The tax system has got more, not less, progressive

October 23rd, 2013 at 7:00 am by David Farrar

has stated:

Lower income households are paying a smaller proportion of net income than they did in 2008, indicating that the system has become more progressive since the Government’s changes in 2010, Finance Minister Bill English says.

“This should contribute to improvements in income equality in New Zealand, contrary to the Opposition’s completely false claims that lower income households were disadvantaged by the tax changes,” he says.

If you repeat a lie often enough, people may believe it.

  • Households earning less than $60,000 a year, which total around half of all households, are generally expected to pay less in percentage terms towards total net tax in 2013/14 than they were paying in 2008/09.
  • Conversely, households earning more than $150,000 a year – that is, the top 12 per cent of households by income – are generally expected to pay more of the total net tax than they were paying in 2008/09.
  • And only 6 per cent of individual taxpayers earn over $100,000 a year, yet they pay 37 per cent of total income tax. This has increased from the 2010/11 tax year, when those taxpayers paid 29 per cent of total income tax.

Despite this, Labour persist with their rich prick envy tax insisting that those on higher incomes must pay 39% income tax as well as 15% GST!

Using data from the Household Economic Survey, the Treasury earlier this year estimated that this year households earning over $150,000 a year – the top 12 per cent of households by income – will pay 46 per cent of income tax.

But when benefit payments, Working for Families, paid parental leave and accommodation support are taken into account, these 12 per cent of households are expected to pay 76 per cent of the net income tax. And that is before New Zealand Superannuation payments are counted.

12% of taxpayers are funding 76% of the net income tax take, and Labour says this is not enough! What do they want? 90%? 95%? 100%?

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77 Responses to “The tax system has got more, not less, progressive”

  1. nickb (3,658 comments) says:

    National has failed big time IMO by not aligning the top personal, company and trust tax rates.

    Their most bold tax policy in 6 years is to raise GST and give some minor tax cuts to compensate (while raising the pension and benefits so the net fiscal effect was zero).

    Like I have stated earlier, the National Caretaker Government has really set things up well for David Cunliffe to come in and raise the top personal tax rate.

    Business confidence is being harmed by the tax avoidance rules and IRD’s application of them, IRD is changing its interpretation of the law all over the show to cynically serve themselves, and we have absolutely hare-brained schemes like the FBT carpark bungle.

    All in all, a D grade for National and Peter Dunne on tax policy.

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  2. berend (1,630 comments) says:

    DPF: indicating that the tax system has become more progressive

    And that is not a good thing.

    [DPF: I believe the best tax system is a relatively flat one, with low rates and a broad base]

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  3. meanybeany (21 comments) says:

    So. . . all this says is that income inequality is rising

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  4. Right of way is Way of Right (1,129 comments) says:

    I am one of the 12%, not because of my earning level, but because I have never claimed for WFF, never had any tax credit, never asked for one, and if I needed more money, I went out and worked for it!

    And I am pissed off at these statistics. WFF has turned in to the rort it always was going to, and I am now going to have to pay for the next bloody generation, who are being subsidised to NOT be productive!

    What the hell is wrong with working harder if you need more money. At least that is productive!

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  5. Harriet (4,497 comments) says:

    Liberalism has shown remarkable success in its ability to make bad behavior completely acceptable and even desirable; take a vice or two – envy and theft – and package it as the greatest virtue of all. WFF and general welfare is that package, and it’s name is ‘fairness’.

    However, English’s role in the fight between capitalism and socialism, freedom and tyranny, is to increase the size of the middle class, as it is the middle class that provides the opportunity for the ‘rich pricks’ to prosper and the ‘poor’ to be then gainfully employed.

    ‘Fairness’ is then reality, not the promise of Nirvana, always just over the horizon, always just out of reach, a little further, keep moving forward, continue reaching for that glass of cool water that Cunliffe keeps just out of reach, forever.

    The current fawning of the Cunliffe led Left by the media is a snapshot of a future Hell on earth, and over half the voting population in this country are too stupid to see it. :cool:

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  6. big bruv (13,210 comments) says:

    Seems like this needs fixing. It is about time that those who are parasites started paying their fair share.

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  7. duggledog (1,333 comments) says:

    Which all goes to show we are still very much a socialist country. 150k is pretty average for Auckland for a household, in Dunedin this is a colossal income. High earners are being absolutely rogered.

    And let’s not forget all the other little taxes we are lumbered with. How this administration has continued Clark’s modus operandi and put our books back in order is nothing short of miraculous.

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  8. Manolo (13,320 comments) says:

    C’mon, DPF: you’re trying to defend the indefensible!

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  9. Mobile Michael (410 comments) says:

    Cutting taxes means more taxes from the rich. Take note Mr Key and Mr English.

