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No tax cut for most from Nats

Written By: - Date published: 1:40 pm, October 8th, 2008 - 86 comments
Categories: national, tax - Tags:

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]

86 comments on “No tax cut for most from Nats”

  1. lprent 1

    Delays in the site are due to the large number of page views going on.

    Jez – hope this doesn’t keep up until the election. It hasn’t got off 100% CPU for over 45 minutes. You almost need a 8 core system whenever tax cuts come up on the political calendar

  2. Sheesh – you guys are bad losers eh! I would have thought you’d be rejoicing that people earning $30k (hardly the rich) will be paying 10% less tax by April 2009.

    I guess it’s like that immortal line from “Life of Brian” – “there’s no pleasing some people”!!

  3. Rich Prick 3

    Diddums!

  4. Hamish 4

    Is there anything you can’t spin?

    Top-income earners (above 80K) will get around $69 a week more in their pockets by 2011. But that’s only $15 a week more than the $55 Labour has already promised. But somehow National is the only party giving tax cuts to the rich.

    I agree with the fact that people on $250K should not be getting tax cuts. But it is very hard to design a tax cut package that explicitly ignores them. Even Labour’s package gives those individuals quite a large sum of money. And the very small number of $250K means that it will not be a considerable drain on our tax revenue by giving these individuals tax cuts.

  5. Inv2. I’ll try to say this without being mean. What the hell are you talking about?

    There is no tax cut for anyone on an income below $40K under National’s plan for April 1 next year. And since the threshold wouldn’t rise from 14K to 17.5K to 20K under National as it would under Labour, a person on 30K ends up paying more tax, unless they get the one of the small number earning between 24K and 50K who can get the rebate (I’ll try to estimate that number for you later, as National has not mentioned it)

  6. milo 6

    Gee, I’ll say it again. A few months ago this blog was crowing that people on WFF were effectively paying virtually no tax at all. Now, in the middle of an unprecedented economic crises, you want people on WFF to get even more largesse? It just beggars belief.

    Why don’t you wake up and look at the PREFU, and see what Labour’s low-productivity redistributive policies have delivered. Delivered before the impact of the current financial crisis is taken into account.

  7. Paul 7

    They’re canning the R&D tax credit – so much for thinking about the future

  8. lprent 8

    It is going to be interesting to see how the Nat’s are going to explain their tax threshold management to the majority of voters.

    After moaning about fiscal drag since 2002, they are planning on leaving it largely in place unless you earn a lot – ie the people who have the lowest need for it to move.

    In other words, as inflation rises they are planning on taxing the poor more using fiscal drag over time.

    Tax rebates are interesting – they are largely worthless unless you file a tax return. Most tax payers don’t these days. So National is wanting to increase compliance costs or more probably, expecting people not to claim it. Tell me that isn’t what they are planning?

  9. milo 9

    Paul, so if the R&D tax credit was so good, should it have been even higher in the first place? In fact, any view on what the right level would be?

  10. milo 10

    lprent: I think everybody in the country recognises that National is more interested than Labour in addressing fiscal drag. Labour is interested in increasing taxes, National is interested in reducing them, and that’s no secret to anyone.

  11. Scribe 11

    I know they’re unscientific, and I know most authors at The Standard hate the Herald and think it’s a bastion of right-wingers, but the Herald polls on whose tax package is better has National ahead 77% to 23%.

    Post of those online voters will vote in the election too.

    PS Does anyone know if Herald/Stuff polls allow multiple votes from one IP? If not, the results are slightly more reliable.

    captcha: Mrs Mackin (i hear she votes ACT)

    [lprent: Online polls are not just unscientific, they are just moronic. I keep meaning to finish off my post showing the code to use to make them come out whatever way you want.]

  12. Tane 12

    Of course they’re unscientific Scribe. Apart from self-selection issues, who do you think has access to the Herald online during their working day?

    The polls are worse than unscientific.

  13. milo. Labour’s tax cuts address fiscal drag. For most people, National’s doesn’t.

  14. John Dalley 14

    Again short term greed is being offered instead of long term gains.
    I am in no doubt that someone will crunch the numbers with regard to the long term loss of personal savings with the changes to Kiwisaver offered by National but in the long term this is a disaster for individuals and the countries wealth.

