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Nats painted into a corner

Written By: - Date published: 12:55 pm, July 28th, 2008 - 29 comments
Categories: election 2008, john key, tax - Tags:

John Key has announced Working for Families would be kept unchanged by a National-led government. That’s the same Working for Families that National attacked endlessly. Key himself said “Working for Families is a real ‘Maharey special”. It started as a mess, it was completed as a mess, and it will remain a mess the whole way through.”

National was particularly concerned about two things: that a few high income ($100K plus) families with a large number of children (4+) get small Working for Families payments ($1.1 million in total was paid to 1000 families earning over $100K in 2007) and that the abatement rate on Working for Families is too high (for every extra dollar of family income of $35,000, 20 cents is taken off WfF payments) meaning that for every extra dollar you earn you only get 80 cents richer, before tax. Of course, simple maths shows you can solve one of these ‘problems’ but not both – if you want WfF to not be available to families earning over 100K, you need a steeper abatement rate (a cut-off point is just an even higher abatement rate), or if you want a shallower abatement rate so that people lose less of their WfF payments for every extra dollar they earn, then people will still be eligible for payments at even higher incomes. The only way to solve both issues would be to make all WFF payments lower.

Labour chose a middle path between abatement rates and high income recipients but that didn’t stop National attacking. Now, they’ve been forced to concede they can’t do better.

The tens of thousands of Kiwi families who pay little or no tax thanks to their WFF tax credits will be breathing a sigh of relief but National now has a real problem. They’re still promising big tax cuts and there’s no money left to pay for them – they’ve guaranteed all major spending. That just leaves borrowing. Will Kiwis vote to borrow for tax cuts for the rich?

29 comments on “Nats painted into a corner”

  1. George 1

    Another nice tasty dead rat swallowed. Key should write a cook book, “101 ways to enjoy dead rat”.

  2. Draco TB 2

    From Here

    Act leader Rodney Hide said National’s move emphasised there was nothing between the two big parties.

    “It’s consistent with their strategy,” he said. “They agree now with everything Labour has done, and the only thing they disagree on is who should be Prime Minister.”

    The only real difference so far between National and Labour are that National have promised to cut wages, indirectly, by putting in place policies that undermine the negotiating power of the workers.

  3. “The only real difference so far between National and Labour are that National have promised to cut wages, indirectly, by putting in place policies that undermine the negotiating power of the workers.”

    Of the policies oft criticised yet ne’er delved from, most are straight from the Labour Party philisophical playbook. Many of these policies originated in this seat of government.

    They are not from the National Party playbook – obviously, otherwise why would have they opposed the implementation of all of them? National is setting itself up as the Clayton’s People’s Party, to get the votes of the very people it despises as “punters”.

  4. Pascal's bookie 4

    Yep, as this seeps in, the question will become: why vote for a fake Labour Party when you can have the real thing?

  5. mike 5

    “Will Kiwis vote to borrow for tax cuts for the rich?”

    Is that the latest test line line out for trial?

    For one berating the lack of statement from National you obviously missed Key on morning report stating they would not borrow for Tax Cuts.

  6. Felix 6

    And there’s no way he’d just, you know, change his mind about that?

  7. Matthew Pilott 7

    And there’s no way he’d just, you know, change his mind about that?

    In theory, if a few people in Hawkes’ Bay said they wanted him to, Key would. That’s apparently why he’s keeping WfF. Why don’t we get a few people to tell Key they’re voting labour – then Key would probably say he’ll do the same.

    That is such an obvious ploy I can’t believe no one had thought of it until now.

  8. Draco TB 8

    For one berating the lack of statement from National you obviously missed Key on morning report stating they would not borrow for Tax Cuts.

    No, they’ll borrow to fund capital investment after cutting taxes. They just won’t admit that if they hadn’t cut taxes they wouldn’t have needed to borrow. Comes down to the same thing really – we end up paying more than we should have and decreasing our living standards in the long term.

  9. Sheik Sensible 9

    I am not a fan of either National, Labour nor Mr Key himself.(I see Mr Key as “Bill Rowling with a wallet!”) I deeply resent the WFF policy as I believe it is discrimanatory at the expense of those members of the constituency who have either already raised a family or elect to remain childless. Let’s label it as what it is “Working For Another’s Family.”