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  10. Yoza (1,521 comments) says:

    This is why the right are absolutely shot:

    duggledog: 7:49 am

    Which all goes to show we are still very much a socialist country. 150k is pretty average for Auckland for a household, in Dunedin this is a colossal income. High earners are being absolutely rogered.

    This is completely out of touch with reality, there is no way “..150k is pretty average for Auckland for a household…”.

    I wonder how many there are in the National party who share duggledog’s little fantasy.

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  11. big bruv (13,210 comments) says:

    This is why we are still be taxed so highly…

    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11144400

    This bludger should have thought a bit more carefully before deciding to have more kids, if she could not afford them then perhaps she could have taken measures to ensure she did not get pregnant.

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  12. redqueen (451 comments) says:

    If we pay 100% of the tax, can we get 100% of the votes? I am beginning to think ‘No representation without taxation’ might not be a bad idea…

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  13. oc35 (3 comments) says:

    A simple calculation tells me that people taxed at the 33c rate when spending those particular dollars on goods or services also incur a GST charge of 10.5 cents thus giving a total tax rate of 43.5%!
    I won’t even do the sums on fuel or alcohol.

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  14. Harriet (4,497 comments) says:

    redqueen#

    “…If we pay 100% of the tax, can we get 100% of the votes? I am beginning to think ‘No representation without taxation’ might not be a bad idea…”

    The trouble today is that the working taxpayers are out numbered by those who vote for a living or part-living.

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  15. redqueen (451 comments) says:

    @big bruv

    Worse, the father was in rehab, she couldn’t make a meeting because she hasbeen disqualified from driving…(and ‘couldn’t get a ride’) and has two children already, one of whom is not in her care…but is shocked that W&I think maybe what she needs is a douse of employment…

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  16. Simon (679 comments) says:

    Bill English lies. Inflation has removed any benefits of National alleged lower tax rates. Tax rates need to be inflation adjusted. Inflation has pushed income higher into higher tax brackets removing the benefits of the lower rates. Bill English knows this that makes him scum.

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  17. In Vino Veritas (136 comments) says:

    NZ Labour strategy in a nutshell:

    Step 1. Spend more money than you collect.
    Step 2. Increase taxes and continue to spend more than you collect.
    Step 3. The disincentive to work via punitive taxation drops tax take.
    Step 4. Reduced tax take encourages Socialist to borrow.
    Step 5. Borrow to make up shortfall between tax take and spending.
    Step 6. Borrow to pay for additional promises made to stay Government.
    Step 7. Repeat 1 – 7 until:
    Step 8. Run out of other peoples money.
    Step 9. Become Greek.

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  18. Alan (1,054 comments) says:

    There should be legislation that moves tax thresholds up every year automatically. We have rules that move pension and welfare payments up, they should be applied to income earners too. Every year National don’t do this, they effectively raise tax.

    Is tax too high? I think so, i’m paying over $1k a week in paye alone, god only knows what the total would be if i factored in condumption and excise taxes.

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  19. Nigel Kearney (864 comments) says:

    People are not all equal and vary widely in their ability to add value to society. Income inequality can only be reduced by undermining the connection between the value of work done and the reward for that work, reducing everyone’s incentive to add value. We should care about the absolute standard of living of the poorest people in society, but should not care at all about how this compares with those in the middle or at the top.

    Once a National party finance minister starts using phrases like “improvements in income equality” it is time for them to just fuck off and let someone else have a turn.

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  20. nickb (3,658 comments) says:

    Bill English lies. Inflation has removed any benefits of National alleged lower tax rates. Tax rates need to be inflation adjusted. Inflation has pushed income higher into higher tax brackets removing the benefits of the lower rates. Bill English knows this that makes him scum.

    This, and what Alan and Nigel said. It makes the “fiscal neutrality” phrase a joke.

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  21. Sector 7g (236 comments) says:

    The National Party has got more, not less, progressive.

    Fixed it.

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  22. Harriet (4,497 comments) says:

    “….Once a National party finance minister starts using phrases like “improvements in income equality” it is time for them to just fuck off and let someone else have a turn….”

    I’ve never before seen you lose your cool and swear Nigel………………..you must pay a fucken shitload of tax! :cool:

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  23. nickb (3,658 comments) says:

    [DPF: I believe the best tax system is a relatively flat one, with low rates and a broad base]

    Well you are certainly supporting the wrong party then, by the looks of the statistics above. Especially given National’s craven inability to remove the tax distortions in the residential housing sector and ignoring most of the recommendations of the Tax Working Group (FFS, why set it up if you are not politically brave to get near 95% of its recommendations?)

