Minimum Wage lies

January 28th, 2010 at 9:30 am by David Farrar

blog:

Ok, so I’m not 100% sure on the math here (need to check up the tax rules) but both bulletins can’t be right here in their calculations.  Using IRD’s website, currently for a earner, they pay $2.27 in total for their tax and ACC levies.  I’m trying to double check these figures quoted, but I think 3 News is wrong – it can’t be right thatminimum wage earners are taxed 40%!

ONE News: $10 – $2.10 in tax – $0.20 in ACC levies = $7.70 in the hand
3 News: $10 – $3.00 New ACC levies in April – $1.00 PAYE tax = $6.00 in the hand

Note: also said about $6 in his 3 News interview.

Trevor Mallard is of course wrong, and if relied on him, shame on them.

One News had is absolutely correct. The marginal tax rate for a FT worker on the minimum wage is 21% and the ACC levy for next year will be 2%, so a $10 gross increase will be a $7.70 net increase.

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27 Responses to “Minimum Wage lies”

  1. dime (9,690 comments) says:

    What happens when ya add to kids to the mix?

    For every $10 they earn, they pay $2.30 in tax, then claim back $10??

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  2. virtualmark (1,522 comments) says:

    Had an interesting experience yesterday evening, watching One News at my parents house as we passed through for holidays. Trevor Mallard was on twice (IIRC), once speaking on this minimum wage raise and the other on Anne Tolley and education.

    My parents are strong Labour supporters, have been for years. Not members of the party, but stoutly left wing. But they must have made half a dozen comments about Trev when he was on-screen, all of them strongly negative and dis-approving about him personally.

    Certainly in my parents’ eyes Trev had done his dash, they didn’t know what he actually stood for apart from just reflexively objecting to things. His credibility was completely shot with two people who should have been a safe target market for Trev. That was a real surprise for me, I’ve never heard my parents make those sort of comments about Labour pollies before.

    I know you read this blog Trev. I think you’re missing your target market mate. My parents are textbook “ordinary New Zealanders” and they just don’t trust you any more and they’ve switched off.

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  3. Murray (8,842 comments) says:

    If you’re silly enough to either use Trevor as a source or vote him you deserve him.

    If you’re on minimum wage either you or your boss suck. time to either improve yourself or your job situation. New Zealand employers do not exist to make your life comfortable for you in exchange for little or no effort.

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  4. Auberon (873 comments) says:

    If you’re only capable of earning the minimum wage then you really shouldn’t have kids.

    Harsh? Maybe. But true.

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  5. Mark (497 comments) says:

    Great, Labour is recommending getting rid of ACC and taxes.

    There is a policy we can all support.

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  6. Inventory2 (10,185 comments) says:

    Lies coming from the left? Gee, whoever would have thunk it?

    But why are none of the media outlets questioning the affect that a rise in the MW to $15 would have on wages in general? It’s not rocket science to see that there would be a flow-on, but to deny it by ommission is equally dishonest.

    http://keepingstock.blogspot.com/2010/01/more-thoughts-on-minimum-wage.html

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  7. calendar girl (1,203 comments) says:

    Why do the MSM get all excitied about the net rate anyway? They don’t attempt such calculations when the report breathlessly on the salary of the Prime Minister or the CEO of Telecom. Every employee’s pay is normally stated in gross terms, before deductions for tax, ACC, student loan repayments, Kiwisaver contributions, liable parent contribuions, and all the other possible deductions at source.

    The real issue is that the minimum wage was raised by the prevailing percentage rate of inflation. That was intended to maintain the income of the lowest paid employees in real terms – not a bad outcome in my view.

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  8. david (2,557 comments) says:

    Interesting, not one unionist, CTU spokesperson, Labour or Green polly has mentioned, even in passing, that the message is clear to parents; …….. insist, cajole, encourage, do whatever you have to do to ensure your kids get educated sufficiently to make them valuable to a potential employer. Make them want to do better than aspire to minimum wages because the writing is on the wall. Handouts won’t provide your lifestyle choices, that takes energy, enterprise and a willingness to deliver.

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  9. Redbaiter (13,197 comments) says:

    Man this is crazy. Minimum wage increases due to legislation do nothing at all but increase inflation. Where the hell is the intelligence in our politicians, let alone their ability to do basic maths???

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  10. Brian Smaller (4,029 comments) says:

    david – you are right. It is called the minimum wage for a reason. It is what is deemed acceptable as the lowest amount to pay an unskilled worker. Get educated. Get a better job. If you have to work a minimum wage job, keep looking for something better.

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  11. kiwiscouse (4 comments) says:

    I’m confused. TV One news last night showed a young woman with about 6 kids saying the increase would get her a loaf and some milk each week. She also said her partner got little more than the minimum wage. She then went outside and started to load her kids into a new looking SUV. I then thought of Working for Families. Nobody has brought that into account. Is it true that WINS will pay Working for Families supplement to people with children who only get the minimum wage? And if so, will the increase in the minimum wage reduce the Working for Families amount? Somebody please explain.

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  12. dime (9,690 comments) says:

    But its not fair! people on minimum wage work hard! they dont have time to upskill!