  10. randal 10

    ss do your thing and stop moaning. give a little instead of wanting to take everything

  11. Jasper 11

    Key’s said that once the election campaign starts, he’ll annouce the tax cuts package in the first week.

    Great. So if the election is November 8, then by the end of August most people would have forgotten the tax cut package.

    Which seems to be the only policy that National will be radically different from Labour on..

    Any takers on betting it’ll be Labours 2011 full tax cut package straight away, but no more tax cuts for the next 9 years while we pay back the borrowings for it?

  12. Tamaki Resident 12

    Isn’t the real question “what will they really do, should they get into power?”. They have flip-flopped over a number of issues, so chances are they will flip-flop back with lame excuses as to why they are not keeping their promises.

  13. Matthew Pilott 13

    Sheik Sensible, given that under WfF you get your own tax back, your renaming of WfF isn’t very…sensible, shall we say.

    Saying that a policy is unfair because someone ‘may have already raised a family’ is beyond ridiculous, though. That means that no government policy could ever be enacted.

    State houses – well what if you would have qualified for one, a few decades before they came in? Welfare – what if you didn’t have a job once upon a time? Unfair… Tax cuts – what if you’ve retired and will get a smaller tax cut now? Discrimination! Roading – what if you elect to not have a car, and buy your goods locally? National’s broadband – what if you don’t use it, or find what we have is fast enough? I could go on with every policy ever enacted by any government, ever, and show how it didn’t affect everyone equally.

    So yeah, not a good criteria there sorry. Try and think things through a little before that deep resentment comes out.

  14. pete 14

    National have been careful not to tell us their tax cuts will be “bigger” — all we’ve been given are vague promises of “better” tax cuts.

    Sounds like tax cuts for the rich will be funded by reducing Labour’s tax cuts to the unrich.

  15. Daveski 15

    Saw a comment this morning that the electorate seems to want “Labour” policies with a different face, so perhaps the policy flip flops are now strategic!

    It raises the idea of a grand coalition! That’s a scary thought. There’s most likely a solid core in both Labour and National that could happily live together.

  16. Anita 16

    Jasper,

    Key’s said that once the election campaign starts, he’ll annouce the tax cuts package in the first week.

    Where did he say that?

    Did he define what the start of the election campaign would be?

    I would be surprised if they announced their tax cuts before PrEFU.

  17. IrishBill 17

    Anita, the link is here. It was the same day (and I think the same business meeting) they announced their employment policy in what was, I suspect, an attempt at inoculation.

  18. Sheik Sensible 18

    Mr Pilott, you address whether I am sensible or not…

    What is sensible in “…you get own tax back…” Why harpoon MY money in the first instance. The tax first being taken then repaid seems a pointless form of musical chairs with a taxpayer’s own funds. If it is my money why can’t it stay with me throughout? What is beyond ridiculous (to quote your pompous sweep) is the insistence of socialist trash imparting a doctrine of ever more government in one’s own life. We are not designed to live from a metaphorical nipple for the duration of our lives. I request all political parties to stay away from me.

    [lprent: so stay away from the site… It is a political site.]

    “Try and think things through a little before that (sic) deep resentment comes out.” In your case not from any cognitive organ.

    That routine BA I estimated you hold is failing you onceagain. Where did you earn it? My wager is Waikato, perhaps Otago, South Pacific, somewhere in Eastern Nigeria? (C-C+ average? Unless Naive Idiocy was a major of yours; it demonstably wasn’t English.)

    [lprent: Ok so you also appear to like masturbation in public. ]

    PS “Criteria” is a pluralised noun.

    [lprent: Personally the only degree you seem to have is a degree in being supercilious. I find it difficult to see any merit in having you around. I’d question that you have sufficent intelligence to maintain a conversation here, because to me you look like you’re pig ignorant. If I see one more message in this style then I’ll dump you out of here permanently for trying to start flame wars. ]

  19. randal 19

    SENSIBLE it is not your money! it is only a lien on future production or a bribe to make your grandchildren love you. when you dig gold out of the ground then it is your bullion otherwise it is fiat currency provided by the government so you can purchase goods on the free market

  20. Anita 20

    “first week of the formal election campaign”

    I suspect that means the first week after the opening addresses, which is significantly after the announcement of the date, as the Broadcasting Act says the opening addresses occur within the “election period” which commences on writ day.