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  24. mikemikemikemike (301 comments) says:

    This might be overly simplistic but – If 6 percent of individuals are paying 37% of taxes, surely the answer is to have an economy where more people are being paid over 100k? Rather than worship the ‘few’ (who moan about being annointed as such) increase the net worth of the many in this country. Then we can lower taxes for everyone. National celebrating the opening of india style call centres and enticing companies here because our labour is cheap is probably not a good way to go about doing this.

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  25. nickb (3,658 comments) says:

    Seems like this needs fixing. It is about time that those who are parasites started paying their fair share.

    I hate that fucken phrase! Especially when stats like this come out showing 3 in 10 New Zealanders completely carry the other 7.

    Tbh, the top personal tax rate is a political football kicked to elicit envy, nothing more. Sadly NZ is such a low wage country that the tax take from our top earners would be pretty small as a % of the total tax take. What’s worse is that PAYE earners get stuffed while the self employed can use different tax planning techniques to mitigate the top rate.

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  26. Sector 7g (236 comments) says:

    Mike.

    That could just work. Problem with this is that Kiwis don’t support industry that provides wages above 100K. They protest against it. Therefore don’t deserve it.

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  27. nickb (3,658 comments) says:

    This is completely out of touch with reality, there is no way “..150k is pretty average for Auckland for a household…”.

    Yoza, you live a pretty cloistered life in Eketahuna if you think that.

    My partner and I earn more than that combined and we are in our early 20s. And given the cost of living in parts of Auckland I don’t think that is very high at all. Especially with 2 or 3 kids that, isn’t anything near approaching wealth or riches. Pretty said if you think so, and basically sums up why a Labour government will never increase wages or wealth in this country.

    Obviously it gets to you that people can earn enough to live in a nice area and send their kids to a nice school. Which is what so much of Labour ideology and policy springs from. Good old envy.

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  28. Alan (1,054 comments) says:

    @Nickb

    ‘ What’s worse is that PAYE earners get stuffed while the self employed can use different tax planning techniques to mitigate the top rate.’

    That’s true, i’ve just quit my paye job to be self employeed. I reckon i can reduce my tax liabilty by a third. Well worth doing.

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  29. nickb (3,658 comments) says:

    Good stuff Alan. Claim everything!!!

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  30. Alan (1,054 comments) says:

    $150k average for a household in Auckland?

    The stats will tell you not, but they don’t tell the whole story. There are two distinct Aucklands and they don’t interact much. There’s central & eastern Auckland plus most of the north shore, where these incomes and salaries are the norm, and house prices are crazy. Then there’s the other Auckland, in the south and west, where these wages and lifestyles are unimaginable.

    Its the same city, but it could be different countries.

    I make no comments on if this is good or bad, just that it is so.

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  31. flipper (3,537 comments) says:

    There are simpletons, there are those who genuinely do not understand, there are those that do, and misrepresent….and then there the likes of Haminda/Yoza , and the peoples flag wavers.

    I have a close relative, aged 40 years, with five children. aged 2 to 16 . Both her, and her husband have jobs. Their combined earned incomes are $65,000 gross. But when WFF, and T/F child support (previous marriage – which actually reduces WFF) is added, their gross income exceeds $90,000.

    Sure, they pay tax – the husband and wife both at a top rate of 17.5%, (the wife at 17.5% for only one third of her gross income), at an average of about 15 % – Yes, a massive 15%.

    But they receive much more (almost double) from WFF than they pay in tax. And then the wife also gets child care allowances from WINZ for the 2 year old, when she is at work.

    They live comfortably, own two cars, a scooter, trail bike and a trailer, pay all school fees without delay, and send kids on holidays. They expect to purchase a house later this year – the LVR’s notwithstanding. But then they have chosen to live and work outside of the Auckland province.

    I don’t live in Auckland, and I have NO sympathy whatsoever for those who continue to live there, but complain about housing and transport costs.

    Frankly, I am paying too much tax now. But I am prepared to accept that (even the specious ETS taxes) , temporarily, if we are going to get the nation’s books back in black.

    But when dipshits like the red melons, like Cun minus T , like Yoza, the flag wavers, and all those useless pricks like Charlie Waldegrave and his living wage wankers, start talking about an income gap, they provide evidence that there really is a void — between their ears!

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  32. wally (61 comments) says:

    Here’s an example of how our tax system works. We have a very good employee who we would like to work more hours. She and her husband have 3 children. He effectively won’t let her work extra as he has calculated the point where their WFF income is maximised. If she earns anymore then it will start to abate. Meanwhile he spends most of his day training for multi-sport.

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  33. nickb (3,658 comments) says:

    Here’s an example of how our tax system works. We have a very good employee who we would like to work more hours. She and her husband have 3 children. He effectively won’t let her work extra as he has calculated the point where their WFF income is maximised. If she earns anymore then it will start to abate. Meanwhile he spends most of his day training for multi-sport.

