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Tax Swindle Graph

Written By: - Date published: 8:34 am, September 30th, 2010 - 30 comments
Categories: budget 2010, gst, same old national, tax - Tags:

Danyl over at DimPost has produced an excellent graph of the gains from National’s Tax Swindle.

This is using the Government’s own figures as dutifully re-printed by the media – so no adjustment for the massive inflation caused by the budget that means that roughly half of households will be worse off at the end of the year than at the start of it (according to NZ Institute of Economic Research).

The graph still doesn’t look good.

Danyl’s nicely pointed out where average wages and salaries are on the graph (not median, which are lower, and could have made the graph look worse…).

bradluen in the comments has calculated the relative gain in income, for those who reflexively add that “of course the rich do better in absolute numbers, they earn more, they get more…”

Net gain as a percentage of income:

If you earn $10K/year: 0.23%
If you earn $100K/year: 2.17%

And by the time you take out increased costs of mortgages from raised interest rates, higher rents from landlords passing on their tax avoidance being closed and extra childcare costs…  well, we can all see where the government’s borrowed money for their tax change is going – and it ain’t to average kiwis.

30 comments on “Tax Swindle Graph ”

  1. One thing that irks me is people saying the average wage is $50K a year. Actually, that’s the average full-time wage. The median wage is $35K and the median income is just $28K or so – that means half of taxpayers have incomes below $28K. Tends to make National’s bias towards cutting the top rates even more obviously about rewarding an elite.

    Haven’t crunched the numbers but I reckon that people on the median income or lower would have been better-off with Labour’s completed tax package, rather than National’s tax switch.

  2. prism 2

    Listening to radio this morning. Most taxpayers going to be paying 17.5% – would this must mean that most are on low wages? And I presume that doesn’t include the 15% GST – 15+17.5 = 32.5% which would apply if the propensity is to spend all one’s income on GST loaded goods. But then there is the factor of housing etc that doesn’t incur GST so that has to be deducted from income to find the actual tax percentage and amount paid. Not quite transparent enough for everyone to be able to understand clearly.

    Then Dominic or Brendan economist this a.m. on Radnz made point about it being an inter-generational transfer. Older people drawing on savings for larger expenditures, and no longer wage earners, will pay the higher GST as all do, but won’t be receiving much benefit from lower wage tax. But then the same applies to low wage earners and beneficiaries of any age.

  3. Roger 3

    “And by the time you take out increased costs of mortgages from raised interest rates, higher rents from landlords passing on their tax avoidance being closed and extra childcare costs… well, we can all see where the government’s borrowed money for their tax change is going – and it ain’t to average kiwis.”

    Within weeks we will know exactly what these combined extra costs will be. We will also know years later what the cost of borrowing to pay for these tax cuts will be through interest payments and the unpalatable restrictions placed on future administrations. I suspect that the RWNJ’s will rationalize that everyone is gaining regardless of how much and that the highest income earners were paying too high a percentage of the tax bill. Lets look at these arguments.

    1. Some people will lose. The reduced government services will harm those that need them. The people that use them will be the ones who do not receive enough in their tax cut to cover the extra cost.

    2. Extra taxes on goods and services are will be passed onto the consumer if a business can afford to do so. With goods that are necessities this will usually be the case, with luxuries businesses may have to absorb some of the cost, especially during a recession. So food items that the poor buy, price goes up. New Porsche for the the wealthy person, probably minimal price change.

    3. At the median income, a person over their lifetime will earn $1.26 million assuming they work from 20-65. John Key has the wealth of over 39 median lifetime earnings right now. Graeme Hart has over 1269 median lifetime earnings right now. Paul Reynolds will earn over 5 median lifetime earnings this year. A person earning $100k will reach the median lifetime earnings in 12.6 years. They pay a large proportion of the tax bill because they earn a ridiculously large proportion of the wealth.

    4. The wealthy complain about paying tax for services they don’t use but they rely on government more than the poor. The owners of multiple properties and owners of capital that is used to run businesses from multiple sites need the police to act on crimes committed at multiple locations and districts. They travel around the country more often therefore they personally need hospitals in all areas of the country to be functioning correctly. The education of their children is important but also the education of all children as they will grow up to become the labour that goes into their business production function and develop capital that can grow their business. Their position and ownership of vast amounts of property and capital mean that they are more likely to need the justice system funtioning as they are more likely to require it as the plaintiff.

    Lets see this for what it really is, a smash and grab by the right at the expense of society. RWNJ’s I await your response.

    • Colonial Viper 3.1

      Their position and ownership of vast amounts of property and capital mean that they are more likely to need the justice system funtioning as they are more likely to require it as the plaintiff.

      I guess that explains perfectly the Right’s throw away the keys attitude, three strikes, grow Corrections into the largest department in the land etc.

      • Roger 3.1.1

        Yes and they are not willing to pay for it. The next step is privatisation of the system or public-private partnership where they can own some of the process themselves and put lining their own pockets before justice and human rights. Oh thats right, this is already happening.

  4. ak 4

    Headlines we’d like to see:

    NORTH OF $50 NOW SOUTH OF $5 FOR MOST TAXPAYERS

  5. nilats 5

    Looking forward to my tax cut of $60/wk. If you are on $40, suck it up baby, thanks for the subsidy. Bout time tax got FAIRER for me.

    Tax cuts from NACTIONAL- i\\\’m lovin it.

