web analytics

Thanks, I guess

Written By: - Date published: 5:38 am, March 25th, 2009 - 25 comments
Categories: tax - Tags:

Growing up I always knew the rich had it better than us. It’s only now that I’m one of the wealthy that I realise how much we’ve got it in our favour.

Next week the government is giving me, for no reason I can work out, another $1110 a year in tax cuts. That goes up to $1,500 a year next April, and up to $1,860 a year in 2011.

Then, to top it off, they’ve given me a way to beat the recession. I’ve just chucked $15,000 in a year term deposit. When it matures, I’ll use it to make a voluntary repayment to my student loan of $15,500 and the government will give me another $1,550.

13.5% after-tax return per annum during a recession, you can’t beat that. Of course, you can only afford to pull the trick if you’ve got the money.

I just can’t work out what the point of the government borrowing money so it can give it to someone who already has heaps. If we’re going to borrow, a lot of people could use the help more than me.

Why should I be the priority? I don’t even intend to spend the extra dosh and I won’t be working harder because of it. It looks like they’ve just decided that I’m more deserving because I’m well-off.

I guess it’s true. It really is government by the rich, for the rich.

25 comments on “Thanks, I guess ”

  1. And Thank You for that.
    It’d be good if you could keep posting this perspective over the next few years over here at the Standard I reckon.

  2. Stever 2

    I think the directive from the PM was that you should give the money to a charity. Otherwise, as you point out, the money doesn’t enter the economy as “stimulus”.

    And due to being worse off because of cancellation of tax breaks (to lower-paid people), and the declining value of the social contract, poorer people will need the charity increase.

    You know it makes sense.

    Besides, think of how it’ll boost your moral standing and self esteem.

  3. Alex 3

    Personally, I support a flat tax rate right across the board. Totally fair to everyone. It will never happen though.

    • RedLogix 3.1

      Personally, I support a flat tax rate right across the board.

      Set at about 45%… yeah I could go with that.

    • Pascal's bookie 3.2

      It will never happen though

      Only ’cause no one seems to be able to make it work. The c*mmunists went the 100 percent route: fail. A low enough rate that the poor can afford to pay it doesn’t bring in enough revenue, and higher rates (which the poor can’t afford) recquire transfers, which defeats the purpose of the flat rate.

    • George Darroch 3.3

      We already have an almost flat tax system.

      According to the Economist, only the top 10% pay much more tax than under a 25% flat tax system.

      We already have a 12.5% flat tax on everyone, the flat elephant in the room.

  4. daredtodream 4

    [deleted]
    [lprent: Previously banned. Likes changing names]

  5. simon 5

    “Personally, I support a flat tax rate right across the board. Totally fair to everyone. It will never happen though.’

    If the brought in a (higher if already in existence)…
    Capital Gains tax on Houses (with the ‘Home’ being excempt)
    Luxury Tax on Cars above lets say $45,000, boats above $100,000, Planes above $200,000
    An inheritance tax on sums lets say above $100,000 (ie based on total payout not individual ones)
    Tax on company cars and fringe benefits associate with employment
    Tax on work ‘bonuses’ (that are more than 10% of base salary)
    Tax on interest from Bank etc deposits lets say 50% when interest is above $2500 PA

    also
    stopped subsidising Private Schools
    dumped the tax breaks for those with rental properties
    stopped people using Trusts to avoid bankruptcy, paying the ‘new’ flat tax, and the new inheritance tax.

    maybe it would

  6. sally 6

    I’m glad someone’s posted this. Puts it in perspective.

    I think it’s amusing that John Key has jumped at not getting a pay rise this year, and ‘setting an example. Let’t not forget that he’ll still get a nice tax cut next week, where as Joe Average-Wage won’t.

    John Key – Ronald Reagan of the South Pacific.

  7. ieuan 7

    ‘Guest Post’ you need to get some children, that will suck up any spare cash you have.

  8. Stephen 8

    Sally, Joe Average-Wage probably has WFF!

    edit: and as Tim Ellis points alludes, some Joe Below-Average-Wages can now afford Kiwisaver…

  9. Tim Ellis 9

    Guest, if you are earning over $100,000 a year, then I would like to thank you for the amount of tax you pay. The top 5% of income-earners pay 29% of all income tax. The top 15% pay 55% of all income tax. In return, they receive far less than their percentage share of government services. The bottom 58% of taxpayers however pay just 15% of the total tax take. Without people like you remaining in New Zealand, paying the very high amounts of cash that you already pay, the government wouldn’t be able to provide services to the most needy.

    You wrote:

    I just can’t work out what the point of the government borrowing money so it can give it to someone who already has heaps. If we’re going to borrow, a lot of people could use the help more than me.