  15. Paul 15

    well I guess it depends on how much R&D you want people to do – it’s an investment in the future and long term probably should be vaguely revenue neutral – kind of like the govt saying “we’re going to let you pay less money in tax now because we thing that there’s a good chance you’ll end up paying more in the future” – the govt’s going to win that bet sometimes and lose it others – they’re assuming that on the whole they’ll win more than they lose and we’ll all be better off with a higher standard of living.

    The US gives big R&D tax incentives to tech companies, by comparison NZ’s is pretty piddly

    BTW as an example the PM currently earns ~$375K right? under National’s plan they’ll be paying 33% rather than 39% on everything over about 75kish (just to make the math easy and a little conservative) that’s 6% of $300k or $18k/year – if Key wins he’ll eventually get a tax cut of $346 a week

  16. appleboy 16

    i see block..or is that slice… of cheese being hurled right back at national!…cheese on toast perhaps!

  17. It’s very easy to design a tax package that explicitly ignores people on $250k – or better, gets them to pay more tax. Just don’t alter the top rate and they don’t get any bigger a bonus than people who barely scrap into the top bracket. Add a fourth bracket at say $100k or $200k with a rate higher than 39%, and they get a negative tax cut. Simple.

  18. Pat 18

    SP – what does “population” mean specifically in the graph?

    e.g. population of NZ, population over age 18 etc

  19. lprent 19

    milo:

    I think everybody in the country recognises that National is more interested than Labour in addressing fiscal drag.

    Yeah? Explain that they are not moving ANY threshold apart from the 33 percent one? I believe thats what SP’s post says..

    If that is the case then we are still in a fiscal drag state. The changes that Cullen was putting in were designed to remove the effects of the last 9 years of fiscal drag on the thresholds.

    It looks to me like the Nat’s are planning on using fiscal drag to claw back what they’re giving away.

    This is going to be interesting as all of those people who had inflated expectations of what the Nat’s were going to do realise what they are actually going to do.

    captcha: resources and

  20. averagemum 20

    Here’s a specific example.

    My pretty average family: two part-time incomes each $40k, two kids, small WFF entitlement.

    Under Labour’s tax plan, we will be $52/wk better off by 2011.
    Under National’s tax changes we will be $43/wk better off by 2011, but we will also lose $30/wk in Kiwisaver matching funds.
    (These are the tax changes only, and do not include any future WFF adjustments – I’m assuming these will be the same for Labour or National as National has promised not to change WFF).

    So net $39/wk worse off under National compared to Labour.

    I don’t mind non-families getting a bit of a boost. But I DO object to actually being left worse off than what is currently legislated for!

  21. noxxano 21

    Tax cuts for the rich screamed S. Pierson. What a load of rubbish!

    The trend to reduce the taxes on the PRODUCTIVE sectors of NZ society can only be a step forward, despite Mr. Piersons protestations and whining.

  22. Rod 22

    [lprent: deleted under the moronic troll rule.]

  23. lprent 23

    pox after: For productive, do you mean the people who actually work for a living?

    This package seems to look at mainly favouring the idle with lots of property investment a *LOT* more than someone assembling high end electronics for export? I’d class the former as parasitical on the economy and the latter as productive. So no – I’d say that you’re largely incorrect.

  24. Pat. NZ taxpayers, in 1000s

  25. Matthew Pilott 25

    Did the SPINster write this rubbish for you?

    Wow, Rod addressed himself in his own post in the second person, while asking himself a question. Hang on, if I address myself “you” is that the second person?

  26. radar 26

    “But the ultra rich would recieve much more from National.”

    How is someone earning $250,000+/yr “ultra rich”? Where are we? North Korea?

    [51,000 out of 3,200,000 taxpayers have a taxable income of over $150,000, according to Treasury. How many of those 51,000 are on $250K or more? Probably very few – only 1.5% of taxpayers get to $150K, so only a fraction will get another $100K. My guess would be fewer than 10,000 people -that’s 0.3% of taxpayers have an income over 250K. Given the median income is just over 10% of that (ie 50% of people have an income less than $27K) I think it’s fair to say $250K is ultra-rich. I don’t believe for one second ‘radar’ earns anything like 250K, I suspect he/she is a commerce student, but they’re clearly ambitious for their wallet-book. SP]

  27. Tim Ellis 27

    LP wrote:

    Tax rebates are interesting – they are largely worthless unless you file a tax return. Most tax payers don’t these days. So National is wanting to increase compliance costs or more probably, expecting people not to claim it. Tell me that isn’t what they are planning?

