Helping the rich!
A comment in another post got me curious. How does Kiwi Saver affect people at different income levels compared to National’s 2005 tax policy?
On $50,000 you get $2,370 from National’s tax cuts and $670 more or $3,040 from Kiwi Saver. Fairly close. Note with tax cuts you are getting all your own money back and with Kiwisaver it is a mixture of taxpayer money and employer money.
For someone on $100,000 there is not much difference. National’s tax cuts would give you $4,770 and Kiwi Saver $5,040.
But go to a Marketing Manager on around $130,000. Under National they get $4,770 and Labour gives them $6,240. That is around $1,500 more.
A General Manager on around $220,000 gets $4,770 from National and $9,840 from Labour. An extra $5,000.
A CEO on $350,000 would get $4,770 from National and $15,480 from Labour. An extra $10,000.
And the CEO of Telecom would get $4,770 from National and $61,040 from Labour’s Kiwi Saver. Theresa/Marco thanks you for the extra $56,000.
Dr Cullen has given an unprecedented windfall to those on ultra-high salaries. He will be the toast of highly paid employees everywhere.
May 21st, 2007 at 1:39 pm
Then again, someone on $25,000 a year would have got almost nothing from national’s proposed tax cuts, but could receive $2000pa from kiwisaver.
May 21st, 2007 at 2:12 pm
And OTOH, most of that money comes from the employer, not the government. The government’s direct contribution is capped at $1040, and its tax credits to employers at a similar amount.
May 21st, 2007 at 2:35 pm
The Socialists are a cunning bunch of bastards You gotta hand then that They have forced employers to pay money to their employess and the bigger the salary the more.So the Socialists get the credit for forcing someone to pay money to another person. And dont forget the Socialists use OPM (other peoples money) for the benefit of their supporters to pay the tax credit.
Yet another reason to regards them as the arseholes of the planet.
May 21st, 2007 at 2:43 pm
OPM? Are Labour meant to fund everything out of their own salaries? See, I thought governments used tax to pay for things – now that’s how it is in most countries. So isn’t that always Other Peoples’ Money? And if you’re talking about the employer contrubition – umm, it’s universal, you don’t have to be a card-carrying Labour member to qualify…
I like it how DPF calles $670 a year “fairly close” whilst thrashing about how brilliant National’s proposed tax cuts were – when they’d only give OPM? Are Labour meant to fund everything out of their own salaries? See, I thought governments used tax to pay for things – now that’s how it is in most countries. So isn’t that always Other Peoples’ Money? And if you’re talking about the employer contrubition – umm, it’s universal, you don’t have to be a card-carrying Labour member to qualify…
I like it how DPF calles $670 a year “fairly close” whilst thrashing about how brilliant National’s proposed tax cuts were – when they’d only give <$10 a week to someone on $30k. So if $12.89 a week is ‘fairly close’, then National’s proposed tax cuts must amount to SFA (hope I don’t need to spell out that TLA for anyone)..
May 21st, 2007 at 2:57 pm
Hmm not sure where the rest of that last one went.. To continue:
under $10 to someone on $30k. If $12.88 a week is ‘fairly close’ then National’s tax cuts amount to SFA in DPF’s eyes, apparently.
May 21st, 2007 at 3:22 pm
Anyone else notice that Taxblog predicted this a year ago?
http://iiq374.blogspot.com/2007/05/taxblog-prediction-was-right-year-in.html
May 21st, 2007 at 3:23 pm
OPM? Are Labour meant to fund everything out of their own salaries? See, I thought governments used tax to pay for things – now that’s how it is in most countries. So isn’t that always Other Peoples’ Money?”
Any Government that redistributes OPM is wrong and committing theft.Leave people to spend their own money…they get better value for it.
May 21st, 2007 at 3:29 pm
Ok James, let’s abandon taxation and all pay for our own health, and defence, and police, and justice system, and I could go on for a while here…
You see, individually, people can’t pay for services where there is a natural monopoly. That’s where Governments come in – they take other people’s money – a portion of everyone’s money actually – and use this to build and maintain infrastructure at a country-wide level. Have you not noticed any of this around you previously? Take a look around – it will be an eye-opener.