    Good point wally, and this is why it is shameful National haven’t removed this millstone around the NZ economy. When our supposedly right wing party embraces communism (in their own words) it is a pretty sad state of affairs.

    Why not just remove WFF and replace with actual tax cuts you ask?

    The reason is because, like this thread has shown, WFF has turned NZ’s middle class into beneficiaries and millions of Kiwis now pay no net tax after WFF is taken into account.

    That was even if National wanted to reverse WFF. Which, of course, it doesn’t so it won’t.

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  34. dime (9,357 comments) says:

    “And only 6 per cent of individual taxpayers earn over $100,000 a year, yet they pay 37 per cent of total income tax. ”

    Its about time we started paying our fair share!

    Fair share being LESS THAN WHAT WE PAY NOW.

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  35. bhudson (4,734 comments) says:

    Inflation has removed any benefits of National alleged lower tax rates.

    That would be the record low inflation you are referring to?

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  36. meanybeany (21 comments) says:

    In Vino Veritas – Dr Cullen got our net national debt down to zero! What a lie you peddle. Irving Crystal is the one who came up with the idea that right wing governments should reduce taxes and borrow more so that subsequent left wing governments would have no choice but to reduce the size of government. George W Bush took his advise.

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  37. Doc (88 comments) says:

    Everyone keeps harping on about “fair share” but nobody has ever said what a fair share is!

    Just tell me how much each New Zealander needs to pay?
    …could it be as simple as “The taxable income required by the govt divided by 4 million?”

    Then we can *all* pay 15% of whatever we earn until we’ve paid our fair share – and keep whatever else we earn that year for ourselves.

    Of course, not everyone will pay their fair share (for one reason or another) so we might need to make it “Pay your fair share of taxes plus 10%” just to cover for those that can’t pay their share… You’d also need to ensure that you paid for the “fair share” of each out your dependants if they weren’t paying their own way…

    All it would take is for someone to tell us what a “fair share” is?

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  38. gazzmaniac (2,317 comments) says:

    meanybeany – that is true, Cullen used the structural surplus that National set up in the 1990s and rode a credit boom to pay off all the soverign debt. He then blew it all, set up a structural deficit, and hand-balled it to the new National government.

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  39. Sir Cullen's Sidekick (783 comments) says:

    “What the hell is wrong with working harder if you need more money. At least that is productive!” – in the eyes of the Socialists and Communists who are set to take over the country from 2014, is a bad thing. You work, you earn, you give away that income to the dole bludgers. Simple really.

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  40. duggledog (1,333 comments) says:

    Big Bruv, I agree. The child in the article has been put with the drop kick father’s parents to be looked after

    AS IT SHOULD!!

    This child of a deadbeat dad and a foolish mother is NOT MY PROBLEM. No wonder our taxes are not only far too high, it’s being thrown away. Thrown away on people like this for decades

    Why issue permits for deep sea oil drilling, when we clearly have plenty of money to reclaim? Phase out the DPB. Remove welfare payments from able bodied NZ men who will not go and milk cows in the South Island. There are thousands of Filipinos and South Americans down there doing those jobs. Not to mention Christchurch rebuild.

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  41. srylands (385 comments) says:

    It is depressing that the MSM does not pick this story up. 9 to noon on red radio led (of course) with the Grenpeace oil spill scenarios. If they were really serving the public interest they could have run this story.

    I bet not one media outlet chases down labour and the greens and asks them to respond to the Treasury analysis.

    The Government could also do much more to hammer the opposition with evidence like this. It should be relentless. Othwerwise sheeple really do believe the lies.

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  42. srylands (385 comments) says:

    Did a google news search for this – one story in the ODT. Otherwise nothing. It should be headline stuff. Today’s Dom Post has graphics of a catastrophic oil spill that is less likely than an an AIr NZ plane crashing and killing everyone. What is happening to this country?

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  43. In Vino Veritas (136 comments) says:

    Meany Beany, Dr Cullen did not get debt down to zero. He managed to get it down to 17% of GDP after a decade of the best economic conditions of a generation. He also left the country with a permanent structural deficit. He also left the country with barely any money in the bank. He also left an unfunded liability in ACC of over $1 billion. He also oversaw the increase of public service numbers, over 21% between 2003 and 2008 alone, along with the attendant increase in expenditure. Thats not to mention the buyback of Kiwirail which lost NZ’rs over $300 million in its first year, not to mention the ongoing costs still be suffered. There are a few facts for you Meany. They are all in the public forum. How’s Dr Cullen getting on Chairing NZ Post?

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  44. lazza (358 comments) says:

    WARNING ! BS Detector Alert!

    Quote: “Despite this, Labour persist with their rich prick envy tax insisting that those on higher incomes must pay 39% income tax as well as 15% GST!”