    But I could be wrong – anyone have a different interpretation?

  21. Aj 21

    As I said in another thread, I look forward to Key defining ‘average wage’ ‘$50’ ‘now’ ‘in three years’ ‘borrowing’.

    Come on John, front up.

    Gosh – as National try to fight Labour on their own ground – having absorbed most of Labour’s core policy – the teetk grating amongst grassroots supporters must be ear shattering.

  22. Matthew Pilott 22

    SS, if you can devise a redistrubutive instrument that allows families to keep their tax instead of recieving credits then by all means, let the IRD know. I suspect that it would be too difficult, hence WfF in the present form.

    Play the ball sunshine, prove me wrong instead of making vacuous personal comments… You might want to watch your English use, if you want to critique mine! Not to mention the odd question mark MIA, spelling mistakes, tautology, capitalisation, failure to use spaces where required and a fundamental inability to construct a list, or to distinguish a personal attack from one upon a specific (and demonstrably flawed) idea of yours.

    In lieu of a counter-argument, I’ll presume that you accept my point, and that your reason for such ‘deep resentment’ of WfF is based upon general ignorance and a thorough lack of understanding of implementation government policy. Feel free to try and argue though, if you’ve finished being an Angry Bigot. Again, try and think things through. I don’t think you know what your metaphorical nipple looks like at this stage, but keep trying if you can, son, you might get there.

    Oh: “…it demonstably wasn’t English.” Gold.

  23. Anita 23

    Matthew Pilott,

    Oh: ” it demonstably wasn’t English.’ Gold.

    I thought it was a (probably accurate) assertion that not even Bill could prop up Lucifer.

  24. Matthew Pilott 24

    Ah well, I managed to butcher ‘redistributive’, but no, English doesn’t hold a candle to the Lord Of Darkness! Nice interpretation though…

  25. Anita 25

    I love my spell-checking web browser now I just need a fact-checking one 🙂

    [lprent: Ummm I think that happens after you post the comment? Of course if you’re fast enough you get 5 minutes to correct (small print – only works if you proof-read fast as well).
    BTW: the correct smilie if you miss the edit is probably 😳 colon opps colon ]

  26. RedLogix 26

    In the meantime back at the ranch.

    The tens of thousands of Kiwi families who pay little or no tax thanks to their WFF tax credits will be breathing a sigh of relief but National now has a real problem. They’re still promising big tax cuts and there’s no money left to pay for them – they’ve guaranteed all major spending. That just leaves borrowing. Will Kiwis vote to borrow for tax cuts for the rich?

    Geoff Robinson interviewed Key on this topic this morning and I clearly heard Key state THREE times the exact words; “We will not borrow to pay for tax cuts”. Key could not have been more explicit.

    And yet at the same time he was still promising substantial tax cuts for everyone.

    http://www.radionz.co.nz/__data/assets/audio_item/0010/1681264/mnr-20080728-0616-National_Working_for_Families-wmbr.asx

    I suspect Key intends to loot Cullen’s Superannuation Fund.

  27. randal 27

    so in other words they still have no policy?

  28. Dean 28

    “Play the ball sunshine, prove me wrong instead of making vacuous personal comments”

    I’m only not laughing out loud, for fear that my head would fall off. MP, you take the proverbial cake.

  29. jbc 29

    I don’t know where Steve got that 20c in the dollar abatement figure.

    I just tried the IRD WFF calculator. It gave me a 31.2c/dollar abatement. As far as I am aware you still pay income tax on your gross income. Together with 33c/dollar income tax that means that you can keep 35.8 cents of each dollar you earn (64.2% marginal tax rate – ouch!)

    For the record I used a family with 2 pre-school kids (my situation), and $60,000 gross income.

    An increase to $61,000 gave a weekly payment reduction of $6 (x 52 weeks = $312 deduction for the additional $1000 before tax income).

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