May 21st, 2007 at 3:55 pm
I dont mind if they take taxes for services, sure, but I dont like taking taxes to then give back as a form of welfare or subsidy
May 21st, 2007 at 3:57 pm
I dont mind if they take taxes for services, sure, but I dont like paying taxes to then have it given back as a form of welfare or subsidy. Its wasteful and stupid.Worse, its only a device created to assuage their socialist views.
May 21st, 2007 at 4:16 pm
Matt: It ought to be clear from DPF’s choice of examples that he is not particularly interested in the 96% of us who earn less than $100,000 a year, let alone the 50% of us who earn less than $25,000.
As for benefits at that end of the scale, someone on $25,000 a year would have received a mere $200 a year from Dr Brash. They’ll get $2000 from Kiwi Saver (though won’t be able to spend it unless they want to buy a house). I’d call that a significant difference.
May 21st, 2007 at 4:20 pm
Oh dear.
If they gave taxes back to everyone that’d be wasteful and stupid. However they’re targeted credits – it’s a form of income redistribution. That’s what a Labour govt should do…
You say worse, a lot of people say it’s a good thing – but in the end it is what the govt was elected to do as a Labour Government. I’d be surprised if the Govt wasn’t doing something to ‘assuage their socialist views’ as you so, ah.. adroitly put it…
May 21st, 2007 at 4:21 pm
Then again, someone on $25,000 a year would have got almost nothing from national’s proposed tax cuts, but could receive $2000pa from kiwisaver.
Where the hell are you living if you think someone can save 4% of their income on $25,000? Power, food, clothes, rent, beer – these essentials need paying.
May 21st, 2007 at 4:27 pm
And UC, you’re talking of about $14, if you’re on that income. That’s two beers, or four if you’re at Otago. Even on such an income, many people would look at that ($14) and decide that it’s rationally not that impossible to do.
And while you do this, you get more than 100% from the govt – it would be even better value.
May 21st, 2007 at 4:30 pm
I/S – you are at least happy that most of the money comes from the employer but they were just given this money from the government in their tax cut so it was govt money till the budget.
Also as this is a new payroll tax what about the distortion that this can cause between spending decisions between capital and labour? This system increases the incentive away from employing staff in NZ and towards replacement with capital (machinery).
This will be easiest in the manufacturing sector so another body blow to this lower waged sector- hey but at least the employers will be paying the contributions (just not to so many people)
May 21st, 2007 at 4:35 pm
Idiot/Savant, the point remains, if National had designed tax cuts which paid out the same as Labours policy everyone on the left would be focussing on those 4%. But because it is Labour, well, they can do no wrong apparently.
Someone on $25k a year may not be able to afford $14 a week no matter what incentives the government puts in place.
There is no getting around the fact that tax cuts would INCREASE their disposable income, Kiwisaver would DECREASE it.
May 21st, 2007 at 4:58 pm
There is also no getting around the fact that increasing disposable income would increase inflation in NZ, and further raise the NZ dollar, hitting exporters a lot more than a 4% empolyer contribution would. Much worse for employment rates than Kiwisaver; I think people would prefer jobs to the idea of a tax cut they’d be enjoying, if they were employed…
And let’s not forget that in the ‘lower waged’ sector the government credit will cover a larger proportion of the involuntary contribution.
May 21st, 2007 at 5:27 pm
The shit for brains lefties just don’t get it.
People on $25k per year who can’t afford to pay for their piss and smokes and kids’ school lunches aint gonna gat a red cent because they aint gonna opt in to Kiwisaver. If they do, they’ll have to smoke less and drink less to drown the sorrow of their rotten stinking wretched lives and they aint gonna do that.
Meanwhile loonytune loopies write drivel on threads like this about how awful it would be if these people’s disposable income were increased. Just imagine how much their income could have been increased WITHOUT any inflatinary pressure if government spending over this last nine years, and in particular this last two years, had not been pushed through the roof to steal an election. Tell us this was not inflationary, why don’t you?
May 21st, 2007 at 5:33 pm
um, what happens to the Kiwisaver money? Doesnt it just get invested? But of course investment doesnt affect inflation, does it.
And thats to say nothing about the ability to direct Kiwisaver to mortgage payments. Not inflationary in the slightest bit.
Not only that, the increase in labour costs for NZ businesses, DEFINITELY NOT INFLATIONARY.
Matt, you are arguing AGAINST increasing disposable income for poor people simply because they are more likely to spend their tax cuts than save them!
