Rudd backs massive tax cuts

October 20th, 2007 at 8:40 am by David Farrar

As I have said many times, most left wing parties do not share NZ Labour’s ideological hatred of reducing tax. I doubt one could find another party in the world that has had surpluses as high as NZ’s, and they’ve refused to lower personal tax rates.

Australian Labor leader Kevin Rudd has endorsed almost every element of Peter Costello’s massive tax cuts. The only difference is with the rate for those earning over $180,000.

Rudd has also offered tax deductions for laptops and Internet connections if used for home education.

And his long-term plan through to 2013-14 would have Labor flatten the tax structure going from four rates of 15%, 30%, 35% and 40% to just 15%, 30% and 40%.

So no matter who wins in Australia, within a few years there will be 0% income tax for those earning up to $20,000.  Someone on $30,000 will pay only an average 5% tax.

And what do we have after years of massive surpluses?  A worker on $30,000 paying almost four times as much tax as one in Australia.

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75 Responses to “Rudd backs massive tax cuts”

  1. milo (525 comments) says:

    In New Zealand, you are rich at NZ$60,000 per year. In Australia, you are rich at A$180,000 per year. Unless you are the Prime Minister, in which case household net worth of $3 million plus is simply being “comfortable”.

    I just can’t see how this is a recipe for success.

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  2. Tina (687 comments) says:

    “And what do we have after years of massive surpluses? A worker on $30,000 paying almost four times as much tax as one in Australia.”

    Simply unsustainable for Mick and Hulun.

    And speaking of ga-ga…..”In New Zealand, you are rich at NZ$60,000 per year. In Australia, you are rich at A$180,000 per year”. Has NZ got some sort of idiot factory these days?

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  3. philu (13,393 comments) says:

    i repeat..!

    raise the tax-free level to the aussie one..

    ans lower the lowest rates..

    ‘simple as’ to administer..

    all monies flow back into the economy..

    everyones’ a winner..!

    (also..true ‘user-pays’ green taxes..

    stop punishing/bleeding the workers..!

    tax the wreckers/pollutors..

    not the creators..

    phil(whoar.co.nz)

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  4. PaulL (6,048 comments) says:

    Geez, what a poorly written article by SMH. I guess when you’re a left wing paper you can’t attract good writers. Or maybe they were stretching to be able to write anything positive.

    Rudd is quoted as saying that he will flatten the tax system from a top rate of 49% to a top rate of 40%. And that people on the top income will pay $10 per week in tax more under Labour. Dunno how that math works, but that is very little difference from the Coalition, and definitely represents a substantial change for those earning over $180K.

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  5. Frank. (607 comments) says:

    Not acceptable to this Labour led Government. All tax cuts must come with strings attached in the form of benefits – working for families etc

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  6. RossK (275 comments) says:

    Yes but what about the WFF credits and all the great government benefits / services that NZ’ers get for their taxes here. Actually, it occurs to me that the system would work a lot better if 100% of our salaries were paid to the government directly (under a PAYE system, “Pilfering All Your Earnings”) and then the government took responsibility for the free supply of all necessary goods and services free of charge. What a great idea. I hope no one has come up with this one before me. I want to be first with this ground breaking can’t fail scheme. Yay for me and the Left.

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  7. scrubone (3,105 comments) says:

    We’re likely to become like New Jersey if this keeps up.
    http://halfdone.wordpress.com/2007/10/19/is-new-zealand-the-new-jersey-of-australasia/

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  8. tim barclay (886 comments) says:

    There is a better policial culture in Australia for tax cuts than NZ. People like paying and paying for heavily unionised state monopolies for essential services. And they think tax increases are needed to keep them afloat.

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  9. Lee C (4,516 comments) says:

    Perhaps the brain drain has afflicted all areas of life? How many able politicians are simply not here in New Zealand because they left one day, never to return?
    Did that leave the field open to a bunch of mediocrities who appear to shine for want of any competition?

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  10. RossK (275 comments) says:

    Shine????? Which of the politicians is shining? Even in a mediocre field none manage to stand out. They are a bunch of theiving b**#$%. Tell you what, if their salaries were linked by a (low) multiplier to the real median fulltime after tax wage then we might see better policies.

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  11. Lee C (4,516 comments) says:

    RossK are you daring to suggest our politicians are not quite up to scratch?

    Wash your mouth out.