    Labour/Greens will say anything to gain power. About time then that the MSM got on board and instead of just reporting their BS … they challenged it.

    Goodonyuh DNF et al for doing their job for them.

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  45. seanmaitland (455 comments) says:

    Here’s my little anecode:

    I went out with some mates in Wellington last Christmas and a couple of their mates came along too. We had a massive night on the turps in downtown Wellington. I got talking to one of the “mates of a mate” and another guy, and the latter said that WFF should be deleted. The former guy got furious about it, and said that “WFF is the only reason I’m out having a big night on the piss tonight, how dare you!”.

    We ended up in a strip club where this guy also paid for a private lapdance for himself in a side room ($80 if I recall), and he was drinking topshelf for the entire night. It turns out he has 5 kids and lives in Miramar and the WFF money they get gets seen as his and his wife’s “spending money”, whereas his income goes to paying rent and groceries/bills etc.

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  46. UglyTruth (3,935 comments) says:

    Just tell me how much each New Zealander needs to pay?

    As much as they tell you. Need is a response to a threat, so you only need to pay tax if you are being threatened.

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  47. srylands (385 comments) says:

    “This is completely out of touch with reality, there is no way “..150k is pretty average for Auckland for a household…”. ”

    On The Standard I remember commenting that to live a half decent – and I stress half decent – life in Auckland if you are a couple with two kids you need a household income of $200K – and that will not get you luxuries – simply a mortgage on a reasonable house, and sending you kids to a decent school. I am thinking a couple in their early 30s. Of course that comment provoked howls of protest and derision, as though I was from another planet.

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  48. dime (9,357 comments) says:

    srylands – thats because they are thick. they see 200 stacks and think that is what you get every year. in a big pile! no taxes or anything.. just a giant pile of money (to go with their giant pile of envy as they have their hand out for state charity).

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  49. OneTrack (2,568 comments) says:

    “What do they want? 90%? 95%? 100%?”

    Yes.

    When are Labour (and their coalition partners) going to explicitly tell the voters what “higher incomes” actually means ie actual number and actual rates. Maybe they need to get back down the pub with the beer coaster and try and work something out.

    I suggest to get the income they want for all of their hare-brained schemes, they will find they need to drop that threshold a bit. Especially when too many “rich pricks” simply get tired of being punished for paying for Labour/Green/Mana/Winston/Maori follies and bugger off overseas, taking their tax revenue with them”. 54K anyone? (3 x the Living Wage – who needs more than that, right ) And if not 54K, why not?

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  50. seanmaitland (455 comments) says:

    @srylands – I have to agree with that:

    My wife and I have a 2 year-old son with another on the way, live in a 500k house in Auckland that we have a 400k mortgage on, and our income is 185k. My wife has a 50k student loan and contributes 3% to KiwiSaver. I’m a self-employed contractor.

    Our tax and ACC levies on 185k of income are $53,500 per year.

    On top of that we both have life and trauma insurance ($2400 a year), I have income protection and mortgage insurance ($1200 a year), health insurance ($1000 a year), and our son goes to daycare ($9500 a year currently for four days a week). I have a separate retirement SA scheme (non kiwisaver) that I also put about $3000 a year into.

    If you add GST on to all our spending, as well as petrol taxes and other consumption taxes, it takes us up over $80,000 a year in tax and insurance costs before we even can pay interest on our mortgage or other types of insurance such as car, house and contents.

    Out of the 185k, we are looking at about 65k in the hand once our minimum mortgage payments and other insurances are taken out.

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  51. seanmaitland (455 comments) says:

    Edit: We also have to pay $3000 in council rates a year. Out of the 65k net in the hand we get, we have to cover all our living costs (food, petrol, WOFs, rego, phone, power internet) etc as well as trying to put money in each month to paying off the capital of our home. We also pay $20 per week into an account for our son’s university education in 16 years time.

    I would much rather pay less tax and put money into my families wellbeing than, seeing the government and insurance companies take 85k a year of our income for themselves.

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  52. Yoza (1,521 comments) says:

    srylands (38) Says:
    October 23rd, 2013 at 11:29 am

    “This is completely out of touch with reality, there is no way “..150k is pretty average for Auckland for a household…”. ”

    On The Standard I remember commenting that to live a half decent – and I stress half decent – life in Auckland if you are a couple with two kids you need a household income of $200K – and that will not get you luxuries – simply a mortgage on a reasonable house, and sending you kids to a decent school. I am thinking a couple in their early 30s. Of course that comment provoked howls of protest and derision, as though I was from another planet.

    dime (7,526) Says:
    October 23rd, 2013 at 11:42 am

    srylands – thats because they are thick. they see 200 stacks and think that is what you get every year. in a big pile! no taxes or anything.. just a giant pile of money (to go with their giant pile of envy as they have their hand out for state charity).