Here is what you are saying,
“No, poor people, you may not have an increase in your disposable income because you will simply spend it on food, rent and entertainment! Have you no concern for the economy at all?”
May 21st, 2007 at 5:51 pm
And UC, you’re talking of about $14, if you’re on that income. That’s two beers, or four if you’re at Otago. Even on such an income, many people would look at that ($14) and decide that it’s rationally not that impossible to do.
In a country with high personal debt it is your advice to put off paying this debt and invest 4% of your income in a social security retirement fund. Only one question remains, how much of Instant Finance do you own?
May 21st, 2007 at 6:11 pm
Matt Pilot, no matter how many times I work this out, 4% of $25,000 just doesn’t equal $14. (Assuming weekly here). I’m getting $19.23 everytime. This is pre-tax, I assume?
Then looking at $480.77 of income on average a week, less tax on code M according to IRD, we’re looking at $296 per week. And you’re SERIOUSLY expecting people would put roughly $15-$20 of their income towards some vague and nebulous scheme that they might see in future? Or be paying of a mortgage on that salary and put it towards that?
See, there’s this bridge in San Francisco. I think you’d like it. Lovely harbour views …
May 21st, 2007 at 6:54 pm
Not to mention that many of those in and around that $50k mark have significant mortgages and no possibility of shaking loose 4% of their income so it’s all a moot point really.
May 21st, 2007 at 6:56 pm
So it seems we’re back to the “who-gets-what” lolly scramble argument that typified the media’s coverage preceding the last election. Let’s not forget that under this analysis, National’s tax cuts and Labour’s Working for Families extension were seen as six of one/half-a-dozen of the other by the average worker with kids.
Since then, DPF and others have complained – with some justification – that WFF is “middle-class welfare” involves “churning” money back to the taxpayer, and results in high marginal tax rates that dis-incentivise working harder. Even some social democrats might accept criticisms of WFF as inefficient and paternalistic (though there’s an alternative view that it’s a targeted tax break to those undertaking the productive task of providing the next generation of workers).
The Kiwi Saver scheme by contrast, is largely virtuous from an economic point of view. It’s addressing a structural problem with the NZ economy. It’s returning tax dollars to individuals without the inflationary effect that would erode those dollars’ worth. And the harder you work, the more you get (to save).
So now it’s forget the serious analysis, back to the lolly scramble argument? Somewhat disappointing, if you prefer genuine debate to political spin.
May 21st, 2007 at 7:28 pm
Bidsta, I think the point was that those who were frothing at the mouth about Nationals “tax cuts for the rich” are silent about the transfer of wealth to the extremely wealthy Labour just budgeted.
May 21st, 2007 at 7:43 pm
The lolly scramble argument hasn’t actually arrived yet. We’ll see Labour’s true colours when the election comes around.
Meanwhile, the debate on whether the lower income bands can afford to take up the “too good to turn down” deal has to also factor in the following:
1. The person’s net income falls slightly
2. It falls again with increased petrol costs
3. It falls again with rising interest rates
4. It falls again with compounding inflation
5. It falls again with unprecedented rates rises
As the election looms, expect the Greens to push the agenda by trading a move in the tax thresholds for some carbon based taxes, and the government to trumpet the former with much fanfare, and downplay the latter. I’m guessing the price of fuel will be pushed higher, particularly diesel, which a possible rebate scheme towards public transport on diesel costs.
May 21st, 2007 at 8:32 pm
Putting “rich” in the thread title really brings the frothing lefties out of the woodwork..well done DPF, mind you I would have thought Redbaiter would have swooped on this.
May 21st, 2007 at 9:22 pm
“Helping the rich”
Is someone seeking a part-time job as a copywriter with APN?
May 21st, 2007 at 9:34 pm
I think the point is that the compulsory employer contributions will erode wage rises. I seem to recall that even Michael Cullen admits this. So in a few years, with stagnant wages, you can discount the employer contribution from the equation. Taking this into account makes all employees better off with tax cuts.
May 21st, 2007 at 9:37 pm
Bidsta :And the harder you work, the more you get (to save).
No, wrong. Your comment should say: the harder you work, the more stolen money you get from your employer by the approval of the state.
Bidsta, you’re (and everyone else) entitle to save your own money heh? But do not show a willingness to pocket money that is not yours in the first place, which is the employer’s compulsory contribution sanctioned by this Socialist fucking Labour thiefing government. Employers are being forced to contribute to the KiwiSaver scheme without their consent, and I call that theft.