    On the bright side, after the EFB yo won’t even have that privilidge.

    One step closer to Telly-Tubby Land…

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  12. RossK (275 comments) says:

    I think that they are paid too much that is for sure. How can people who get $120,000 plus perks, as their base salary, relate to to the effect their polices have on some poor schmoe who gets only 40,000. I have long thought that our politician’s pay should be based on their average annual earnings over the immediately preceding three years, subject to certain floors and caps, with perhaps a premium loading of a pre specified percentage. This would (1) ensure that people who fiddle their earnings have no financial gain (rather a loss) to make from being politicians (2) provide similar financial incentives to all participants to be politician’s (the cap could be set quite high – although I don’t think the John Keys or Don Brash’s are in it for the money so such a scheme would not operate to exclude the likes of them from parliament as they are not their for the money). Well, what do you reckon?

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  13. RossK (275 comments) says:

    Sam, as someone has already responded to you, the payroll tax is not relevant.

    In Australia, the Payroll Tax is a specific tax which is paid to the individual states and territories by employers not employees. It is not a deduction from the worker. The Australian Government itself only requires one tax withheld from paychecks, the PAYG (or pay-as-you-go) tax which includes medicare levies.

    Your continual bleating is a little silly. If in fact we should consider the payroll tax then what you are really saying is that an Aussie worker manages to get substantially more after tax take home pay than a Kiwi even with a higher tax burden in Australia. Hardly something an incumbent NZ government would be singing from the rooftops. It also means that the comments you guys make about all the wonderful social services we get for our tax dollar in NZ are a crock because Aussies are, accoridng to you, paying more tax and, it follows, enjoying greater government funded services. Pray correct me if I am wrong.

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  14. bwakile (757 comments) says:

    Sam you can argue the point until the cows come home but perception in peoples minds is as good as reality. People think they are getting stuffed in this country and that counts more than all the facts and figures. People percieve Australia as having greater opportunities and that counts as much as tax figures.
    Our problem here is not lack of opportunity and wealth but Cullens worldview. I think he confuses tax relief with that other great form of male relief.

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  15. PhilBest (5,125 comments) says:

    Tim Barclay is right. Somehow, Our Dear Leader has an awful lot of Kiwis actually BELIEVING that it is BETTER if the State “provides” and we pay them (more and more) to do it. Aussies appear to be just plain more intelligent.

    In the U.S. a high proportion of the population are intelligent enough to look at State-provided “health care” in the UK, Canada, NZ, and so on, and conclude that they don’t want a bar of that, thanks very much. Say what you like about the heartlessness of the U.S. system, but it actually treats a far higher proportion of the population who need treatment, and treats them far quicker. So why is Socialised “health care” ever deemed compassionate by comparison?

    The tax cuts as per the Howard way are a winner. Unlike the reduction of tax at the top of the scale, which got Don Brash such condemnation from the left, the Howard cuts do the most for the lowest income earners. Cullen and Clark get shown up for what they really are when they’re so sour-grapes about this. The only explanation for this is that they DON’T want to incentivise beneficiaries to join the workforce by letting them keep more of what they earn should they do so. How putrid is that?

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  16. stan (108 comments) says:

    The fact that we have a half-assed Left-wing National party opposition doesn’t help either.

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  17. bwakile (757 comments) says:

    The only thing that Cullen will ever cut are the the rungs out of the ladder of success. He wants people to remain at the bottom where he can control them and thus justify his own miserable existance.

    It always amazes me that the very people he professes to care about are the very ones that he stuffs the most and they take it.

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  18. Spam (588 comments) says:

    Look, I’m sorry, but all you righties are wrong, and Sam, Phillip-John & Tane are correct:

    When it comes to comparisons, there are a small proportion of people in New Zealand, who are better-off now (under Labour) than they were in the 1990s under National. For example, the guy down the road only had a part-time job, and is now working full time. Hence, his average or median earnings are now higher. So there.

    Also, a friend of my cousin’s brother was unemployed in australia, and came back to New Zealand, where he gets Working For Families (on account of working 30 hours a week on minimum wage). In fact, he has an iPod, a cellphone and a $2000 fridge. He is clearly better off here than he was in Australia, where other people had to pay payroll tax (not for him, remember, he was unemployed. But they had to pay medicare as well, and he was charged some GST on some stuff he brought).

