http://www.nzherald.co.nz/index.cfm?c_id=1&ObjectID=10342037

Where the wonderful people at the New Zealand Herald have done some tables for us. I suspect the assumptions are different, but people will get the idea. I believe the tables compare extra money in the pocket under National/Labour Governments compared to what people get now? (but don’t quote me)

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Haven’t we, as a society and globally, got more pressing problems.
If we get the climate change solution and peak oil transition wrong, there won’t be an economy as we know it, to provide goods and services, let alone arguing about appropriate levels of taxation.

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The struggle is still going on here. Fortunately this is still a Democracy. In the USA the class war is over, has been over for quite a while and the wealthy are mopping up pockets of progressive thought all over the left and center of the spectrum.

The class war is over (in America), the rich folks won.

Which is why we have shooting wars but only poor people go to fight them… and democracy with all the voting machines moved to the wealthy suburbs.

respectfully
BJ

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I imagine you will have noticed that your numbers for money in the hand per week differ from those National’s tax calculator is spitting out. Quite markedly.

Well, I think I’ve realised where your mistake is: in calculating how much various hypothetical families will receive in the hand under a National-led government you have assumed that they are abolishing the Working For Families package, when in fact they promise to keep it (if changing the name to the incredibly stupid “family tax”).

You have compared Labour’s Working For Families package with National’s tax cut package, when you should compare Labour’s Working For Families package with National’s package of tax cuts and the previosuly announced Working For Families package (i.e. excluding the recent extension promised by Labour).

Were you to incorporate this into your table you would find (using National’s Tax Cut calculator) that (adopting your assumptions of dual indentical-sum-earning parents with two children under 12) that in fiscal 2006 the family earning $20,000 would be $2 a week better off under National than under Labour (but $17 a week worse off in 2007).

There are similar alterations to your table at each income range, with the differences substantially less than your current (though no doubt soon to be corrected) table shows. In fact, you will note the majority of working (and all retired) families (even excluding those whose children have left home, or who have yet to have children, or never did) will have more money in the pocket under National next year (but please feel free to argue even though they’d have more money in the hand they’d still be worse off because of funding cuts/interest rate rises etc.).

You will note that National’s calculator and Labour’s calculator spit out the same figures for families’ “savings” under Labour’s scheme. And that Labour’s calculator (understandably) does not spit out a figure for “saving” under national. I suspect that both calculators can be relied upon, given that no assumptions of the sort needed in the student loan calculators need to be made.

These are knowable figures – they have to be or IRD would never be able to implement Government policy. If person X earns a certain amount next year we can know exactly how much the ought to pay in income tax and exactly how much they will be entitled to under either Labour’s Working For Families scheme, or National’s Family Tax scheme. But it is interesting that you used Labour’s calulator to estimate how much families would be better off under their policy and did not use National’s to calculate the figure you asigned to them. But better late than never, eh?

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Icehawk: To explain – cutting tax on the first $5000 to nil would give something back to all. Just as cutting tax on the first 12,500 effectively gives something back to all. Agreed.

Cuts on the next 37,500 also gives something back to heaps of people. Sure, a few people who don’t earn all the way up to 50K do not benefit directly, but it gives them something to aspire to without extra taxes kicking in as they improve in a marginal way. Indirectly, people will tend to spend just about all their income up to that level, so the economy benefits through spending. Not really as horrible as Cullen makes out I suspect.

I think zero tax on the first 20K is affordable, but there are other ways of structuring the deal too.

I think your tax policy is a good idea – so go buy a lotto ticket. (If support it is a different topic, but it is still a good idea)

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I didn’t understand your post.

Cutting tax on the first $5000 to nil would give tax back to all. It would give the same amount of tax back to everyone. But you’re complaining that’s not egalitarian.

As for cutting tax to nil on the first $20K – uh, I’d vote for it, given tax increases elsewhere to make it workable. I suspect the whole Green caucus would too. But small steps, mate: start with the first $5K and work from there.

[Actually Zen, this week my favoured tax policy is a tax of negative $160/wk (ie the govt sends everyone a cheque for $160/wk), followed by 33% on every dollar to 80K, followed by 39% thereafter, and we introduce a bunch of taxes on pollution and resource use. Scrap social welfare, student allowances, and all that stuff, and fire the beaurocrats who administered all that (we are talking serious savings here). Children under 10 receive only $40/week, under 17 $70/week. So there's absolutely no such thing as high marginal tax rates. But I'd say I have more chance of winning Lotto than of convincing anyone that my tax policy is a good idea].

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The point is whenever some-one screams “that guy gets $100 a week back in taxes” they conveniently forget that the other guy is only paying $30 per week in taxes anyway.

Yes, yes, $30 bucks is a lot blah blah blah. Which is why I suggest you set your tax free threshold at a decent level and make a name for yourself. Its hard enough with GST on food!

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If you provide a tax free threshold of $5000, you supposedly provide for the poor. If National lower the tax rates for all up to $50,000, those people need a cut least do they?

Your example is a family of 4. Always wanting to push the extreme to suit an argument. The average family size is 1.9 I thought – at least go with the averages with your examples.

National’s policy is much fairer than labours “targeted assistance”. It sends a message that, whatever your life choices, if you are low or middle class NZ, you get to decide how to spend your money. The rich have been redefined at 100,000 and higher. That’s going to sound fair by many peoples standards. A tax rate of less than 20 cents in the dollar earning up to 50K per person, that’s going to sound fair by many peoples standards. People want a fair tax system. If we need extra money, then drop the company tax rate to 20% and see how much growth we get in NZ. The extra activity will fund our extra expenses, and the rich still pay 39 cents in the dollar plus other taxes.

Again, your “rich get all the money” example is unbalanced.

If Theresa Gatting pays $21,000 a week in tax, and she suddenly only has to pay $15,000 a week, it doesn’t change the fact that Fred on $20,000 pays about $1,500, which is a shit load less.

Can Fred use that $1500? Absolutely. We could charge no tax on the first 20,000 to make a real difference to Fred. Your $5,000 tax free threshold is really pretty wimpy. If you have principles, then make it an amount that reflects the strength of those principles. Your fisking of Nationals reasonably egalitarian offerings might have more impact.

Well, that’s the way I see it.

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your calculations exclude National’s family tax proposals – go to http://www.taxcuts.co.nz to work out newer, better numbers

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according to the IRD (and one would hope they’d know) income from $0-$38000 is taxed (now) at 19.5%.

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ta

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In your example:
*it’s a 6% of 3K ($180)
*it’s 2% of 37.5K – drop for 21c to 19c – ($750)
*it’s 6% of 40K – between 60,000 and 100,000 there’s a decrease from 39c to 33c – ($2400)

Which is a total saving of $3330 a year, or $64 a week, or $128 a week for a couple earning $100K each.

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P.S. Avoid using “tax relief” because it is passing the baton in the language battle to the right because it implies that tax is somthing that you need relief from.

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