May 21st, 2007 at 9:41 pm
“And the harder you work, the more you get (to save”, wrote Bidsta.
Let me tell you this: I work hard. I work very hard. I probably dont earn as much as you Bidsta but I guarantee you I work harder. I dont get much to save, either.
You seem to think that the higher your salary is the harder you work. You are nuts if you believe this.
May 21st, 2007 at 9:56 pm
The policy has been designed by people who have averaged a 9% pay rise every year since 1999. Common garden worker varieties like you and I have been lucky to see 3%. High wage increases are inflationary you know….
Labour are out of touch with reality. Their MP’s have no idea what it’s like living under their own policies because they don’t themselves. Kiwisaver demonstrates that, they (the policy makers) know full well that many poor households can not afford to invest 4% of their pay. They also know very well that people like themselves will do very well from it.
And their supporters still claim they are looking after the little guy when they implement policies like this! Astounding – If Nationl implemented such a benefit so unavailable to the poor or the old there would be people protesting at parliament.
May 21st, 2007 at 10:15 pm
The irony is that this policy would be fair (to low earners) if they didn’t pay tax from the first dollar they earned, as they don’t in many countries (including Australia). Isn’t it just obvious that a $10K tax free threshold implemented at the same time would have given all people sufficient extra cash to invest into Kiwisaver without destroying their household budgets.
How bizarre that low earners are paying tax to benefit the higher earners in NZ.
May 22nd, 2007 at 12:17 am
exactly burt.
The thing with this scheme is that over time as this enforced saving scheme becomes quite substantial it will become more and more tempting for the national super to become redundant – or means tested based on your kiwisaver nest egg.
So long term, national super will pay for the poor or lazy who either could or would not opt in to the kiwisaver scheme, while everyone else pays double for superannuation -just as before -for themselves and for those 50% who didnt take it up.
May 22nd, 2007 at 12:26 am
It is so easy, all they needed to do is drop the lowest tax rate by 4-5% or axe it completly and this becomes a nomimnally socialist policy that actually can help everybody, poor people included. Instead what they are doing is a vote grab on the centre brought about by wannabe populists, at the expense of the poor.
Greens can capitalise on this and takes votes off Labour.
May 22nd, 2007 at 6:46 am
I/S and everyone misses the point in their whining.
I have blogged previously on how much benefit people get from KS at various income levels. I even support KS as the largest privatisation programme of all time.
The purpose of this post was to point out the hypocrisy of Labour. They attacked National’s tax cuts as money for the rich and their own programme gives the rich far more money.
But hey I love seeing I/S and others cheer Kiwisaver on just because Labour did it. I know their cries of outrage would be massively loud if National had done it.
May 22nd, 2007 at 8:55 am
Hmmm, it seems to me that most people on low paid incomes can manage their money a lot better than the good folk of the late and unlamented Sir Hunphreys who still like to contaminate the internet. Some rightwingers they are, can’t even pay their own bills.
May 22nd, 2007 at 9:39 am
Don’t worry about them TomS, we are not supporting them.
Worry more about the folk earning less than $25,000 that won’t be in a position to invest in KS. Worry about them more when their kids are watching you park your BMW in your 4 car garage and they know that it was paid for by the taxes their parents paid.
May 22nd, 2007 at 10:10 am
kimble..
here is some grist for yr mill..
http://whoar.co.nz/?p=10863
i’d be interested in sonics’ respone also..
phil(whoar.co.nz)
May 22nd, 2007 at 10:40 am
DPF your point is pretty irrelevant – those on higher incomes already have far more attractive super schemes and you know it – there’ll be sweet f.a. people on higher salaries enrolling in KS, they can afford the financial advice to do much better.
I’m loving watching all the righties frothing in defence of the poor, the very people they love castigating and target #1 when it comes to policy time.
And Wicket – have a wee think about this before you’ve thrown all your toys out of the cot: would you prefer that the govt took that 4% off empolyers, just to give it straight back to the employees’ KS fund? Instead of doing it via a much more simple and effective way? That’s churn, and stupidity. WFF isn’t because those funds are redirected. They’ve just avoided double handling of the money. If they’d done it differently you’d be whinging about too much bureaucracy, and this way you call it theft. Use some common sense.