    Really? Isn’t working for families a tax rebate?

    [yup and you have to sign up to make sure you get your WfF payments. It’s one thing to do that for $50-$100 a week but it’s another to do it for $10 a week, the amount of administration for the size of the payment looks like a real problem with this plan. SP]

  28. r0b 28

    Say Tim E – what do you have to say to averagemum commenting at 2:58pm in this thread?

  29. Help 29

    I just cannot believe that people think that running a country successfully is all about cutting taxes… and are prepared to ‘gamble’ with a party that has even said that they will do & say whatever it takes to win this election – PLEASE, PLEASE WAKE UP NZ!!!

  30. Patrick 30

    radar – 47% of New Zealanders earn $20k or less, they will be getting 1% of what National are planning on dishing it out – so in perspective of the majority of New Zealanders, I would say that $250k is ultra rich.

  31. Pat 31

    Averagemum – why 2 part-time incomes? Yours is not the avaerge family with 2 kids.

    If one obtained a full-time income, then your overall position would be significantly better off.

  32. Tane 32

    How is someone earning $250,000+/yr “ultra rich’? Where are we? North Korea?

    Someone earning $250,000 a year is in the top 1% of income earners. That’s ultra-rich by any definition.

  33. Matthew Pilott 33

    Lynn – I think they’re just using the term ‘rebate’ in a non-technical sense. I’m sure it will be automatically distributed. It seems to be a very ugly mechanism, but I guess that’s because it’s reverse-engineering WfF.

  34. Pat 34

    Patrick – 47% of workers do not earn $20K or less.

  35. Rod 35

    Matthew
    Thanks for keeping my post alive after it was deleted by the moderators.
    Sorry guys, I’m really not a moronic troll, just an average kiwi with no links whatsoever to Lord of the Rings, but someone not impressed by what I believe is your misleading spin on the tax policies in the news right now.

  36. r0b 36

    Why don’t you wake up and look at the PREFU, and see what Labour’s low-productivity redistributive policies have delivered.

    Labour’s policies have delivered strong growth, reduced debt, KiwiBank, KiwiSaver, Working for Families, an deconomy well placed to cope with the current international crisis and much much more.

    The situation described in the PREFU is bad, but would have been much worse without Cullen’s careful management. From Armstrong in The Herald today:

    The ugly numbers are down to international circumstances. They are not the finance minister’s fault. But the update is so full of bad news that National is punting it will hang around Cullen’s neck through this campaign like the albatross around the neck of the Ancient Mariner.

    So expect plenty more nonsense talking down the economy from the ill informed or manipulative.

  37. Pat 37

    rob – deconomy? Was that intentional?

    Either way, it perfectly sums up what Cullen has left us with – a Deconomy!

  38. Patrick 38

    Pat – read my post again. Slowly if you need to. 47% of New Zealanders earn less than $20k.

  39. Pat 39

    Patrick – the discussion is about tax cuts. Tax cuts are for workers, who pay tax.

  40. lprent 40

    TE: I don’t get WFF so I’m uncertain how you get it. But from memory you apply to receive tax credits during the year from the IRD. Yep.

    IRD site

    Family assistance has been renamed Working for Families Tax Credits. Use this form to register with us to receive Working for Families Tax Credits payments. You can register for weekly or fortnightly payments, or payment at the end of the tax year.

    Now the question is – would they do weekly or fortnightly for between $10 and $15 per week. The transaction cost is probably going to be too high to do it weekly or fortnightly. At $60 every 4 weeks it should be possible. Yearly is definitely possible.

    But then Bill gets a bright idea to save costs – why don’t we just add it into the tax returns. At $10 per week that is a rebate of $520 per year, and a lot of taxpayers will not fill it in. He has a double benefit, being able to announce generously giving money back – and then not having people collecting.

    Now if he’d moved the bottom threshold then he’d have to lose all of that tax income.

  41. Patrick 41

    Actually I believe John Key was waxing lyrical about his “Economic Package”, so I think it’s fair to look at his tax cuts in a wider context.

    What will these tax cuts do for middle New Zealand? What will they do for Key’s “underclass”?

    The point stands that the lowest 68% of tax payers are getting 19% of the tax cuts; the highest 32% of tax payers are getting 81% of the tax cuts.