    This however is a wrong assumption. National isn’t borrowing to pay for tax cuts. It is funding tax cuts primarily by changing the kiwisaver scheme.

  10. Kevin Welsh 10

    So Tim, you are saying that if there were no tax cuts, the level of borrowing by this government would be the same?

    • Tim Ellis 10.1

      If there were no tax cuts, Kevin, there would be no changes to Kiwisaver, so the fiscal effect would be zero. I don’t think Labour are advocating changes to Kiwisaver without tax cuts.

      • Kevin Welsh 10.1.1

        So, in other words, they are not really tax cuts.

        Funny how the wealth of the working class is fair game for redistribution, but out of bounds for the wealthy.

        • Tim Ellis 10.1.1.1

          Kevin, what do you consider working class?

          How many taxpayers do you consider to be working class? What proportion of the total income tax take do they pay? What proportion of government services do they receive in return?

          I think you’ll find that the answer is that the vast majority of tax is paid by high-income taxpayers to provide services that are primarily consumed by low-income taxpayers. There is a very high degree of redistribution from high-income taxpayers to low-income taxpayers. That situation hasn’t changed. Reducing the burden of tax paid by high-income taxpayers doesn’t take money earned by low-income taxpayers away from low-income taxpayers, which is the definition of redistribution.

          • r0b 10.1.1.1.1

            I think you’ll find that the answer is that the vast majority of tax is paid by high-income taxpayers to provide services that are primarily consumed by low-income taxpayers.

            As to “primarily consumed by”, I very much doubt it. Only beneficiaries have assistance that is specifically targeted at them (not the “working” working class). In the “welfare” category the largest spend is on superannuation, which is available to all. The majority of Government’s spending is on health, education, police, defence, infrastructure and the like which is a benefit to all.

            There is a very high degree of redistribution from high-income taxpayers to low-income taxpayers.

            As above I disagree. Say rather that high income taxpayers support most of society’s costs, as they should, because they control most of its wealth.

            In fact you could make the counter argument, that ordinary taxpayers are currently involved, world wide, in a massive payout to high income earners, in the form of tax payer funded bailouts of banks and financial institutions. As has always been the case, businesses prefer to privatise their profits and socialise their losses…

  11. BLiP 11

    Under National the rich get richer and the poor get poorer – didn’t the bewildered and bamboozled vote for a change?

    Hah! Business as usual.

  12. rave 12

    Fat cat tax did you say?
    Cool cat likes a flat white.

    Taxes redistribute income that is already produced by productive workers. No tax for workers. Tax profits flat out.

  13. Daveski 13

    Emotion always works better in opposition than logic or common sense.

    Income is but one measure of wealth. Labour had 9 years to offer solutions to address inequality of wealth (assets) but has only addressed income. There are many many people who are wealthy but do not have higher nominal incomes.

    Second, again it makes for great desk thumping, but the greater the gap between the top marginal tax rate and the company tax, the greater the inefficiencies and the distortion to taxable incomes.

    Third, the changes to the tax rates coming up don’t go anywhere near reversing the changes Labour introduced – not only do the “rich” pay more tax, their marginal tax rates are still higher now than 9 years ago and as others have pointed out, WFF is not an option for most.

    Still, nothing beats a headline and emotive post.

  14. Greg 14

    Hang on, so your not going to spend it? If your planning on putting it in the bank how is this any different to spending it?

    • Phil 14.1

      If your planning on putting it in the bank how is this any different to spending it?

      Plenty different, and a much better idea than blowing the taxcut on a new, imported, TV.

      That term deposit is now available for the bank(s) to lend out to new develping enterprises, or an existing business needing bridging finance. Which is exactly what we need to be happening so that we’re not so dependent on international wholesale funding markets.

  15. Chris G 15

    Well, your sposed to give it all to charity mr Guest Post!

    After all… thats what the Americans do!

Recent Comments

Recent Posts

  • Twenty highlights of 2020
    As we welcome in the new year, our focus is on continuing to keep New Zealanders safe and moving forward with our economic recovery. There’s a lot to get on with, but before we say a final goodbye to 2020, here’s a quick look back at some of the milestones ...
    2 weeks ago