    You both seem to be missing the point. I wasn’t arguing that $150k was an excessive or paltry sum on which to exist, I was pointing out to duggledog that there was no way that $150k was the average household income for people living in Auckland. It is completely valid to also point out that anyone who believes $150k is the average household income is completely out of touch with reality. See! Nothing controversial thus far.

    The problems begin when that statistical minority, those who do receive more than $150k per-household, disproportionately contribute to decisions which influence policy. Most of the post 2000 tax alterations have been as a consequence of the social disasters caused by neo-liberal wealth redistribution policies (which, funnily enough, most generously advantaged those dwelling in households receiving more than $150k). The Nirvana promised by the ‘free-market’ fantasists was exactly the opposite of the reality experienced by the average person (the real average person – not the average person living in a $150k household).

    The worst, most unequal tax is GST. This is the one tax that sucks more wealth out of the pockets of those who can least afford it than any other, and it was the introduction of GST that allowed massive tax cuts for this county’s wealthiest. Any government that raises the GST threshold to further reward the already very wealthy is not making the tax system ‘more progressive’.

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  53. Weihana (4,496 comments) says:

    seanmaitland (330) Says:
    October 23rd, 2013 at 12:19 pm

    Out of the 185k, we are looking at about 65k in the hand once our minimum mortgage payments and other insurances are taken out.

    What do mortgage payments and insurance have to do with taxes? Do you really think most people are going to think “Oh poor you” that you receive an income of 185k? This is not to say you don’t deserve what you make. Of course you do. But a lot people live on a a lot less. You have 65k left over after you’ve discounted every tax that is paid (so that comes off the price of groceries, petrol etc.) AND your mortgage and insurance payments. And you still have 65k left over to play with. Many cover every expense they have (including tax on groceries, petrol, income, rent etc.) on much less than 65k.

    You’re doing well by most standards. Enjoy it. :)

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  54. Weihana (4,496 comments) says:

    seanmaitland (331) Says:
    October 23rd, 2013 at 12:25 pm

    I would much rather pay less tax and put money into my families wellbeing than, seeing the government and insurance companies take 85k a year of our income for themselves.

    For themselves? So that 50k student loan. Interest free? Not even the full cost of the tuition? Your children? Free education? Free healthcare?

    Council rates? You do not benefit from anything the council is responsible for?

    I don’t think anyone would deny that there is a transfer of wealth going on. But you seem to ascribe your entire burden as the government taking it “for themselves”. Is that fair?

    Also, you do realize how insurance works right? I pay for health insurance. Last year when I had surgery my bill was strangely cheap. I wonder why that was. :)

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  55. dime (9,357 comments) says:

    “Any government that raises the GST threshold to further reward the already very wealthy is not making the tax system ‘more progressive’.”

    who are these “already very wealthy” you speak of?

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  56. Alan (1,054 comments) says:

    “Our tax and ACC levies on 185k of income are $53,500 per year.”

    Count yourself very lucky you’re splitting the income between the two of you in a fairly tax efficient way.

    We had a fairly similar income, but just on my salary as my wife stayed home to raise kid. Cost us an extra $20k a year in tax. Just horrid and so unfair. Same household income, vastly different tax bill.

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  57. Alan (1,054 comments) says:

    GST is a great tax, I much prefer it to taxes on income it for a couple of reasons.

    It’s very hard to avoid, even outlaw biker gangs need to spend drug money in the legitimate economy on things like food and petrol.

    It rewards savings. Money not spent isn’t taxed.

    I’m all for pushing GST to around 20% and aligning the personal / trust / company /GST rates at the same number

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  58. RRM (9,420 comments) says:

    All hail the 12%.

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  59. UglyTruth (3,935 comments) says:

    I’m all for pushing GST to around 20% and aligning the personal / trust / company /GST rates at the same number

    Trusts are not taxable.

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  60. srylands (385 comments) says:

    Yoza:

    “Most of the post 2000 tax alterations have been as a consequence of the social disasters caused by neo-liberal wealth redistribution policies”

    This is what you get on The Standard all the time. Repeat the lie. Over and over.

    Yoza – did you not read the data that has just been released? There is no “neo-liberal wealth distribution policy”. We have a highly progressive tax and welfare system which is largely paid for by 12% of taxpayers. I am one of them. I don’t expect thanks, but I resent being labelled as a rich prick and told I will pay even more tax after November 2014. When that happens I WILL leave for Melbourne and take my business and tax revenue with me. I doubt I will be alone. So what happens then? (I had a frequent commentator on The Standard say to me “Doesn’t matter, when they all leave the Government will simply issue more currency to replace what they take with them” – seriously you couldn’t make this shit up)

    As for the “average income” issue. I never claimed that the average household income in Auckland was 150K. The FACT is that the average income for Auckland couples with children is now around 108K. (Yes I can track down the stats data if you want.) Of course that includes many of the poor in South Auckland. Therefore you will find many thousands of couples with kids who are on household incomes of 150K – 200K who I can assure you will not regard themselves as “rich pricks”. The problem we have is that people with household incomes of 50K (or less) in Auckland think they can afford kids – they can’t and they should not have them. Because I have to pay for them.