    Now, if we extrapolate these two cases to New Zealand, it is clear that DPF is a big liar, and New Zealand is a much better place than Australia.

    [rakaunui(moderation): It is for the reader to decide who is a big liar, not for you to make unjustified exprapolations]

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  19. virtualmark (1,540 comments) says:

    It seems clear both National and Labour will be touting tax cuts in the 2008 election.

    For National it’s a no-brainer that a surplus the size of New Zealand should be returned to taxpayers.

    For Labour, even if Cullen thinks tax cuts are the ideological equivalent of dog poo on your shoe, pragmatism will out. I’d be very confident their internal polling is telling them the mood of the key swing voters is that tax cuts are overdue. I think we all agree Helen’s only principle is to stay in power … if it takes tax cuts to do that then tax cuts it is.

    Elections are decided by only about 10% percentage of the population who genuinely do swing their vote between the major parties. I suspect that 10% of the population are now thinking its time for real tax cuts and that Cullen isn’t credible in offering them.

    Now, if only I felt confident that National will be able to campaign intelligently without stuffing both feet in their mouth on a regular basis … I suspect the only thing standing between National and a win in 2008 is their own (in)competence.

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  20. Whaleoil (767 comments) says:

    I am so over the distraction of “payroll taxes” that Sam dixon and other fools like to use. Clearly they have never lived in Australia as they wouldn’t utter such inanities such as that. Payroll taxes are STATE imposed taxes on the payroll of a company. Individuals do NOT pay payroll taxes nor are they deducted from wages. No FRO over payroll taxes dickheads.

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  21. Tina (687 comments) says:

    Correct Spam…..the Aust economy isn’t run for the benefit and maximum advantage of mendicants like your unemployed mate.
    Tails do not wag dogs here.

    More shocking concepts for la-la land.

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  22. Tina (687 comments) says:

    How to help Sam?
    Think of it this way…PT is levied @ 6% above a base concession in NSW, a business pays it as a cost just as it would pay extra for its fuel when oil prices increase.
    Qantas doesn’t pass on its savings on Jet A1 costs to its employees as wages when the price of fuel decreases.

    You seem to think removal of this tax would mean the money saved by business would go to employees and therefore should be treated as wages foregone.

    PT is a trivial part of the Aust business tax equation and has no practical effect on salary negotiations/packages.

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  23. Sam Dixon (596 comments) says:

    RossK – it does matter if a tax comes off before or after gross wages.

    , you don’t know your basic economics, both an income tax and a payroll tax are a cost of abour on top of net wages – the result of adding any tax is to move the point where supply and demand cross to a higher price and lower quanitity, the assocated deadweight loss comes from both the employer and the employee no matter which kind of tax it is. therefore, when the question is ‘how much is an employee’s income decreased by tax on wages?’ you have to include all wage related taxes – payroll taxes decrease take home pay (and, incidentally, income taxes add cost to employer’s as well as decreasing employee’s take home)

    … this really is basic basic economics

    the cost of any price distortion is shared by both supplier and demander

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  24. stan (108 comments) says:

    Woah, you’re way better at sarcasm than me Spam : P

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  25. Grant (444 comments) says:

    It seems to me that:
    The Australian government takes as much tax as it needs, the current New Zealand government takes as much tax as it can.
    G

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  26. Sam Dixon (596 comments) says:

    sorry, should be it doesn’t matter

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  27. virtualmark (1,540 comments) says:

    Sam, from my experience of working in NSW no one ever refers to payroll taxes in the context of negotiating their salary packages. Sure, people know payroll taxes exist and employers have to pay them. But, as Tina says, they’re seen as an element of company taxation rather than personal taxation and I’ve never heard anyone raise them in the context of personal income.

    I think you’re flogging a dead horse here mate. Fair enough to factor in Medicare levies and the compulsory super contributions … but payroll taxes are irrelevant to a discussion of workers after-tax take home pay. And that’s what we’re all trying to maximise.

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  28. ZenTiger (435 comments) says:

    Payroll tax, a business cost. If they didn’t have to pay it, they could pay even higher wages…

    Payroll tax does not kick in until a business reaches a certain threshold…so many small businesses do not pay it.

    The business tax rate on profits is lower than NZ’s 33%. By the time NZ match it, the Aussies will probably drop that rate too.

