Despite almost every economist alive saying the stupidest thing you can do in a recession is to raise taxes, this is what the Greens are promising.
We now can clearly see what a Labour-Green Government will look like. Labour will say as little as possible on tax, but then sign up to the Greens’ tax plans as a price of coalition after the election.
And what the Greens want is massive. First of all they want the top tax rate to go up 9% from 33% to 42% for those on over $150,000. They’ll also hike it 4% for those earning $100,000 to $150,000.
So every dollar over $150,000 you earn will be taxed 42%. So let’s look at what happens to $10,000 of income over that level. They’ll take 42% in income tax leaving you $5,800. $750 of that will probably go on GST at 15% if they spend it. So that means they get left with $5,000. The Government has taken half.
But it doesn’t stop there. Let’s say you’re worked hard and are now in your late 50s and have a mortgage free house and a KiwiSaver. Say it comes to $1.5 million. Then you’ll be paying another $5,000 in their asset tax.
The Greens tax policies will punish people for saving, for being old and for being female.
A fair few elderly people will have assets of over $1 million when they retire. Their house alone may be worth that and if they want say $50,000 a year income on top of NZ Super you’ll need $1 million in shares, funds, retirement accounts etc. Also they’ll be worried about having to pay for possible hospital level rest home care when they get very elderly which can cost $1,100 a week.
The Greens will punish those retired people by taxing them. If they have $2.5 million in assets, then they’ll pay $20,000 a year in asset tax.
Also their policy is that a $1.5 million home owned by a couple isn’t taxed but owned by a single person is. So you’re not paying the asset tax, and then your partner dies and wham the next day you get a bill from the IRD saying you now need to pay asset tax on your home.
Of course the super wealthy will pay nothing. They will have all their assets in trusts. This asset tax will just affect the prudent retired person or small business owner who has managed to save some money, but don’t have fancy lawyers to hide everything in trusts.