  42. lprent 42

    MP: Yes, but in my usual operations research way I was considering the effects of having such a small rebate against the transaction costs.

    It feels very much like a negative sum game. There is effectively a whole new channel set up with a new set of clients for a very small amount per annum if they do it the WFF way.

    I’m kind of betting that they mean the old type of rebate which would be much more efficient in terms of government revenue and transaction costs. After all this is the party that is going to put a lid on compliance costs and excessive civil servants(?sp)

  43. milo 43

    r0b – okay, I’ll bite.

    (1) A family with two kids on $80,000 a year gets $40 per week WFF. That should be added in. It is a “tax credit” after all. That means averagemum’s total tax benefit form tax cuts and tax credits is $92 under Labour, and $83 under National. I think it’s important to look at the total position, and just incremental changes.

    (2) Now, let’s look at the “rich prick”. Labour will give them $55 per week, and National $62 per week. So averagemum has got a tax benefit $37 a week more than the “rich prick” under Labour, and $21 a week more under National. Either way, she wins big time, considering how much more tax the “rick prick” is contributing in the first place.

    (3) Now lets look at Kiwisaver. This is a percentage reduction. That means it hits people on higher incomes harder. Averagemum loses $31 per week in benefits (although she can’t access that until retirement). A “rick prick” on double her family income will lose $62 per week in benefits.

    So under National, the “rick prick” gets $62 and loses $62, coming out even, but able to access her earnings now rather than in retirement. Averagemum still gets $83 and loses $31 dollars, putting her $52 a week ahead of the “rick prick.”

    Now admittedly, this is a back of the enveloped calculation. But the silly commentary from people like Tane and Norightturn really don’t help here. If you really want to analyze tax benefits, you have to include WFF and Kiwisaver, and do it properly.

    The fact is, National’s proposal benefits averagemum more than it benefits the “rich prick”. Labour’s proposal is more generous, but this is simply a continuation of their loose fiscal policy and incompetent management that has driven the New Zealand economy into the ground.

  44. r0b 44

    rob – deconomy? Was that intentional?

    Nah, typo.

    Either way, it perfectly sums up what Cullen has left us with – a Deconomy!

    Cute but stoopid. Cullen – who hasn’t “left” us yet thanks! – has managed the longest period of sustained growth since WW2, and a robust economy that is well placed to weather the current crisis. See for example this Treasury summary:

    Economy well placed to meet challenges in 2008
    The New Zealand economy is well placed to meet challenges in 2008 but uncertainty and market volatility is likely to persist in the short term. In addition, the current high inflation environment further complicates the outlook for 2008. However, the sound fiscal position; the prospect of tax cuts; and the ability of the Reserve Bank to move quickly on interest rates, if growth and inflation drop more quickly than expected, mean that the New Zealand economy is well placed to meet potential challenges over the next year.

    Or how about Reserve Bank Governor Allan Bollard in January this year:

    New Zealand had responded positively to significant global shocks in the past few years, and there was no sign of those shocks abating, Dr Bollard said.

    “We have enjoyed a decade of growth, the longest period of economic growth since the post-World War 2 era. Inflation has been low, averaging 2.2 per cent since 1998. …

    “We have been able to absorb recent shocks reasonably well because of the improvements in our economic institutions and policymaking frameworks, avoiding the boom-bust cycles of the 1970s.”

    Though it is very early days even new policies like KiwiSaver are starting to show their potential in this respect:

    According to funds industry performance analyst FundSource, net outflows for the quarter of $48.6 million would have been much uglier without KiwiSaver inflows of $353 million. … Mr Atkins said the high voluntary uptake suggested a big proportion of the funds would be invested in growth assets. “This will provide a boost to the financial services industry, with greater funds under management also potentially boosting local equity markets.”

    Labour led governments have been good managers of the economy. Let’s hope Dr Cullen is round for a few more terms yet!

  45. rave 45

    Well done standardistas.
    If the National front bench has half the talent theyd be laughing all the way to the bankrupt bank.

  46. r0b 46

    r0b – okay, I’ll bite.

    You certainly will.

    So under National, the “rick prick’ gets $62 and loses $62, coming out even, but able to access her earnings now rather than in retirement. Averagemum still gets $83 and loses $31 dollars, putting her $52 a week ahead of the “rick prick.’