    With NZ’s recent surpluses, National could easily launch a revised tax policy and set the agenda for the election as strongly as Howard did:

    0-10K NIL
    10K-30K 15%
    30-100K 30%
    100K+ 40%

    Set the Company tax rate at 25%, but consider a tobin tax of 1-3% on all money leaving the country.

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  29. milo (525 comments) says:

    Sam Dixon: You aren’t following your logic through. Folklore is that Australian wages are 30% higher than New Zealand wages. If you insist on including payroll tax, that figure should go up. And it should go up for 9% compulsory super too. So the 30% becomes 45% higher wages in Australia.

    You can’t have your cake and eat it too.

    By the way, do you support compulsory unionism?

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  30. kisekiman (219 comments) says:

    Sam, so your admitting higher taxes create deadweight costs, what a breakthrough for you.
    You also say “there is more tax on every dollar paid in net wages in australia than there is in new zealand…”. This has been disputed but even if true it looks like the aussies are going to deal to their overtaxing and remove some of those “costs of labour on top of net wages”.
    Keep teaching us economics though, it’s very educational.

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  31. Sam Dixon (596 comments) says:

    virtualmark, milo, zentiger – a cost of employing someone is borne both by the employer and the employee. lets take another example: we put GST up to 25%, does the supplier take all of that additional cost on themsevles? no. does it all get passed on? no – its shred between supplier and demander according to the shapes of the supply and demand lines…

    milo – yup, wages are higher in aussie, no arguing it, but, as the OECD points out (see earlier link) there is less tax on wages in new zealand than australia.

    no not complusory unionism – MECAs though.

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  32. kisekiman (219 comments) says:

    “As the OECD points out (see earlier link) there is less tax on wages in new zealand than australia.”

    Clearly not for much longer though eh?

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  33. Tina (687 comments) says:

    Haven’t been following Sam’s various misconceptions too closely….but via virtual it sounds like he’s been spinning Aust. Superannuation…naughty boy.

    Follow this closely Sam, it will be a great help.

    The compulsory 9% super levy is paid 100% by employers as “extra” income to all employees.
    Employees can then, non-compulsorily, contribute much more to the fund if they choose.
    Almost everyone who can does, it has huge tax concessions…like a 15% tax on its earnings no matter what the amount earned.
    Those lucky Aussies then get to withdraw the lot tax free at 60.

    Now this is the interesting bit…..the compulsory 9% employer contribution was legislated overnight ( time exaggerating for simplicity here Sam) it is a genuine extra payment forced by govt and not otherwise able to be extracted by most employees as wages because of the IR system of negotiated contracts. There was no plateauing of wage increases for 3 or 4 years as if future increases were already paid for by employer super contributions.

    Brings a tear to a socialist eye, doesn’t it.

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  34. Sam Dixon (596 comments) says:

    tina – i haven’t been talking about super, i’ve been pointing out that you can’t forget about payroll tax when considering the tax on wages in a country, like Farrar would have us do… the economics is really really basic – think it was 6th form when we were taught about taxes’ impact on price and quantity… so far no-one has refuted the economics, just made pointless extrenios comments.

    [DPF: Payroll taxes affect the gross salary of a job, but do not affect how much money you take home once you have agreed to take a job at a certain level. Now seeing Aussie salaries, even with a payroll tax, are much higher than in NZ your arguments fall flat.]

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  35. kiwi in america (2,511 comments) says:

    Sam
    I posted this yesterday and no response. Many posters have made the point I am now making.

    “A payroll tax is not paid by the worker. The price of labour is the market price of a particular job in a particualar industry in that country. An Australian employer pays this if he/she wants to attract/retain staff. If a person is a personnel manager in a hospital for arguments sake and in NZ and the market salary is $60,000. Lets assume for arguments sake that Australian hospitals pay the same salary (in AUD) of $60,000 (the reality is that the equivalent salary in Australia is likely to be higher). Lets assume an identical tax rate in both countries. Ah but Australia has a payroll tax and yes – the Australian hospital pays a percentage of the $60k personnel manager’s salary to the State Gov’t. The Aussie worker DOES NOT pay this tax and the Aussie hospital personnel manager’s salary is not REDUCED to compensate the employer for the payroll tax as you seem to allege. Thus trying to say that the presence of payroll taxes in Australia in ANY way reduces the take home pay of the Aussie manager is an absurdity. We know that the Aussie manager is likely to be paid a higher salary than his/her Kiwi counterpart and will be taxed less and thus will take home more pay.