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  61. seanmaitland (455 comments) says:

    weihana you dumb muppet – are you stupid or just being obtuse? – the reason I have to pay so much insurance (life, health, mortgage, income etc) is because if anything happens to me or my wife the government would tell me to fuck off and wouldn’t help out – yet they are happy to take over 35% of what I earn in taxes and ACC levies a year while i am working.

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  62. Yoza (1,521 comments) says:

    seanmaitland (332) Says:
    October 23rd, 2013 at 1:49 pm

    weihana you dumb muppet – are you stupid or just being obtuse?

    I know what you mean Sean, I have continually wept since reading of your struggle.

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  63. burt (7,791 comments) says:

    I guess we can’t call National Labour lite now – They are showing themselves to be more socialist than the failed socialists.

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  64. Zapper (925 comments) says:

    Weihana has shown she is stupid previously, sean.

    And Yoza, pretty sure he didn’t say he was struggling simply commenting on the lack of fairness. The point, I believe, was that he pays a shitload to cover people like you, as well as insurance for if anything goes wrong because people like you are too useless to cover him should he need help.

    Vote for the redder of the socialists and see what happens. And you know, I bet when NZ becomes Greece you will still blame John Key.

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  65. nickb (3,658 comments) says:

    Trusts are not taxable.

    UglyTruth,

    I think you may have stumbled across the biggest scandal since the common law admitted to being behind 9/11.

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  66. Weihana (4,496 comments) says:

    seanmaitland (332) Says:
    October 23rd, 2013 at 1:49 pm

    weihana you dumb muppet – are you stupid or just being obtuse? –

    Just touching a nerve apparently. :)

    the reason I have to pay so much insurance (life, health, mortgage, income etc) is because if anything happens to me or my wife the government would tell me to fuck off and wouldn’t help out – yet they are happy to take over 35% of what I earn in taxes and ACC levies a year while i am working.

    No. You pay insurance in order to safeguard standards of living over and above what others might be able to afford or what the government provides as a safety net, which is smart and sensible.

    However, if you injure yourself you will likely be covered by ACC as anyone else would be. If you fall ill, you would be entitled to public health services as others are. Your children are entitled to a public education. Your wife is entitled to an interest free student loan and the bulk of the tuition subsidized like other kiwis. Your family is entitled to drive on public roads or use public parks or other amenities. You enjoy the benefits of the justice system. You enjoy the benefits of a military. You will, presumably, be one day entitled to Superannuation. If everything turns to absolute custard, you will be entitled to welfare support.

    You do contribute more than your average person though.

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  67. Weihana (4,496 comments) says:

    Zapper (667) Says:
    October 23rd, 2013 at 3:05 pm

    Weihana has shown she is stupid previously, sean.

    And Yoza, pretty sure he didn’t say he was struggling simply commenting on the lack of fairness.

    Fairness? Is it fair for a baby to be born into a Mongrel Mob household? Is it fair to be born with the mental capacity of Forest Gump? Is it fair that some people can make millions because their talent is kicking a ball around a field? Is it fair that the children of wealthy parents do not need to work a day in their life?

    When has fairness mattered? Surely it’s everyone for themselves: the Gordon Gekko philosophy of life. That being the case the proper response to the democratic mob voting itself your money is to withdraw or flee. If you’re complaining about fairness then it indicates you aren’t prepared to do that in which case the mob, with their alternative views on fairness, has little reason to care.

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  68. pidge (53 comments) says:

    @UglyTruth @1:23pm
    Income Trusts receive is taxable, at 33%, higher that the company tax rate.

    http://www.ird.govt.nz/trusts-and-estates/

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  69. In Vino Veritas (136 comments) says:

    Weihana, quite correct, withdraw or flee (funnily enough exactly what Ayn Rand propounds). And that is exactly what happens. Look at France.
    With regard to your debate with seanmaitland, I guess Darwin had a point with his theory of natural selection.

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  70. Weihana (4,496 comments) says:

    In Vino Veritas (98) Says:
    October 23rd, 2013 at 4:16 pm

    Weihana, quite correct, withdraw or flee (funnily enough exactly what Ayn Rand propounds). And that is exactly what happens. Look at France.