Finally Kimble – yup. They went for something non-inflationary, especially in comparison to tax cuts. What’s your point? Froth froth…
May 22nd, 2007 at 11:09 am
MP – better than 100% risk free return at day 0?
However there is the interesting question of who pays the 4% for the sole propreitor / small business owner.
Oh sorry I forgot that it is Labours personl goal to shaft those as much as possible so they can encourage big businesses supression of the worker while pretending to care about the poor…
May 22nd, 2007 at 12:24 pm
Unlike most socialists, I would rather have $2000 of my own earnings currently taken as tax returned to me as a tax cut than receive $2000 of other people’s money.
May 22nd, 2007 at 12:38 pm
toms, if you had a brain you’d be even more dangerous than you are. Take this comment of yours:-
‘can’t even pay their own bills.’
You need to know this comment is untrue and is defamatory. I suggest you beat a hasty retreat and ask DPF to delete your comment after you have issues an apology on his site.
Sir Humphreys is down temporarily for reasons other than that it’s authors’ cannot pay their bills. These reasons are none of your business. Many of the authors are known about the town by their real names and I can assure you you we do not take kindly to having false statements made in public to the effect that we are insolvent.
May 22nd, 2007 at 12:45 pm
Wow Adolf you’ll bag me on another thread with a piece of brainless nonsense (apparently i am made of plastic – this guy is a genius everyone) yet you really get serious when someone bags you.
Nice piece of hypocricy.
May 22nd, 2007 at 12:46 pm
I’m loving watching all the righties frothing in defence of the poor, the very people they love castigating and target #1 when it comes to policy time.
Who is a rightie here? Cos I am thinking a policy locking the poor out of a benefit that mandates an effective payrise and tax rebate for everybody else, that’d be right wing.
The very same party has reduced benefits to the lowest proportion of average wage in 30 years. The party has the highest prison population in ever.
Making the poor the #1 victim of policy, that’d be the Labour Party.
May 22nd, 2007 at 12:52 pm
Not to mention the party that has got unemployment to the lowest level since half of the people alive in this country were born.
‘The poor’ actually have jobs, not benefits, under Labour, to a far greater degree than they have had for decades. If that’s what you mean by victim, then you’re a fan of people being on the benefit.
Let’s not forget the large minimum wage rises that you conveniently ignore.
And incidentally – you have to have a job to tap into KS too.. Hmm…
May 22nd, 2007 at 2:01 pm
Yeah, basically classical right wing policy is to get everybody working, and classical left wing theory suggests that this is so a low cost working population can be exploited by the wealthier members of society. A right wing party will achieve this by cutting benefits so that poor people must work to survive. And at the same time a right wing party will reduce income taxes for the wealthy and might increase VAT that disproportionately affect those unable to generate wealth (ie. poor people).
What this policy does is offer a deferred tax rebate to people who can afford to accept the offer, a deferred tax cut for the wealthy. It offers no support to the poor. This is classical right wing policy.
If I was a right wing supporter of this government I would come out and say something like: “poor people deserve it for being poor, at least they have jobs and they should be damn grateful for it. Without our policies they’d be wasting away on benefits. Damn stupid lefties, why would we want more people on benefits?” – Oh look, didn’t you just say that?
Lets not forget the increases on petrol VAT that Labour brought in last time and have again. Lets not forget the soaring costs of debt.
May 22nd, 2007 at 2:21 pm
Employment isn’t exactly a policy per se, at least not since I last checked. However, under Labour, more people have jobs. Spot the left wing theory that says this is bad.
It’s not left wing policy to have as many people as possible on benefits either (as before, that was last time I checked. Let me know if you find an update that says a left wing govt’s goal is to increase the number of people unemployed and on benefits). So umm, nice rant, despite the lack of relevance.
Oh petrol taxes – and what, specifically, are they to raise funds for? Public transport. Now what parts of society are greatest users of PT? That’s right – it’s the CEOs and General managers!! Did you know I used to catch the bus to work with Theresa from Telecom?
May 22nd, 2007 at 2:23 pm
And to make it totally crystal the “large minimum wage rises that [are] conveniently ignore[d]” – no where near enough to stop poor people being shafted by this law.