    (yet they find time to was 3-4 hours of tv a night)

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  13. Inventory2 (10,185 comments) says:

    The Wanganui Chronicle does mini-surveys called Street Talk where there stop a few people on the street and ask their opinions. They did one yesterday (published today) asking “What do you think of the increase to the minimum wage?” Here’s one response:

    “It should go up. People want to buy the latest technology, and it won’t be enough, things will be too expensive”

    Here’s some advice to the commenter, Christian Cowley. Go and get an education; a meaningful qualification. Then you might get a decent paying job, after which you can buy whatever of the “latest technology” you can afford. However if you CHOOSE to stay in work on minimum-wage jobs; tough. No-one owes you a living.

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  14. Pete George (23,356 comments) says:

    There is a simple way to render the minimum wage irrelevant – to earn more.

    I don’t think there is anyone who believes that everyone should be guaranteed the same relative income and the same standard of living every year for life. Do they? Not in the real world.

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  15. Murray (8,842 comments) says:

    Boys talkn like a conservative here.

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  16. PaulL (5,986 comments) says:

    Is Trevor perhaps including abatement rates on accommodation supplement and the like? Once you include all the means tested subsidies like WFF, the effective marginal tax rate for those on low incomes is a lot higher than the headline rate.

    Not that I want Trevor to be right about anything, but it is certainly true that our current tax system (much of which he helped put in place) has significant disincentives for low income earners to work harder/more/smarter.

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  17. Swiftman the infidel (329 comments) says:

    “Interesting, not one unionist, CTU spokesperson, Labour or Green polly has mentioned, even in passing, that the message is clear to parents; …….. insist, cajole, encourage, do whatever you have to do to ensure your kids get educated sufficiently to make them valuable to a potential employer. Make them want to do better than aspire to minimum wages because the writing is on the wall. Handouts won’t provide your lifestyle choices, that takes energy, enterprise and a willingness to deliver.”

    Therein lies the evil agenda of the ‘left’.

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  18. Tauhei Notts (1,652 comments) says:

    Can anybody confirm whether or not, that Trevor Mallard had been a Social Credit man.

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  19. Murray (8,842 comments) says:

    Tauhei you credit us with substantially more interest in Trevor Mallard than any of us actually has. He was a part of the team that got us into this mess and hes certainly got nothing to help us out of it.

    Go buy another train set Trevor, theres a good boy.

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  20. mavxp (495 comments) says:

    If we wish to make life easier for those on the lower income levels, then we should reduce taxes (say first 10k earned is tax free) not increase the minimum wage. To offset this, we can reduce WFF contributions and steadily wean NZers off the government handouts.

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  21. Manolo (13,517 comments) says:

    “To offset this, we can reduce WFF contributions and steadily wean NZers off the government handouts.”

    This government should act boldly and abolish WFF altogether. What are Key and English waiting for to decisively remove the worst example of middle class welfare?

    Their empty words “election promises” do not stand the test. National found easy to keep some, while breaking others, i.e., tax cuts.

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  22. whalehunter (478 comments) says:

    the reaction of the media and the commentry they entertained
    makes me think this country is screwed.

    i cant believe so many people think they are owed a minimum wage
    and that a 25c increase is outrageous.

    the smart people are busy inventing robots.

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  23. Inky_the_Red (744 comments) says:

    Not exactly what TV3 claimed. The ACC (Non-work levy) portion was referring to the extra 30c per $100 earned that would be paid by people on the minimum wage. Someone working 40 hours on the minimum will pay $1.50 more ACC from. Add that to the $2.30 it makes $3.80 so TV3 and the Duck were not that far off.

    Yes poorly explained but it took me 1 minute research to see what exactly was being said. It appears the some bloggers jump to the wrong conclusion as quickly as the MSM.

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  24. nickb (3,676 comments) says:

    The minimum wage has long since ceased to be a compassionate interference in the market, to prevent exploitation of workers, poverty, etc.

    Now it is just a tool of the left, the National Party included, to try and play envy politics, and drag the lower class up into the middle somehow. Ignoring the basic laws of economics that if a price goes up, demand for an item will reduce.

    Why our governments can’t just institute a tax free threshold is beyond me.

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  25. jaba (2,097 comments) says:

    just imagine this .. us “rich Prick” landlords who are claiming the LAQC “scam”, avoiding or evading tax (legally) will get hit by the Nats .. and good job I hear many (especially Labour supporters) say.
    mmm, with a tax subsidy gone, what will happen .. rents will increase to compensate. Guess who the majority of renters are?
    Now, if the Govt decide to change the rules to the extent we hear, maybe they would like to buy rentals off the Landlords and then drop the rental cost to the low paid. Now that would be fair. Labour would love that .. but only while in opposition of course.

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  26. Inky_the_Red (744 comments) says:

    Is that how the free market works, If the government won’t give the wealthy tax breaks then houses will go empty to punish the poor for the government taken away landlord subsidies?

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  27. Alistair Miller (557 comments) says:

    Here’s the bit I don’t get. If you are sufficiently lazy, stupid or indolent to have only a minimum wage job, what are you going to do to earn the extra per hour?

    Second point. There are some jobs that are patently and clearly not worth paying someone $12.50 per hour (let alone $15) to do. As a smal business owner, am I going to employ another person at $15 per hour to perform tasks that are rightl worth somewhere considerably south of that, or am I simply going to distribute those tasks among my other employees (or do them myself)?

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