    Massage the numbers until your face turns blue milo, knock yourself out. Fact is that averagemum is worse off under National’s proposals than Labour’s. Relative comparisons to other made up numbers don’t help averagemum, she has less under National. And she represents the majority of medium and low income earners – see again the graphs in the original post.

    The fact is, National’s proposal benefits averagemum more than it benefits the “rich prick’.

    And less than she is benefited by Labour.

    Labour’s proposal is more generous

    So what were you on about above?

    but this is simply a continuation of their loose fiscal policy and incompetent management that has driven the New Zealand economy into the ground.

    And kissing goodbye to any last remaining shreds of credibility there. The NZ economy has had the longest period of sustained growth since WW2, and is well placed to weather the current international crisis.

  47. Jasper 47

    I was working it out for me

    Single male. 65K pa.

    Labours cuts came through in my packet today – another $54 per fortnight better off
    Come 2011, and assuming I still earn same, I will get back around $80 a fortnight

    National: Apparently will give me $60 per fortnight… $6 woohoo.
    Come 2011 – $91 a fortnight.

    However, kiwisaver changes leave me, by 2011, around $85 a fortnight worse off.

    Over the rest of the 40 year working life, up to 65, – Im worse off by $125,000

    No deal

  48. milo 48

    r0b – if the NZ economy is so sh*t hot, why haven’t we reached the top half of the OECD? Why are we going backwards in relative terms instead?

    And it’s not massaging the numbers, it’s an honest calculation using the IRD WFF calculator. Have a go yourself, and see what figures you get.

  49. Matthew Pilott 49

    Rod, hate to say it to ya but pretty much everyone out there (talking about the media) is saying much the same – th eolny ones better off are middle and high income earners not with kiwisaver.

    $50 for the average earner – and more hooks than a tackle store in Taupo.

    Milo: why haven’t we reached the top half of the OECD? Do they only measure the economy? Also you might want to look at our starting point – national policies in the 09’s that caused a needless recession.

    Lynn – not having contacted IRD for some blissful years, and not receiving any form of transfer payment, I have to admit I assumed they’d just magic the rebate to people’s accounts… As I said here (or maybe another thread) it’s very ugly because they’re trying to reverse-engineer the effects of WfF – cancelling out one targeted payment with another is never going to be pretty!

  50. r0b 50

    r0b – if the NZ economy is so sh*t hot, why haven’t we reached the top half of the OECD?

    OECD rankings are relative not absolute. We have been improving fast, but if others improve faster we go backwards in the rankings. And our economy has a few challenges that others in the OECD don’t have, not least our isolation and distance from markets.

    Why are we going backwards in relative terms instead?

    Are we? What has been the movement over the last decade?

  51. Draco T Bastard 51

    Milo:

    Labour’s proposal is more generous, but this is simply a continuation of their loose fiscal policy and incompetent management that has driven the New Zealand economy into the ground.

    You have a strange idea of what a loose fiscal policy is. You see, cutting taxes is a loose fiscal policy whereas maintaining tax rates is continuing a tight fiscal policy. This being the case what Labour has done over the last 9 years is to run a tight fiscal policy that has delivered improved government services, cut government debt and grown the economy so that we are in a much better financial position to weather the oncoming depression.

    Nationals tax cuts, an actual loose fiscal policy, would have left us with greater government debt, emaciated government services and, most likely, ruined the economy (look at what has happened to the US economy lately) so that when this depression turned up we would have been up shite creek without paddle.

  52. randal 52

    I seem to remember Bill Birch (NATOINAL) promising tax cuts that were just compulsory super annuities (i.e. no guarantees) and this one smells just like that.

  53. milo 53

    Draco: Eh? If you don’t like it from me, this is what Bernard Hickey had to say in March:

    “Government spending is growing at a rate of 9.8%, which was more than twice as fast as revenue growth at 4.5% and twice as fast as estimated nominal GDP growth at around 5%. The government is eating the economy.”

  54. milo 54

    Update: And here are the Treasury figures for Government expenditure as a percentage of GDP.

    1999, 38.0
    2000, 36.9
    2001, 36.9
    2002, 37.8
    2003, 39.5
    2004, 37.7
    2005, 38.7
    2006, 41.0
    2007, 40.9

    So the government sector has expanded from 37% to 41% of the economy. Crown revenue went up 86% from $39 billion to $75 billion (I assume those are nominal figures).