May 22nd, 2007 at 2:27 pm
Typical bait and switch from DPF – like on the Working for Familes – focus on the very few people on higher incomes who will benefit, people think ‘well, yes maybe those people don’t need that benefit’ and use that to bag the entire scheme…
The fact is the bulk of the impact of both the Kiwisaver changes and the Working for Families scheme go to lower income people and boost their wealth significantly (that $20 a week will be worth a lot more to someone on $25,000 than a very rare joker on $250,000). DPF would like to have the baby thrown out with the bathwater.
May 22nd, 2007 at 2:29 pm
You’re assuming low incomes = low intelligence (too dumb to save). It’s actually quite possible to be on a very low income and save, especially when the benefits are so obvious. I have done it, and many others have done it. No workers are excluded from KS. How difficult is that to grasp?
May 22nd, 2007 at 2:33 pm
DPF your point is pretty irrelevant – those on higher incomes already have far more attractive super schemes and you know it – there’ll be sweet f.a. people on higher salaries enrolling in KS, they can afford the financial advice to do much better.
Quite possible Matt. I’m not convinced though. If somebody has their own attractive super scheme, why not take the additional money you can get for your retirement in return for a measly 4%? When you’re earning 120Kpa or more, 4% does not make such a big difference in your cost of living allowance as it does when you’re earning 25K or 40K. So why would they turn down that extra little boost when they will, as David has rightly pointed out, be getting SO much more in return from employers and the government?
You’ve still not come up with even a possible answer for why a low wage earner will take this up when it cuts so heavily into their cost of living expenses. I’ve been crunching numbers for a while on this and I can’t see somebody doing that without having to give up part of their lifestyle today. Especially your touted 25K earner example. When you factor in costs of public transport, shared apartment room rental and food, electricity, etc. – it just seems impossible to work a further $20 per week towards this.
So, if we assume that what you say is true – that the richer people who would benefit from this the most will not take it up – who will?
Nobody? Then what was the bloody point?
May 22nd, 2007 at 2:43 pm
Spot the left wing theory that says this is bad.
Simple words. Exploitation of poor people = bad you are left wing. Explointing poor peoples work to pay for rich owners = good, you are right wing.
Offering a tax rebate to rich people and not poor people = ?
Oh petrol taxes – and what, specifically, are they to raise funds for? Public transport.
Actually half roads and half public transport. And how were these paid for before this VAT was inflicted on commuters? General fund (just been given away to corporates and rebated to wealthy people) and property rates. Isn’t that marvellous, rates are being kept down – bet Theresa is gonna be real pleased she gets her bus ride is subsidised and she gets $10,000s wiped off her rates bill.
May 22nd, 2007 at 2:48 pm
Llama – I have been in that situation and put money towards a super scheme – because there was a suitable incentive. This was while living in a major city (by NZ standards). This while paying off a student loan, HPs, credit cards, overdraft, rent, public transport costs, rent, food, the works.
I can understand that it would look neigh on impossible, but it wasn’t that hard – it gets taken out of your pay and it’s like you never had it (to blow on rubbish)- you also get to see it add up pretty fast when your contribution is met by another source.
And why would I do this when I had outstanding debts (some of which were interest bearing) – I needed the incentive to save.
Hence my support for it – I know it’s not that hard, and I believe a lot of lower income people will take a look, and buy in. Many more so than the higher-paid people in NZ.
May 22nd, 2007 at 2:50 pm
Matt Pillock
There is a difference between bagging and slagging.
May 22nd, 2007 at 2:59 pm
Adolf – you’re adept at both, or so it would seem, so quit having a cry when someone has a go at you.
UC: People working, and not existing on benefit = Exploitation? As I have explained, It’s not “a tax rebate to rich people and not poor people”.
Oh I see – only rich people pay rates!! Got it, cheers for the explanation…
May 22nd, 2007 at 3:15 pm
You’re assuming low incomes = low intelligence (too dumb to save). It’s actually quite possible to be on a very low income and save, especially when the benefits are so obvious. I have done it, and many others have done it.
The good ole deserving vs. undeserving poor.
Those “too dumb to save” – didn’t need to go to their grandmothers funeral, did not need to splash out to impress a gf/bf, did not need to pay for that cough medicine. Bet that’s why they’re poor, they’re just “too dumb”.
Of course the fact that they’re working to help subsidise retirement funds of their (higher intelligence) betters is no way expoitative. Because they deserve it, they are “too dumb”. Well you just keep telling yourself that.