    Now you have alluded to the fact that overtaxed NZers receive special advantages paid for out of taxation that compensate for the difference in the take home pay. When I asked for you to tell us how Australian taxpayers are disadvantaged by their lower taxes vis a vis Gov’t services you link to a mealy mouthed social wellness survey from the NZ MSD that shows that (even allowing for all the silly categories measured) that it’s about even stevens. So you are going to have to do better than that to prove your contention – that somehow lower taxed Australians get govt services on the cheap compared to their higher taxed Kiwi contemporaries.”

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  36. sdm (39 comments) says:

    Do Australians pay property rates? Serious question, I dont know the answer…

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  37. milo (525 comments) says:

    Okay, one last try Samo.

    If a job is advertised for $40,000 in New Zealand, you get $40,000 less PAYE and ACC in the and.

    If a job is advertised for $40,000 in Australia, you get $40,000 less PAYG and the Medicare Levy.

    You do not get payroll tax taken off the advertised salary. Therefore, it is not a tax borne by the employee. You might argue that it affects total employment cost for the employer, and thus the employment rate, but that is a completely different argument, with many other relevant factors involved.

    And if you are in any doubt about the attractions of Australia, and the failure of current NZ Government anti-‘rich’ polcies, then ask yourself why doctors are getting paid $70,000 more in Australia than in New Zealand. Your eat-the-rich policies are basically cutting off your nose to spite your face.

    http://www.radionz.co.nz/news/latest/200710201535/salary_gap_with_australia_must_be_narrowed,_warns_doctors_union

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  38. roger nome (4,067 comments) says:

    This is crap David:

    You know full well that the level of personal tax in NZ is very normal and average for a developed country. So to calim that Labour has “an ideological hatred of tax cuts” – well you’re just talking out your proverbial aren’t you?

    [DPF: I know that since 2000 Australia has cut tax rates year after year so that Australians are now paying far less tax as a % of their income. I know that Cullen has only put up personal tax rates and refused to inflation index so that almost every NZer is now paying a higher % of tax than they used to. It’s all about direction – and ours is bad]

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  39. bwakile (757 comments) says:

    Roger I know you wont agree but there are people out there who would prefer to have more say in the financing of their lives.

    The “cradle to grave” philosophy allows for Existance but not Life

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  40. milo (525 comments) says:

    Roger Nome: Labour has introduced many new taxes and raised the top level of personal tax. Our top tax rate cuts in far below the levels found in other countries. There has been massive fiscal drag. These are undeniable facts, so I don’t know what reality you live in. Oh, hang on, yes I do – you live in the under-40 reality; under 40 years of age and under $40,000 a year.

    If you want to live in a society where nobody is better than anybody else, why don’t you piss off to Pitcairn, or Norfolk Island, or the Chathams. If you want to live in a modern successful western econcmy, you need to swallow a large dead rat.

    The dead rat is this: you need to encourage people to get ahead, so that they will create wealth for everyone. As long as financial success is seen as a sin, New Zealand will struggle.

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  41. Peak Oil Conspiracy (3,433 comments) says:

    Milo:

    You’ll never get far with Phillip John/Roger Nome. He believes in an extreme wealth redistribution programme. What other country in the world deems $60,000 to be “filthy rich” (and deserving of the top marginal tax rate) – yet supports “poor” households earning more than $100,000 under the guise of Working (Welfare) for Families?

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  42. milo (525 comments) says:

    POQ – yes, I think you’re right. At the end of the day I guess it’s easier for him to vote himself money rather than to earn it.

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  43. Tina (687 comments) says:

    Payroll tax has no pull on salaries in Aust Sam.
    As my previous post points out this money is not available as wages.

    I see your problem
    You’ve done economics 101 and know not much about markets and how they work, but you do have a theoretical opinion.
    The fact that the market doesn’t fit your theoretical understanding of markets means the market must be wrong.
    The Aust salary/tax market does not behave as you claim.