    [lprent: Now put in the rates of expansion of superannuation and health against the number of people over 65. You’ll find that accounts for most of the increase. You should also have a look at the capital expenditure budget for the long overdue maintenance. Of course if the Nat’s get in…. yeah right]

  55. milo you retard – Hickey is a discredited hack. Remember how he was gonna show all that government waste and couldn’t? Or how he thought tax cuts should have come at the top of the economic cycle?

    The start point you are using (1999) is the point at which National had devastated the public service to the point where even the police were taking protest action over under-resourcing and the fire brigade and the health service… In fact the only thing that had picked up was food banks and suicides. You’ll also find that government spending as a percentage of GDP is actually lower than it was in 1991…

    You might want to go back to that but most Kiwis aren’t that friggin stupid…

  56. milo 56

    Robinsod – resorting to name calling is a sure sign of a weak argument. And it’s pretty weak invective, for that matter. Can’t you be more creative? Political abuse does have a long and proud history. Let me get you started – I see that your mind is like a soup dish; broad and shallow.

    Anyway, yes, 1991 was the peak. That’s because there was a huge tick up in 1990 and 1991, due to the aforementioned mismanagement by Labour and $5 billion projected deficit. That’s $5b in 1990 dollars!

    The figures that far back are “Financial Net Expenditure” rather than “Total Crown Expenses”, but assuming they are comparable, it is instructive to note that under Kirk and Rowling, they were 25% of GDP. Under “socialist” Muldoon, they went up to 37% of GDP. Labour’s 1984 term cut them back, but in their second term they started at 37% of GDP and let it escalate to 41% in 1990. An exact match with the current situation.

    So Labour are now Bigger than Think Big! Bill Birch would be proud of you all.

  57. Draco T Bastard 57

    Milo, two things. I wouldn’t trust B Hickey as far as i could spit him as he seems to have an irritating habit of forcing numbers to fit his conclusion. As for spending – well, I’ll leave that to Brian Easton:

    I am looking here only at central government current spending (which excludes social security transfers). We all know National’s Sir Robert Muldoon was a big spender; he outlaid 16.6% of GDP on education, health and the like. Labour’s Roger Douglas and David Caygill cut that back to 16.1%. National’s Richardson-Birch-Peters-English regime cut the figure further to 15.8%. That is what we would expect (although their cuts were not as great as Labour’s).

    However, current Labour Minister of Finance Michael Cullen has kept his spending even lower: 15.6%. Of course, he has actually spent more, because the economy has expanded. He has also spent more on infrastructural investment (which is not in this total), although that has been partly funded by reduced social security outlays from falling unemployment and indexing benefit rates to prices rather than wages. But -relative to the size of the economy, he is spending about $250 million a year less than National did in the 1990s.

    And then there’s the fact that you didn’t address the simple fact that a loose fiscal policy puts more money in peoples pockets which is what cutting taxes does and what Labour didn’t do until recently.

  58. milo 58

    Um, excluding social security transfers is not a step that I feel able to take.

  59. Spider_Pig 59

    You will always be able to claim “tax cuts for the rich” because, guess what, the “rich” pay all the tax.

    This is from the 2008 tax table from the IRD:
    Top % of tax payers Total Tax %
    2 17
    8 38
    15 55
    32 77
    53 91
    79 99

    In other words, the top 15% of taxpayers ($60k +) pay 55% of all income tax. This may seem self-interested, but at least the “rich” are self interested with their own money. Those who claim poverty, want a handout, want middle class welfare, etc are self-interested but they have the luxury of being self interested with someone elses money.

    If you are envious, go out and get the high paying job yourself. Don’t expect the “rich” to continue to fund your lifestyle. Those of us who are upwardly mobile can and will leave if our generosity is taken for granted.

  60. spider_pig. labour managed to cut taxes without giving all the money to the rich – it cut the bottom rate and didn’t cut the top rate. national abandons bottom threshold increases and cuts the top rate – thats tax cuts for the rich

  61. milo 61

    Calling these tax cuts to the rich is a giant con. The standard (heh) definition of a high net worth (or rich) individual, is somebody who has investable assets (outside the family home) of US$1,000,000.

    Based on this measure, New Zealand has 7,000 millionaire households, compared to 140,000 in Australia. That’s about 0.5% of households in New Zealand compared to 2.4% in Australia.

