OnPoint by Keith Ng

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OnPoint: Table 6.2: 'Rich pricks' & Others

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  • George Darroch,

    See what you've done? You've broken the nutshell.

    That's what happens when you bring a hammer to the argument.

    The Greens were proposing that their carbon tax could be used to create a tax-offset (I would prefer a simple cheque, actually, for political reasons). I don't think it would generate as much as they've proposed, but there is no reason why such a change couldn't occur. But they have a reason for this tax shifting. Absent that, it's just a complicated and rather pointless shift when you are redistributing to the great majority of low income earners on the after-tax side, as this and the last Government have done.

    WLG • Since Nov 2006 • 2264 posts Report Reply

  • Paul Campbell,

    Also on my wishlist - income scales that slide up with inflation annually, so we don't have people creeping up the scales as their income goes up as money gets worth less.

    The problem is that fiscal drag (the opposite of what you want - which is when the govt quietly gets more money as inflation pulls people up the tax scales) is alluring to politicians - not only does it quietly help solve their budget woes by bringing in more taxes than inflation alone but it also gives them the chance to win the PR bonus of "lowering taxes" by periodically adjusting for it - if you make it automatic think of what they'll lose!

    Dunedin • Since Nov 2006 • 2622 posts Report Reply

  • 3410,

    ... or you'd need to take a pretty massive punt at the rich, which is actually quite problematic because they can rearrange their affairs into trusts etc.

    Uh... they already do that, no?

    Auckland • Since Jan 2007 • 2618 posts Report Reply

  • Kyle Matthews,

    The problem is that fiscal drag (the opposite of what you want - which is when the govt quietly gets more money as inflation pulls people up the tax scales) is alluring to politicians - not only does it quietly help solve their budget woes by bringing in more taxes than inflation alone but it also gives them the chance to win the PR bonus of "lowering taxes" by periodically adjusting for it - if you make it automatic think of what they'll lose!

    Yup. But we have a whole government act which is about financial accountability and opening the books and what not... (er, Fiscal Responsibility Act or some such). And then there's this big illusion that some things in government tend to go up with inflation (state sector salaries, benefits, health care and education costs), but tax rates don't.

    I'd like to think that it'd be something that a right wing government would support. It would mean that tax rate adjustments were actually honestly that, rather than dealing with drag or bumping it up.

    Since Nov 2006 • 6243 posts Report Reply

  • Paul Campbell,

    I think that the right wing govts like to give us the illusory tax decreases by readjusting the bars and the lefties tend to like the slight increase in money available to spend ... it's sort of a politically neutral rort

    Dunedin • Since Nov 2006 • 2622 posts Report Reply

  • Matt Crawford,

    Paul,

    I think you're wrong. From memory Cullen's "Chewing Gum" Budget in 05 proposed ending fiscal drag by automatically adjusting brackets for inflation. It was a pretty gutsy move at the time, but very politcally unsexy.

    This adjustment was abandoned along with the tax cuts when Cullen launched the "Block of Cheese" budget. This is a shame I think as it would give the public greater transparency over the Government's fiscal plan.

    Wellington • Since Dec 2006 • 58 posts Report Reply

  • Andre,

    I think the point is that rich buggers can suffer taxation better than poor buggers and the governmnt are surfing around this as theory while speculating in a Ruth Richardson or Marie Antoinette manner how much the poor can stand.
    All of the current changes in place seek to redress Labours "wrongs"...
    Changing infringement penalties would be more of a bonus to small business than anything from my point if view.

    New Zealand • Since May 2009 • 368 posts Report Reply

  • Andre,

    Also I find it difficult to believe that I am given no benefit from joining forces with my partner and forging a life together. She earned a benefit for being a widow with two kids and we forgo that benefit to live together with my 2 step-sons and their 9 month old brother. The government offers me Nothing. It costs me more than the average wage a week extra to what I was paid - before we met and I became a step-dad. I own my own firm and therefore receive no help. It seems unfair. I've saved everyone $30k last year and I'm in media and it wasn't a great year.
    Changes need to be made to our laws to reflect the fact that we no longer live in the 1920's.
    My partner previously lived in Australia where everything was paid for by the government (no matter what etc) if you had small children. I think it is all a bit heartless and I don't think the government policy reflects how New Zealanders would prefer it to be.