    The point of this thread is the massive taxation advantage about to be introduced in Aust.
    Hulun must respond….you will eventually be able to thank Aust for much lower taxes

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  44. ZenTiger (435 comments) says:

    Sam, I lived in Australia 12 years, I owned my owned business, I employed people. Your mental gymnastics are not convincing me.

    virtualmark, milo, zentiger – a cost of employing someone is borne both by the employer and the employee. lets take another example: we put GST up to 25%, does the supplier take all of that additional cost on themsevles? no. does it all get passed on? no – its shred between supplier and demander according to the shapes of the supply and demand lines…

    I must admit to losing you completely here. What is your point exactly? GST is only paid by the end purchaser. GST paid by a company is offset against the GST collected when selling to the next company down the chain. Therefore, other than a positive impact on cash flow, the GST is irrelevant to the business.

    In terms of its relevance to the tax system, several think tanks have theorised that an 18-25% GST could (a) wipe out the need for income tax and company tax which would massively simplify the tax system and minimise the tax loopholes the extremely rich always manage to get, and (b) the higher the GST the more likely a low income cash payment can be made to help offset the GST on essential services.

    So, what exactly was the point I missed with GST?

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  45. ZenTiger (435 comments) says:

    Sorry, I quoted Sam on para 2, everything from para 3 was my comment.

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  46. Sam Dixon (596 comments) says:

    kisekamen
    of course taxs create deadweight loss, that’s hardly a startling result. they also pay for things that allow the market to exist in the first place, and make the ‘product, labour, higher quality.

    tina: any tax on your wages is borne both by you and by your employer.

    Or, how about we cut income tax to 0 and replace it with a payroll tax with the same percnetages and brackets? Do you think you’re net wages would go up?

    I’ve had a little bit more to do with economics than some uni paper. ps, liked your ‘they’ve got dogs’ post the other day, hilarious :)

    milo: see above, and your example is further flawed in that on the NZ job the ACC levy doesn’t come off the advertised, gross, wage, it is paid by the employer before gross wages, its a type of payroll tax.

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  47. Sam Dixon (596 comments) says:

    zentiger, my point on GST is just a clear example of what happens when a new tax is imposed. the cost is borne both by the customer and the producer

    …. in economic terms, there is a deadweight loss, that loss reduces both the producer surplus and the consumer surplus.

    i’m sorry guys but i don’t have the time to teach you basic economics, if there’s a term you don’t understand look it up online.

    zentiger, GST taxes are highly regressive as opposed to the progressive income tax we have in place now… that’s not a value judgement, those are economic terms… regressice taxes impact the poor hardest and the rich least, progresive taxes vice versa.

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  48. Tina (687 comments) says:

    Sam …you’re an innocent abroad but I’m starting to worry about your retention

    Last time for me…..”Aust payroll tax is not a tax on wages, it cannot be possibly reclaimed as wages if the tax did not exist due to the Aust IR contract system…… it is a business cost like fuel.”

    Aust has had a 19% pa increase in average personal wealth over the last 5 years, the top of the heap in the developed world.

    It’s 400 a week now…we get more NZ entrepreneurs/skilled tradesmen/cracker Maori roofers and you get to keep the socialist mendicant bludgers.

    Sounds fair.

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  49. Castafiore (262 comments) says:

    Sam,

    Again you argument falls flat.

    Which book of socialist ideology did you pickup the progressive vs regressive terms.(The Little Red Socialists Guide to Wealth redistribution?)

    GST is clearly one of the best and overall fairest ways of bring in tax revenue.

    And BTW is Goff a regressive or progressive advocate??

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  50. Peak Oil Conspiracy (3,433 comments) says:

    Sam:

    i’m sorry guys but i don’t have the time to teach you basic economics, if there’s a term you don’t understand look it up online.

    Actually Sam – I’m sorry.

    You bandy around deadweight loss, producer surplus and consumer surplus without showing a clear understanding of what those terms mean. A bit like Phillip John/Roger Nome quoting numerous articles on peak oil.

    How does GST create a deadweight loss in your blue-sky world, Sam?

    And more to the point, what’s it got to do with Australian Labor cutting taxes, unlike its New Zealand counterpart?

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  51. Peak Oil Conspiracy (3,433 comments) says:

    Oh and Sam:

    Manolo, on another thread, referred to the “don’t attack Labour” letters to Wellington’s Dom Post from you (addressed from sunny Hawkes Bay).

    Do you deny writing those letters? And if not, can we possibly take your contributions to this thread as non-partisan? Only asking, seeing as you like to attack DPF’s neutrality.

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  52. ZenTiger (435 comments) says:

    zentiger, GST taxes are highly regressive as opposed to the progressive income tax we have in place now… that’s not a value judgement, those are economic terms… regressice taxes impact the poor hardest and the rich least, progresive taxes vice versa.