May 22nd, 2007 at 3:28 pm
Rubbish – you’re assuming that those on lower incomes won’t save. And in assuming that, you’re assuming they’re too dumb to save, or you’ve got no leg to stand on – as I have said right after that comment you quoted half of, 4% isn’t some mystical impossibility.
I’m assuming they will save, no such subsidy of the rich etc etc.
May 22nd, 2007 at 3:49 pm
Matt, would you consider yourself to be an exceptional individual or would you consider yourself to be on par with the group of New Zealanders earning the lower wages?
I can agree that there will be exceptional cases when you will find individuals who realise the value in this scheme. But as a mass uptake?
Look at the $25,000 example. Which is probably an unfairly low salary – but it’s what this discussion has centered around so far. $296 after tax per week. A few assumptions here, but that’s the nature of thumb suck examples.
Working on an average of 2 stages to travel by public transport, working 5 days a week you are looking at $6.40 both ways per day. $32 per week. When we were renting we were paying $375 for a two bedroom duplex, so I’m picking you can rent a room for around $100? Would that seem fair? And a reasonable food budget for a single person would be $15 per day to include 3 meals.
So now you have a place to sleep. You have a full belly. And you can go to work and back every day. Of the $296 you’ve spent $207, leaving you with $89. Or call it $385 per month on average.
This is the money you have available for incidental bills, electricity, telephone, buying clothing, what entertainment you might want, saving, insurance and whatever else. Yes, some of those are stepping outside the boundaries of necessity and heading higher up the pyramid, but people are human after all. We can’t discount the human factor in this.
Nigh on impossible? Maybe not. Probable? Maybe not. At least, not from my perspective. Can you work out something that will enlighten me on this?
May 22nd, 2007 at 4:06 pm
This is just budgeting – all of which is individual. However, over $100 a week on food is more than I probably spend now! And unlikely for someone on that salary.
I’m not sure how you got the $296 – I’m certain it’s higher than that, more like $350, but I can’t remember what the pergentages are..
Either way – there’s not a great deal left over. Agreed. However, I’d put it at closer to $130ish. So if someone told you, that you put an amount aside (somewhere between $12-$20) and it would effectievly be doubled, plus you get an extra $5k towards a house – well, it would be hard to ignore. You’d certainly try pretty hard to find a way. (whether you can ever afford the damn house is another story, let’s not start on that…)
May 22nd, 2007 at 4:19 pm
Oh I see – only rich people pay rates!! Got it, cheers for the explanation…
D’uh, yes.
Wow. Can find time to observe minute increases of minimum wage, but has not observed the property boom. Just…wow.
Matt needs an answer : if you pay rates (own property) and your property is increasing in value to the tune of 80% over 5 years, does this make you richer or poorer?
An effect of a property boom is an increase in rates, slower than the property boom, but an increase nevertheless. Luckily for all those who benefitted from the massive increase in wealth there is a government in place that ensures that the burden of infrastructural development is to be placed on motorists and the property owners can make even more wealth out of their property. And if these motorists are not owning property, it is because they’re “too dumb” (meaning unlucky or unitelligent or just plain poor) to have saved.
you’re assuming they’re too dumb to save, or you’ve got no leg to stand on – as I have said right after that comment you quoted half of, 4% isn’t some mystical impossibility.
No. Only you have suggested the poor not taking up KS is due to them being “too dumb”. You are either an ultra arrogant right-wing prat or a party hack – the difference between the two is not easily determined.
I assume that they’re smart or at least a lot smarter than some persons. There may be a need to spend money on family, friends, education, medical expenses or just to have fun and live a little – that will neccessitate excess spending. For all this they need an accessible line of credit or a savings account (not a KS type lock away retirement fund). Living bare bones is possible, but it is risky.
The smartest thing for them to do with their 4% is to take it now and use it now. To get a better chance at earning more money through further education or building associations. Locking it away makes this harder, keeps them poorer.
You can’t see past the fact that you are going do real well out of this scheme and your self interest colours your judgement – a nice Tory blue tint.
May 22nd, 2007 at 4:33 pm
UC just go back and read properly – I never said …to dumb to save – I said you are assuming it. Furthermore, if you read on, you’ll notice me saying that I think those on lower incomes will save – everything you’ve put up there is just plain wrong. So yeah, enough – make some sense and argue based on the facts and what people write instead of this gibberish.