    New Zealand • Since May 2009 • 368 posts Report Reply

  • TracyMac,

    Just as a note, the Australian payroll tax applies to all contractors, whether or not you operate as a "company" and whether or not you're an individual. A lot of companies in Oz prefer contract employees (especially in IT) because then they don't have to fork out the payroll tax themselves, the wankers. I don't know it'd be represented that on the pie, though, assuming you could find out the percentage of contract employees.

    There's also the super contribution, which is a minimum of 9% of your income if you earn more than $450 a month gross.

    It makes my blood boil when I go home and listen to my relatives whining about the tax rates in NZ. And they're the middle class ones, who are doing quite nicely, thank you.

    Canberra, West Island • Since Nov 2006 • 701 posts Report Reply

  • FletcherB,

    While not directly relevant to how the balance of income tax is shared amongst income levels... here's a bit about how income tax compares to other revenue streams towards the total tax take...

    Personal income tax makes up the lion's share of revenue collected by the Government - income taxes account for $28.5 billion or 53 per cent of all tax revenue, company taxes make up 17 per cent, GST raises 21 per cent of all tax revenue and excise duty such as petrol and tobacco taxes raised a further $4.8 billion or 9 per cent of all tax revenues.

    from http://www.stuff.co.nz/national/politics/3246158/Radical-tax-changes-recommended-to-Government

    West Auckland • Since Nov 2006 • 893 posts Report Reply

  • Gareth Ward,

    Insightful analysis of a subject that I find truly interesting, but all I can think is... man, those are some perty graphs!

    Auckland, NZ • Since Mar 2007 • 1727 posts Report Reply

  • Keith Ng,

    Personal income tax makes up the lion's share of revenue collected by the Government - income taxes account for $28.5 billion or 53 per cent of all tax revenue, company taxes make up 17 per cent, GST raises 21 per cent of all tax revenue and excise duty such as petrol and tobacco taxes raised a further $4.8 billion or 9 per cent of all tax revenues.

    Would it be fairer if 40% came from income tax, 40% came from corporate tax, and the remainder 20% came from GST/petrol/tobacco? Or perhaps a 33/33/33 split?

    They talked about this in Nudge. If you made a list of four things and assigned numbers to each of them, people would naturally drift towards the conclusion that a fair distribution would be equal assignment to each item.

    What's are the items? What are you distributing? Meh. Doesn't matter. Because they are part of the same list, cognitively they carry the same significance by default.

    Split the item in two, and suddenly their fair share doubles. Combine two? Their fair share halves.

    The fact that income tax is 53% of tax revenue means nothing on its own. Compared with the OECD, this is high... but that's because we don't have a separate social security tax. Include that, and we're middle of the range.

    Can't be arsed screencapping out of the PDF, but it's on figure 3, page 23 of the TWG report.

    Auckland • Since Nov 2006 • 543 posts Report Reply

  • Sacha,

    Apparently what those on the top tax bracket want is more important than that pesky evidence stuff:

    But Mr Key said lowering the top tax rate to 33c so it aligned with the trust rate would help stop people sheltering their income in trusts to try to avoid higher personal taxes.

    "If you are a higher-income earner, rightfully you should pay your share. One way to make sure people do that is to make sure the tax rates reflect what people think is fair."

    Ak • Since May 2008 • 19740 posts Report Reply

  • Sacha,

    Any thoughts on transaction taxes?

    Ak • Since May 2008 • 19740 posts Report Reply

  • Kumara Republic,

    Any thoughts on transaction taxes?

    Sounds ideal, if only it had wider international backing.

    The southernmost capital … • Since Nov 2006 • 5441 posts Report Reply

  • Steve Barnes,

    That quote of Mr. Key's. He is saying that to stop people hiding their income in a trust he will lower their tax rate to match that of the trust because they should pay their share?.
    Scuse me but that is like saying we should raise the speed limit to stop people speeding.

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • Sacha,

    Doesn't sound like he's planning to ask the unwealthy what they think might be "fair".

    Ak • Since May 2008 • 19740 posts Report Reply

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