generate wealth in an economy. Without workers to make the buisness go they have nothing. Don’t get me wrong. We need inovators to come up with smart ways to grow NZ. I just understand that we also need skilled workers to allow those inovators to achieve success. This goverment only wants to help one half of the equation.

                    • Colonial Viper …
                      11 February 2011 at 12:27 am

                      Even your leftie leaders know why – tax avoidance goes up, it’s scares off big business, & it’s an economic impediment.

                      Tax avoidance is reduced by closing down loop holes. Also by increasing the tax base. In NZ this would be to include capital gains, land and estate taxes.

                      Countries should not be afraid if a big business leaves, its competitors will happily take its place. Room will be created for small innovators to take charge instead of being crowded out by big multinationals.

                      Further we should remember that big business has the well being of its shareholders at heart, not the ordinary citizens of NZ.

                      We can keep kowtowing to capitalist investors and big corporate business but just look around you at the results in this country. A hollowed out job market and offshored jobs. 50% of NZ’ers earning less than $28K p.a.

                      Time for some big changes.

                    • Colonial Viper …
                      11 February 2011 at 12:37 am

                      Higher earners need to pay more tax.

                      And it doesn’t matter if you get an extra 1000 “high earners” to stay in the country because you will still have 2,000,000 poorly paid people. Those who kowtow to celebrity and money hardly spare a thought for how to raise the incomes of that part of the population.

                      That warm pitter patter trickle down on to the forehead of ordinary workers and beneficiaries is not the equitable sharing of money from the rich getting richer. We all know that by now.

                      Every thing the Right does it does to favour the top 5% of income earners and wealth holders.

                      Once a just few more people recognise this, the game for Key and English is up.

                    • NX …
                      11 February 2011 at 4:43 am

                      @Viper – how does it feel to be on the hard left of Michael Cullen? He never did half the shit you’re harping on about for the very reasons I talk about above.

  13. Mike 13
    10 February 2011 at 10:28 pm

    More douchebaggery from the PM at the Halberg awards tonight:
    Susan Devoy to John Key – “Don’t worry you’re amongst friends here”
    John Key – “That’s what Tony Veitch said”

  14. Rosy 14
    10 February 2011 at 10:41 pm

    Always the comedian…

  15. burt 15
    11 February 2011 at 7:24 am

    policies of envy alive and well in standard land.

    • Craig Glen Eden 15.1
      11 February 2011 at 7:51 am

      Get a grip burt or is that your problem to much gripping? The countries back in recession your lot has caused it through its stupid lack of economic management. How about you start engaging in genuine debate about how this country could do better because Burt this lot in National have no idea!

      If you want to be smile and waves apologist fine but people are really starting to realize smile and wave promises lots delivers nothing.

      • burt 15.1.1
        11 February 2011 at 7:18 pm

        Oh I get it, when we have a National govt and we go into recession it’s the gummits fault but when we have a Labour govt and we go into recession it’s drought, oil prices and the prudent economic management of the tax and spend popularity at any price gummit get called prudent.

        That’s to be expected from dim-bulb lefties I guess… but can you answer me this – do Labour govt’s who pretend to be left leaning while being nothing more than popularist always get your support (IE: Is it a colour of the logo thing) or do you actually think about their policies and their consequences every now and then ?

    • RedLogix 15.2
      11 February 2011 at 8:09 am

      Or it’s the politics of brain-dead sloganeering in burtland. (You’re short a few coffees aren’t you? Even you can do better than this.)

  16. Jum 16
    11 February 2011 at 8:09 pm

    Who has that link showing Key’s parliamentary disclosure as having loaned $1million to the Bank of America.

    It seems to have disappeared and now just shows ‘banking’ with Bank of America. They took over part of Merrill Lynch (his old firm) didn’t they?

    • Marty G 16.1
      11 February 2011 at 8:45 pm

      that’s right. in the vid he, modestly, says that when he was at merril lynch it was well-run but it went downhill after he left and had to be bought out by BoA, which is how he got the shares.

      • Colonial Viper 16.1.1
        11 February 2011 at 8:49 pm

        Merril Lynch well run while he was there?

        That’s BS of course. Merril Lynch lost big time in the derivatives and proprietary trading casino 2007/2008, but while Key was there they were already laying their bets down on the roulette table. The same bets which eventually led his firm to implode.

        • burt 16.1.1.1
          11 February 2011 at 10:07 pm

          And the current state of the NZ economy is his fault too… Hell he’s more powerful than god isn’t he.

          • lprent 16.1.1.1.1
            11 February 2011 at 10:13 pm

            You might think that – I couldn’t possibly comment (on your obsessions)

            • burt 16.1.1.1.1.1
              11 February 2011 at 11:57 pm

              Year right lprent, I’m not even a National voter but try telling the lovers of big govt, high taxes and vote buying welfare that you think such polices are short term power grabbing and they seem to think you vote National. Then the dim-bulbs go and blame National for the consequences of their beloved power at any price party consequences. I don’t expect much more from the lovers of a failed ideology but I though you were smart enough to know when I was taking the piss.

            • Colonial Viper 16.1.1.1.1.2
              12 February 2011 at 12:07 am

              The size of Government is irrelevant burt. The role it plays in helping to create a civil, sustainable, working society for citizens is not.

              And believe it or not, to do that job, it needs taxes and it needs people getting things done.

              You cut Government down too small, and all you will do is force a breakdown in service delivery while enriching private for profit consultants and contractors who are not interested in much else except their own shareholders interests. Certainly not the interests of ordinary people.

              Oh whoops thats whats happening right now under National, how co-incidental.

              As for vote buying welfare, I’m sure there are a lot of rural south island investors who just loved getting bailed out of SCf by Key and English. Another happy coincidence eh.

              • burt …
                12 February 2011 at 11:08 am

                CV

                Remind me again who passed the law that enabled the failed finance companies to be bailed out using our money !

                • Colonial Viper …
                  12 February 2011 at 11:16 am

                  burt, small investors needed to be satisfied that their deposits in banks were secure. However, there is no way that large speculative investors and foreign investors should have got 100c in the dollar back courtesy of the NZ tax payer.

                  And who extended SCF’s coverage? Bill English.

                  And who paid out over the SCF collapse? Bill English.

                  Funny, for a Government which cries poor when it comes to ECE or community services, whistling $2B up out of thin air to bail out those finance companies happened awfully quick, didn’t it?

                  • orange whip? …
                    12 February 2011 at 12:08 pm

                    100 cents on the dollar, CV?

                    Oh it was more than that. Billy Boy (us, really) paid them fucking interest on their bad investments too!

                    How’s that for retrospective risk assessment burtie?

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