    I will still pay more tax than most still so I don\\\’t expect too much whinging form you poor socialist luddites.

    • Roger 5.1

      A clear example of the mentality of the RWNJ. Self absorbed, a distorted idea of what fairness is that relates it to their selfish values, and condescending in a manner that is completely unwarranted. Rather than point out any argument as to why the wealthy should have higher tax cuts or how this is better for our country he just tells us to suck it up. But I guess you cannot expect much more than that really.

      • Luxated 5.1.1

        Roger before you replying to nilats you might want to think of this video.

        • Roger 5.1.1.1

          Lol, thanks, I am now somewhat wiser.

          • NickS 5.1.1.1.1

            There’s also Poe’s Law!

            • Maynard J 5.1.1.1.1.1

              There’s also the fact that this person failed three times to complete the simple action of typing in the anti-spam word, as indicated by the ‘/’ character before each apostrophe.

              This is what happens if you fail to enter the word, most people would copy the text, select ‘back’, paste, enter the spam word, and most will also realise that this feature forces the insertion of aforementioned / character before apostrophes.

              I sincerely doubt that someone with the intelligence (or lack thereof) to fail an anti-spam test on three consecutive attempts, and fail to notice the extra characters is capable of earning enough to pay $60 in tax a week, let along qualify for that much of a cut.

              What was your word, nilats? From? That’s an easy one to get wrong, or so it would appear.

              Let’s not even mention the brain power required to craft such gems as “I will still pay more tax than most still”.

              By the way lilnads, we’re all bludgers remember, so you’re still subsidising us if you do pay that much tax. Enjoy. (Apart from me. I earnz waaaay more tahn your getting lulz!!1)

          • Luxated 5.1.1.1.2

            Welcome!

  6. peter 6

    First pay packet in reflecting new PAYE rates.. As I earn over 100K very nice increase.

    • Colonial Viper 6.1

      *Guffaw*

      $100K p.a. was something to write about..maybe in the early ’90’s mate.

    • Maynard J 6.2

      You’re clearly lying, anyone earning a decent amount and who would harp on about it like that is a RWNJ and therefore would rort the system and pay minimal tax on a trust.

      My bet is you can barely get a block of cheese, peter.

    • Armchair Critic 6.3

      Even CEOs on multi-million dollar salaries are wage slaves. If you had any courage to your convictions you would be self employed.

  7. Pascal's bookie 7

    Amazing how all these thoroughly convincing and highly paid illiterate individuals decide that what they really want to do with their tax cut is pop on to the internet and have a wee skite about it on a blog they rarely if ever comment on.

    If they weren’t so transparent one might suspect that they were lefties trying to heighten the contradictions. As it is however, it is to laugh. I suspect compensation is playing a part.

  8. Anne 8

    Funny you should that Pb. I was begining to thunk that ignorince and illitracy was preriqasite for erning a hihe inkum.

    Could they all be the same person?

  9. burt 9

    If we graphed reversing this tax cut after it is implemented it would be the same graph for ‘tax increase’ . It’s the way progressive taxation works.

    You can’t support the progressive taxation model unless you accept this consequence. When you put tax rates up the rich get hit harder, when tax rates come down the rich get the biggest relief.

    You do understand progressive taxation don’t you bunji?

    • felix 9.1

      Weird, I was under the impression that the govt could write any tax law they liked.

      Is that not the case? Are they restricted by some higher power?

      • Maynard J 9.1.1

        Gerry Brownlee.

      • burt 9.1.2

        Even your lot eventually wrote a law that gave bigger tax relief to big earners than it gave it low earners. Even Cullen faced the reality of tinkering with a progressive model.

        And if your lot taught us anything at all, it’s that parliament is unconstrained in NZ.

        • Draco T Bastard 9.1.2.1

          That’s because they were, and probably still are, stupid.

          Hopefully it won’t remain unconstrained for long.

        • felix 9.1.2.2

          Get to the point burt.

          Can parliament pass any tax law it likes or not?

    • Draco T Bastard 9.2

      They could have made the first $10k tax free and everyone would have equally better off (if you think cutting government services is being better off). Of course, NACT didn’t want to do that. What they wanted and did was to give themselves and their rich mates lots of everyone else’s money (we’re borrowing for those tax cuts while also putting taxes up on the lower income earners).

      Tax swindle is a good description of what NACT have done.

      • Jim Nald 9.2.1

        I don’t understand. Nats cry poor, slash public service to the citizenry, borrow and run deficits … and that is responsible and popular Govt?

        • Colonial Viper 9.2.1.1

          NACT is betting at controlling and framing the daily messaging than Labour is. Period.

          The fact that Labour doesn’t seem to have that much to say at the moment doesn’t really help either.

  10. NickS 10

    I look forward to getting less than $5 a fortnight thanks to National and subsidising the rich, who art obviously oh so much better than me, or any other poor person, irrespective of reality.

    Heh, I fail to see how this is actually going to help teh economy, given most of the people who will be pulling in the major tax cuts will likely invest it overseas, while otherwise the tax cuts for most would even cover a days wages at minimum wage. So somehow I expect I wont be seeing a lot of painting work on student job search this summer in Christchurch, and will instead be stuck with minimum wage labouring jobs and last-resort hell-gardens that are better hit with napalm or a chainsaw than “gardened”.

    But hey, what’s more important than giving the rich tax cuts and making those without much pay for it instead? Both now, and in the future as we pay the money borrowed to pay for it back.

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