    Sam, that statement seems to completely ignore the points I made about swapping a high GST rate for ZERO income tax AND real money credits to low income earners. I’ll consider the other point in your comment after I’ve had my dinner…Chicken Laksa…yum.

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  53. krazykiwi (9,186 comments) says:

    …and all the great government benefits / services that NZ’ers get for their taxes here

    Health system is becoming 3rd world despite more money being thrown at it. Education system is allowing our kids to slip behind even global standards of mediocrity (but MoE pays is bureaucrats like MPs). Jails full and overflowing. Familiy violence astronomical. Roads not well funded so we’re up for tolls. A public service that is ballooning. And 700 kiwis per week decide to move to Oz.

    Yes… all those great government benefits… Comedy gold.

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  54. hinamanu (2,352 comments) says:

    “And 700 kiwis per week decide to move to Oz. ”

    But what about all the water restrictions, Aus is drying up.

    are they just a nz/aus conspiracy to get Kiwis home

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  55. Murray M (455 comments) says:

    Sam, something I will forgive you for not knowing as I meet a lot of people who are surprised when I tell them. Every salary and wage earner in this country has 1.3% of their gross wage deducted at source to fund the non-work related injuries component of ACC. Earnings over $96,619 do not attract the 1.3% Employers contributions cover the work-related injuries. So in effect ACC is just another tax deducted at source.
    NZ is going to have payroll taxes beginning next year in the guise of the employer contribution to kiwsaver.

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  56. iiq374 (262 comments) says:

    Sam – in case you missed it when Murray pointed it out; you were just dead wrong when you said:
    milo: see above, and your example is further flawed in that on the NZ job the ACC levy doesn’t come off the advertised, gross, wage, it is paid by the employer before gross wages, its a type of payroll tax.

    Try doing a tax return some time – if your employer isn’t paying your ACC earners levy out of your gross wage / salary you have underpaid tax and need to make it up.

    Of course most things you say are flat wrong so I’m not really surprised that you can’t get the simple facts on how our tax system works right.

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  57. Manolo (14,076 comments) says:

    “Of course most things Sam say are flat wrong..”

    Isn’t Labour socialist? Isn’t the Pope a catholic?

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  58. milo (525 comments) says:

    Thanks iiq374. You saved me the trouble.

    Sam – if you want to be taken seriously, you need to do better. You have some worthwhile things to say, but at the moment your credibility is eroding. Keep it up, and nobody will listen to you.

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  59. Sam Dixon (596 comments) says:

    thanks for the correction on ACC,

    Peak Oil – i’ve never written a pro-labour letter to the dom but i have had a couple published against nat positions – i’m not a labour supporter… never said i was politically neutral, no-one here is… curious that you suddenly make not of the letters, haven’t written one since John Key said the war was over…. stalking? I’m based both in wellington and napier, thanks for your interest.

    Now, of course any tax leads to deadweight loss within that market – draw a suply and demand graph, lines S and D. For D as price falsls quantity increases, the opposite for S, where they intercept is where supply meets demand. Now, sraw line St, this line is supply with a tax added lets say its 10%, this new will be 10% higher than S at all quantities. Where do St and D intercept? at a point with higher price and less quantity, the triangular area described by this intercept point, the ‘S,D intercept point and the point where the quantity is the same a the St,D intercept point on the S line is the area of deadweight loss.

    The producer surplus is the triangular area between where S intercepts 0 quantity, the S,D intercept and the price at point at quantity 0, he producer surplus is the amount extra price the producer has received for selling each of those units above the price at which they were willing to produce them.

    The consumer surplus is the opposite, the area below the D line showing the lower price that the consumer is paying for each of these units then they were willing to pay for them.

    obviously, when you’ve added St and create the deadweight loss, that area will take area off both the producer and consumer surpluses.

    that happens no matter what the tax (or other cost increase) is – add a cost, cut into both producer and consumer surplus.

    (deadweight loss itself is not an argument against tax, after all tax pays for the framework the market operates in, provides healthy, educated workers etc etc)

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  60. krazykiwi (9,186 comments) says:

    rakaunui(moderation): It is for the reader to decide who is a big liar, not for you to make unjustified exprapolations

    Perhaps our esteemed moderators could simply discern truth from lies on our behalf, and then publish the results. Should simplify things nicely.