    In New Zealand, even the rich are comparatively poor. And denying a tax cut to a struggling middle class family on the basis they don’t deserve it, because they are rich, is grotesque.

    Rich is rich. Kiwi taxpayer’s ain’t rich. Clean up your rhetoric.

  62. Lew 62

    milo: So you don’t think that due to the way markets link the cost of goods and services to the money available to spend on them, that measurements of what is `rich’ and `poor’ should be relative?

    Yes, I know about globalisation. I work for the NZ branch of an Australian-based company on both Australian and NZ projects, partly because I’m cheaper than the equivalent in Australia. But the world isn’t completely globalised – local economies still exist and operate, and the local costs of goods and services are still the main factor in determining wealth – not some magic number of US dollars.

    Your argument that people should only be considered `rich’ if they’re worth a certain amount usually (in the customary line of argument) goes hand-in-hand with the line that this ought to be achievable. But what would happen if being a millionaire was common? The benchmark would rise. Your argument rests on a principle of scarcity which requires that a massive number of people be `poor’ for a few people to be `rich’. It’s meaningless.

    L

  63. averagemum 63

    Pat wrote:
    Yours is not the avaerge family with 2 kids.

    averagemum:
    Fair enough, at $80k we’re actually well above average income. If you instead look at a perfectly median family (male salary $34k or so,female salary $24k or so, household income $58k, two kids), they’re actually worse off by $14/wk under National compared to Labour, plus around $39 in lost Kiwisave entitlements. So net $53/wk worse off.

  64. Um, excluding social security transfers is not a step that I feel able to take.

    Righto – I guess that means you are advocating cutting the pension in order to stop government spend increasing with an aging population? How does your nan feel about that?

    Oh and milo? If we’re going to talk international standards for what is rich then we better start adding in the third world. In which case I am even richer than I thought!

  65. If you have an income three times higher than the median (ie, three times more than the amount that 50% of people earn less than) that’s rich in my book. The median in NZ is 27K, 3 times that is 80K. I know I’m rich compared to most Kiwis and my income isn’t 80K

  66. milo 66

    I take your point, but I still think $80k is too low. Bus Drivers are earning $50k – $60k, with overtime. And before anybody says it’s hard yakka doing the overtime, what kind of hard yakka do you think people on $120k do?

    But it does point up something interesting. I think we agree that we want New Zealanders, in general, to be better off. The difference is, I think, that in my view we need more incentive and reward at the top of the scale (as well as support at the bottom), to help drag everybody up.

  67. in my view we need more incentive and reward at the top of the scale

    milo – We had that in the nineties and it didn’t work. We also have had a situation at a corporate level where the business environment has been very good over the last decade but businesses have tended to take the money and run rather than reinvest in productive capital or r&d and show some ambition to become better off in the long-run.

    It hasn’t worked and as a consequence government has had to step in and create incentives for people to do things like save money and for businesses to invest in long-term growth.

    Measures in line with your world view have been tried and they have failed miserably. Now you want to repeat the mistake???

    And you wonder why I call you a retard…

  68. milo 68

    If. You. Look. Over. Seas. You. Will. See. That. They. Do. Work.

    There. All one syllable. Words.

    And if you are going to argue from evidence, hasn’t there been a giant socialist experiment sometime in the last 100 years that rotted from within like a necrotising vampire? I mean, speaking of trying things that don’t work ….

    Meanwhile, you still need to do better on invective. Here’s an example from Mark Twain, on Cecil Rhodes, to give you inspiration:

    I admire him, I frankly confess it; and when his time comes I shall buy a piece of the rope for a keepsake.

  69. Um milo – they work like where? In the meantime your attempts to appear erudite by quoting hacks like Twain just makes you look even more retarded…

  70. milo 70

    That was good Robinsod! And on your own terms too … Anyway, all you have to do is compare marginal tax rates for people on $50,000 per annum in the 20+ OECD countries that have better GDP per capita purchasing power parity. That’s not top marginal tax rates, but marginal tax rates for fairly average income earners.

    Anyway, if you want to support Labour, go ahead, but I see them as a bunch of crazy cranky human beings, not only consistently dirty but deplorably dull. They are a wave of human folly, gloomy and blinking like a stupid old owl.. (Also stolen, but from play reviews 120 years ago! But don’t you think it fits?)

  71. Anyway, all you have to do is compare marginal tax rates for people on $50,000 per annum in the 20+ OECD countries that have better GDP per capita purchasing power parity.

