As predicted on The Standard, National has announced it would abolish the increases in the bottom threshold to pay for tax cuts for the rich. Here’s a break down of what would happen:
April 1 2009: Lift 33 cent thresold from $40K to $48K, reduce 39 cent rate to 38 cents.
April 1 2010: Lift 33 cent threshold from $48K to $50K, reduce 38 cent rate to 37 cents.
April 1 2011: Reduce 21 cent rate to 20 cents.
What wouldn’t happen – the parts of Labour’s tax cuts that would be replaced:
April 1 2010: Lift 21 cent threshold from $14K to $17.5K, lift 39 cent threshold from $70K to $75K. cancelled.
April 1 2011: Lift 21 cent threshold from $17.5K to $20K, lift 39 cent threshold from $75K to $80K.
So, where does this leave you? Here’s the difference in National and Labour’s tax cuts across income levels (above 100K, National’s cuts keep rising, Labour’s plateau at 80K):
That’s right. Most people would recieve a smaller tax cut under National than they would under Labour. Because the bottom threshold would not be increased by National, Kiwis earning up to $44K, some 2.4 million people, would get the same or larger cut from Labour. But the ultra rich would recieve much more from National. Someone on $250K a year (a Leader of the Opposition, say) will get an additional tax cut of $3750 a year from National by 2011.
Now, National has announced a tax rebate – the Independent Earner Rebate – of $10 a week, rising to $15, for people earning between $24,000 and $50,000 who aren’t getting Working for Families, a benefit or Super. Take a look at the graph and you’ll see that will make up for the abolishment of the bottom threshold increases for those people but it will leave anyone on $14,000-$24,000 and anyone getting WfF, a benefit, or Super worse off.
So, tax cuts for the rich, nothing for most of us. Who could have seen that coming?
[in coming posts, we’ll look at the fiscal consequences and how National would fund their cuts – as we predicted, it’s by slashing Kiwisaver]