And as for your other assumption – that I am going to do well out of KS, which is why I support it – assumption is the mother of all f…ups. My personal motivations are nothing to do with it. God knows what’s driving your views (but I’d rather not know, thanks)!
May 22nd, 2007 at 4:44 pm
I got the $296 from IRD. On tax code M, somebody earning $25,000 has $15392.94 after tax. Divide by 52 to get weekly earnings. And I’m assuming somebody on that bracket would be a wage based employee and more likely to be paid weekly, etc.
So, I’m sticking to $296 rather than the $350 figure. I picked $15 per day for food. Does that seem unreasonable? As a family of 3 we spend about $25 per day on average, but it’s generally easier to cook for 3 and more cost effective than it is to cook for 1.
That 4% comes off before tax, does it not? If that is the case … $83 per month. In that case the $296 becomes $284, which is not such a big difference, agreed. But still $12 that must be sliced off the cake somewhere with no tangible, visible benefit to the person paying it.
Maybe that’s the distinguishing point for me. There’s no real visible benefit – nothing tangible that will convince somebody that they’re getting more. After all, if you’re living hand to mouth and day to day – would you really consider sacrificing a meal or a chance to go out with your mates for the promise that when you turn 65 you might be getting some money back? Or perhaps have an opportunity to get a $5000 deposit on that cheap house that would require 3x your annual salary to service the mortgage on?
Whereas – if you are financially comfortable, not taking part in this would be stupid. Grossly stupid, because the benefit outweighs the percentage outlay by so much.
As David’s numbers shows us – wealthy people benefit from this a great deal more than poorer people. So we seem to be tussling with the uptake we’re expecting amongst lower wage earners, but we’re ignoring that this policy delivers much more to the wealthier sectors than it does to the poorer sectors of our society.
May 22nd, 2007 at 6:01 pm
UC just go back and read properly – I never said …to dumb to save – I said you are assuming it.
Thereby introducing for the first time the concept that poor people who do not save are “too dumb to save”. You are saying this and no one else.
This scheme provide a future incentives package for people to take a 4% pay cut today.
Myself and Llama and David see that the people least able (and therefore smartest not) to take a 4% pay cut are people earning the lowest wages. To me this seems a really simple and obvious concept.
However you state that you expect the higher take up to be amoung the poor and the least take up amoung the wealthy. To get to this position you have to be saying that – the people most able to afford a 4% pay cut are the people on the lowest wages (??). That is either incredibly stupid or part of some wider interest you have in seeing this bill suceed and you strongly deny having a wider interest.
May 22nd, 2007 at 8:15 pm
Anyone see 3 news tonight, with Boy Wonder Key trying to deal with the question “will you abolish Kiwisaver if you win the nest election?”
He said he would let Bill English have a look at it and let us know in due time.
Priceless!
May 22nd, 2007 at 8:24 pm
And Sonic? Would you rather have the leader of a party make an arbitrary decision and have to change his mind once they’ve looked over the policy? This was as much a surprise for them come budget release as for the rest of us. It takes a while to formula new policy, examine the angles and investigate the issue.
So what’s wrong with taking the intelligent stance, investigating and letting people know what their policy will be once they’ve researched it?
Isn’t that just plain logical?
May 22nd, 2007 at 8:42 pm
Kiwisaver a surprise Llama?
To a man living in a cave perhaps.
It was a golden TV moment though, first crack in the Key myth. I wonder how he will do in a pre-election debate without Mr English being there to hold his hand?
May 22nd, 2007 at 11:19 pm
As pointed out elsewhere: not only do you contribute you $12 per week, but you will get NOTHING because the only thing that KiwiSaver guarantees is that the time when NationalSuper is disbanded just came 10 or 15 years closer.
The idea that NZ can remain competitive with its existing pension scheme, health scheme, education schemes etc are just completely crazy: NatSuper will go – and your little nest-egg in KiwiSaver will not help one bit.
And as for Key vs Cullen: we already know what will happen we’ve seen it in the house: Key will completely destroy Cullen
indeed – if you look at the opinion polls he already has!
May 22nd, 2007 at 11:24 pm
Now the left denigrate Key for taking a considered approach saying he will consult the guys who know what they are talking about…
The left are in tatters when then need to drag the barrel back to the 70′s.
June 6th, 2007 at 2:23 am
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