    Y’know I would but I’d rather you provided some stats (or even a link!) ‘cos bro – I’m not gonna do the running for your forlorn (and retarded) argument…

    So like, y’know… snap, snap!

    Oh and if you’re talking 120 years ago I’m getting a good sense of where your retarded economic arguments come from…

  72. milo 72

    Oh, you think old ideas are out of date then? You know Karl Marx was born in 1818. Guess he’s just irrelevant today. Or are you a Trotskyite? Sorry to be … picky.

    Anyway, a quick Google shows PAYE tax rates on NZ $50,000 are 25% in the USA, about 18% for an unmarried person in Germany (but they appear to have income splitting), and 22% in Britain.

    And in New Zealand – 33%.

  73. Lew 73

    milo: Apples with apples, please – NZ$50k doesn’t buy as much in any of those countries as in NZ. Compare a percentile of income.

    Oh – and in federations, there are a bunch of different layers of taxation. NZ has no state or local taxes – only nationwide.

    Come on, lift your game.

    L

  74. Oh yes – the US, and Britain those hotbeds of productivity, high saving rates and quality of life.

    As for Germany – have you ever bought a glass of Coke there???

    There are so many holes in your absurd direct correlation of income between nations that even a retard would feel shame to make such an argument. But you don’t, do you milo?

    Oh and while we’re talking international standards you still haven;t answered my point about debt to gdp ratios (here’s a hint – they’re a much more internationally portable measure than your $50k drivel)

    edit: no fair Lew! Find your own retarded rightie to make you feel clever – milo’s mine!

  75. Macro 75

    milo
    “Calling these tax cuts to the rich is a giant con.”

    just for your info 80% of National’s proposed lolly scramble will go to the top 30% of income earners.

    the top 10% of income earners will receive 40% of the the lolly.

    The giant con will be National convincing workers they would be better off voting for them!

  76. Macro 76

    Milo

    “I take your point, but I still think $80k is too low. Bus Drivers are earning $50k – $60k, with overtime. And before anybody says it’s hard yakka doing the overtime, what kind of hard yakka do you think people on $120k do?”

    Bus drivers earning $50K at $15 an hour (more than they get in Wellington) that is 70 hours a week – um are they ALLOWED to drive that long?

  77. Quoth the Raven 77

    Calling these tax cuts to the rich is a giant con. The standard (heh) definition of a high net worth (or rich) individual, is somebody who has investable assets (outside the family home) of US$1,000,000.

    So if my net worth is $999,999 I’m middle class?

    If. You. Look. Over. Seas. You. Will. See. That. They. Do. Work.
    There. All one syllable. Words.

    Over has two syllables.
    Match point to Sod.

  78. Match point to Sod.

    I’d like to thank my mom and pop and jesus and his mom and pop… ooh,ooh,ooh and my manager – he’s been a rock though all the tough times…

  79. milo 79

    Hmn. I produce evidence. Others produce assertions. Okay, that’s clear then. G’night. You can flame me when I’m gone.

  80. and god and milo and…

  81. Steve 81

    On the matter of this ‘independent earner rebate’ the tories want to introduce, thinking about it wouldn’t ‘Working for Singles’ been just as good a name? That essentially is what it is, though if it had been that would it be to quote Mr Key ‘communism by stealth?’

  82. Quoth the Raven 82

    Steve – How about working for spinsters or working for bachelors.

  83. Pascal's bookie 83

    How about angling for a demographic

  84. Fiona 84

    I really want to echo Steve here if thats alright just in case anyone has any illusions about the generosity of National.

    “There is no tax cut for anyone on an income below $40K under National’s plan for April 1 next year. And (.. under National) a person on 30K ends up paying more tax, unless they get the one of the very small number earning between 24K and 50K who can get the rebate”

    Thanks for this Steve. I definitely will not be voting for National

  85. higherstandard 85

    Lew wouldn’t rates be our equivalent to a state or local tax ?

    And aren’t both of the major parties in complete agreement that the only way to seriously lift wages (net or gross) in the longer term is to increase productivity.

  86. Felix 86

    hs re: rates.

    No, Australians also pay rates to their local govt.

    Where we have just central and local govt, they have central, local, and state govt, a whole extra layer with all of it’s own taxes and regulations in addition to the central and local levels.

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