  • Cook Islanders to resume travel to New Zealand
    The Prime Minister of New Zealand Jacinda Ardern and the Prime Minister of the Cook Islands Mark Brown have announced passengers from the Cook Islands can resume quarantine-free travel into New Zealand from 21 January, enabling access to essential services such as health. “Following confirmation of the Cook Islands’ COVID ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Supporting communities and landowners to grow employment opportunities
    Jobs for Nature funding is being made available to conservation groups and landowners to employ staff and contractors in a move aimed at boosting local biodiversity-focused projects, Conservation Minister Kiritapu Allan has announced. It is estimated some 400-plus jobs will be created with employment opportunities in ecology, restoration, trapping, ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Border exception for some returning international tertiary students
    The Government has approved an exception class for 1000 international tertiary students, degree level and above, who began their study in New Zealand but were caught offshore when border restrictions began. The exception will allow students to return to New Zealand in stages from April 2021. “Our top priority continues ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Tiwai deal gives time for managed transition
    Today’s deal between Meridian and Rio Tinto for the Tiwai smelter to remain open another four years provides time for a managed transition for Southland. “The deal provides welcome certainty to the Southland community by protecting jobs and incomes as the region plans for the future. The Government is committed ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • New member for APEC Business Advisory Council
    Prime Minister Jacinda Ardern has appointed Anna Curzon to the APEC Business Advisory Council (ABAC). The leader of each APEC economy appoints three private sector representatives to ABAC. ABAC provides advice to leaders annually on business priorities. “ABAC helps ensure that APEC’s work programme is informed by business community perspectives ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Govt’s careful economic management recognised
    The Government’s prudent fiscal management and strong policy programme in the face of the COVID-19 global pandemic have been acknowledged by the credit rating agency Fitch. Fitch has today affirmed New Zealand’s local currency rating at AA+ with a stable outlook and foreign currency rating at AA with a positive ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Additional actions to keep COVID-19 out of NZ
    The Government is putting in place a suite of additional actions to protect New Zealand from COVID-19, including new emerging variants, COVID-19 Response Minister Chris Hipkins said today. “Given the high rates of infection in many countries and evidence of the global spread of more transmissible variants, it’s clear that ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • 19 projects will clean up and protect waterways
    $36 million of Government funding alongside councils and others for 19 projects Investment will clean up and protect waterways and create local jobs Boots on the ground expected in Q2 of 2021 Funding part of the Jobs for Nature policy package A package of 19 projects will help clean up ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New Zealand Government acknowledges 175th anniversary of Battle of Ruapekapeka
    The commemoration of the 175th anniversary of the Battle of Ruapekapeka represents an opportunity for all New Zealanders to reflect on the role these conflicts have had in creating our modern nation, says Associate Minister for Arts, Culture and Heritage Kiri Allan. “The Battle at Te Ruapekapeka Pā, which took ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Better care for babies with tongue-tie
    Babies born with tongue-tie will be assessed and treated consistently under new guidelines released by the Ministry of Health, Associate Minister of Health Dr Ayesha Verrall announced today. Around 5% to 10% of babies are born with a tongue-tie, or ankyloglossia, in New Zealand each year. At least half can ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Prisoner disorder event at Waikeria Prison over
    The prisoner disorder event at Waikeria Prison is over, with all remaining prisoners now safely and securely detained, Corrections Minister Kelvin Davis says. The majority of those involved in the event are members of the Mongols and Comancheros. Five of the men are deportees from Australia, with three subject to ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Pre-departure COVID-19 test for travellers from the UK and the US from 15 January
    Travellers from the United Kingdom or the United States bound for New Zealand will be required to get a negative test result for COVID-19 before departing, and work is underway to extend the requirement to other long haul flights to New Zealand, COVID-19 Response Minister Chris Hipkins confirmed today. “The new PCR test requirement, foreshadowed last ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • PM congratulates New Year Honour recipients
    Prime Minister Jacinda Ardern has added her warm congratulations to the New Zealanders recognised for their contributions to their communities and the country in the New Year 2021 Honours List. “The past year has been one that few of us could have imagined. In spite of all the things that ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • David Parker congratulates New Year 2021 Honours recipients
    Attorney-General and Minister for the Environment David Parker has congratulated two retired judges who have had their contributions to the country and their communities recognised in the New Year 2021 Honours list. The Hon Tony Randerson QC has been appointed a Companion of the New Zealand Order of Merit for ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New Year’s Honours highlights outstanding Pacific leadership through challenging year
    Minister for Pacific Peoples Aupito William Sio says the New Year’s Honours List 2021 highlights again the outstanding contribution made by Pacific people across Aotearoa. “We are acknowledging the work of 13 Pacific leaders in the New Year’s Honours, representing a number of sectors including health, education, community, sports, the ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Supporting seniors to embrace technology
    The Government’s investment in digital literacy training for seniors has led to more than 250 people participating so far, helping them stay connected. “COVID-19 has meant older New Zealanders are showing more interest in learning how to use technology like Zoom and Skype so they can to keep in touch ...
    BeehiveBy beehive.govt.nz
    2 weeks ago