Wage gap or tax chasm?

Bill Ralston’s column is titled “Wage gap more a tax chasm”.

Actually, Mallard is telling the truth. Those are the wage-gap figures. Gross wages. But what he ignores are the figures that matter most to you and me: our take-home pay.

Because of tax cuts and higher tax thresholds across the Tasman, the gap in tax-paid, take-home pay has widened rapidly under Labour.

Ralston has caught on to the key point – gross wages are misleading in comparisons between countries. You will hear Labour Ministers and supporters talk endlessly about gross salaries.

What you will hear far less from them is actual cash in hand, or after tax income.

And if one is comparing over a number of years, one should adjust for inflation. If after tax income in both countries has gone up 20%, but inflation in one country was 15% and in the other 8%, then it is better to be in the latter country.

So the best measure for comparing between countries is inflation adjusted after tax income.

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