    What would I be looking at exactly? An opinion poll that most French find taxes excessive? That’s surely not the same thing as John Galt fleeing to the mountains. That’s the mob threatening the government. Kind of the opposite of what Rand had in mind.

    So what is the evidence that people are deserting France?

    GDP growth rate?

    http://www.tradingeconomics.com/france/gdp-growth

    Are they going to the UK as the financial times suggests?


    New evidence of top French executives leaving the country has emerged as President François Hollande battles a stalling economy and tumbling approval ratings.

    Two senior executives at Moët Hennessy, the champagne and cognac arm of the LVMH luxury group, are moving to London from Paris and the head of Dassault Systèmes, the software arm of Dassault Aviation, said some senior managers of his company had left and he was considering following suit.

    http://www.ft.com/cms/s/0/13a9bcb0-8a53-11e2-bf79-00144feabdc0.html#axzz2iVqdSqQu

    Two executives counts as an “exodus” apparently. Clearly we can see the impact on UK’s economic growth.

    http://www.tradingeconomics.com/united-kingdom/gdp-growth

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  71. SPC (5,334 comments) says:

    No, the tax system has not got more progressive, what has happened is that those on higher incomes have been increasing their income at a faster rate than those on low incomes – thus the share of tax paid by those on higher incomes is increasing for that reason.

    Its an economy where the haves are gaining in both income and wealth at such a rate, that statistics can be used to make it appear that the tax system is becoming more progressive. Nice spin.

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  72. burt (7,791 comments) says:

    SPC

    Nice spin indeed…. So let me get this clear – if high earners earn more and pay more tax the government has more money to spend on social policy – and that’s a bad thing because it’s not fair when people earn more than a beneficiary ?

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  73. UpandComer (506 comments) says:

    @ SPC

    you say that as if it is some kind of stunning revelation – yes I would imagine it is easier for a millionaire to increase their money more then a student working in a cafe – that’s the nature of wealth. Point? You have no point. The point is that the top earners are now paying much more tax then they were before, despite the tax rate being lowered – so the tax system is more progressive, you idiot. There is no way for you to get around that, there are no weasel words, relative comparisons, snide misappropriated rhetorical suggestions for you to apply in the face of that astounding fact, are there? More tax, means more money for the government. If this was occurring under Labour you would be lauding the genius. You’re a liar, lying to yourself, and everyone you know. Wages are rising, the population in the regions is rising, the whole country is lifting, because National is successfully repairing the damage Labour did.

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  74. In Vino Veritas (136 comments) says:

    Weihana, you are being disingenuous. Of course Galt fled. Exactly as you proposed in your earlier post. Of course two executives do not make an exodus, but there are far more then two leaving, aren’t there? Thats along with 1 in 4 University graduates.

    http://www.telegraph.co.uk/finance/10390571/france-hollande-taxes-socialist-farrage.html

    And also here:
    http://www.forbes.com/sites/realspin/2012/12/18/can-the-last-taxpayer-leaving-france-please-turn-out-the-lights/

    I have personal friends who have left France for precisely this reason. They have uprooted their families and left to the UK and Belgium. And they tell me there are many others leaving.

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  75. SPC (5,334 comments) says:

    Got a laugh, call that those ripostes.

    The term progressive tax system was misused by DPF, and seems misunderstood by some others as well.

    In lowering the top rate and raising GST the tax system became less progressive.

    If the tax system is less progressive, an increased tax share paid by those on higher incomes can only occur if income disparity increased – and this is what happened. Not because the tax system became more progressive but despite the fact that it became less progressive.

    To help you declare what should be second nature to a true rightist thinker – some say that the now less progressive tax system could encourage people to earn more and also reduce tax avoidance (hiding of income).

    True rightists don’t deny their goal is a less progressive tax system. It was George WH Bush who said he wanted more wealthy Americans and his son who said the wanted them wealthier than ever. This has been realised but I am not sure it is an improved American economy that has resulted from the less progressive tax system that they built.

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  76. itstricky (1,535 comments) says:

    has become more progressive since the Government’s tax changes in 2010, Finance Minister Bill English says.

    In lowering the top rate and raising GST the tax system became less progressive. If the tax system is less progressive, an increased tax share paid by those on higher incomes can only occur if income disparity increased – and this is what happened.

    Interesting point.

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  77. SPC (5,334 comments) says:

    itstricky,

    Sure, its actually Bill English who is playing politics with the issue and DPF is just passing on the spin to the blog herd.

    His political purpose is to convince the centre that the government is not just catering to the interests of those on higher incomes because their share of the tax paid has increased. The people of the centre were not supposed to notice that the tax system was not made more progressive to achieve this, it occurred either despite the governments tax changes (as income disparity rose) or because the tax changes resulted in the increase in (declared) taxable income.

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