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  61. Peak Oil Conspiracy (3,433 comments) says:

    Sam:

    I’m no stalker – I believe the words I used were “Manolo, on another thread”.

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  62. krazykiwi (9,186 comments) says:

    Now, of course any tax leads to deadweight loss within that market – draw a suply and demand graph, lines S and D. For D as price falsls quantity increases, the opposite for S, where they intercept is where supply meets demand. Now, sraw line St, this line is supply with a tax added lets say its 10%, this new will be 10% higher than S at all quantities. Where do St and D intercept? at a point with higher price and less quantity, the triangular area described by this intercept point, the ‘S,D intercept point and the point where the quantity is the same a the St,D intercept point on the S line is the area of deadweight loss

    It’s Saturday. Don’t try that as a pickup line… not a winner.

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  63. Sam Dixon (596 comments) says:

    POC – oh, ok. So, Manolo’s stalking me… interesting … that thread on NZ Conservative?

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  64. Peak Oil Conspiracy (3,433 comments) says:

    Sam:

    http://www.kiwiblog.co.nz/2007/10/ha_i_was_right-2.html#comment-355871

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  65. Sam Dixon (596 comments) says:

    krazykiwi – funny, it turns the girlfriend on.

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  66. PaulL (6,048 comments) says:

    Sorry guys, Sam is right that payroll tax impacts wages. You cannot argue otherwise. It is different from a fuel cost in that it is a direct cost of hiring a staff member. Therefore, a company takes it into account as part of weighing up an employee’s cost against their productivity for the company. If the payroll tax wasn’t there, and the employee productivity stayed the same, the company could afford to pay them more.

    Payroll tax, however, only impacts around 40% of employees in Australia, which is a little hard to control for. By rights that should mean that pay is higher in smaller companies, which I don’t believe is true.

    It is, of course, all a red herring. Australia’s tax as a percentage of GDP is lower than NZs, and the tax wedge is distorted by the inclusion of superannuation. Or, to put it another way, we all think that Australian gross salaries are 30% higher than ours. If we include super and payroll tax, then they are actually 45% higher than ours.

    The point that DPF is making is that both Labour and the Liberals in Australia are promising to cut tax by a very significant amount. After those cuts most people will pay a lot less tax than they would in NZ. In particular, people earning under $30K will pay (depending on how you calculate) either no tax, or they will actually get paid $34K and get taxed 9% super and 6% payroll tax (if they work for a company with turnover greater than $1 million). They will also pay 10% GST and no GST on food.

    In NZ, there are currently no plans to cut tax, and in fact our government has been very clear over many years that the right direction for tax is up. Sam and friends seem to believe that our current tax rates are exactly right. I suspect that they actually believe that they should be higher, since they are often keen to model us on certain economies in Europe. I’m pretty sure that secret agenda wouldn’t go down too well in the election campaign next year.

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  67. Sean (301 comments) says:

    Like Labour in NZ, Labor here assumes it knows best what people think about how to spend their money – Rudd (and also the Greens for that matter) both assume that people are quite happy not to keep what they earn but to let the state take money from them to give to other people. This is the central point, not whether we are one or two percent better or worse off. Parties like Labour, Labor or the Greens that that think and say they know better how to spend my wages than I do will never get my vote.

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  68. Peak Oil Conspiracy (3,433 comments) says:

    This NZ Herald article, provocatively titled “Why you’re far better off in Oz”, may crush the socialist spirit:
    http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10471136&pnum=0

    Phillip John – any rebuttal from you?

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  69. krazykiwi (9,186 comments) says:

    quick leftie comrades, find some dirt on the head of New Zealand Institute of Economic Research. surely he’s an EB? what about his business history? or tax declaration history? discredit, deflect, deny…

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  70. Spam (588 comments) says:

    [rakaunui(moderation): It is for the reader to decide who is a big liar, not for you to make unjustified exprapolations]

    My spologies – It was sarcasm…. Some people got it though. ;)

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  71. PaulL (6,048 comments) says:

    [rakaunui(moderation):

    Yeah, I wondered at that too. I thought it was reasonably obvious that it was sarcasm, and even if it weren’t it was still pretty tame – didn’t think it warranted a moderator intervention. Especially since I haven’t seen one for a while. I was wondering whether the moderation was sarcasm as well, but that didn’t seem right…

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