National campaigned on a proposal to adjust the existing tax thresholds, but as part of coalition negotiations with ACT last year, it agreed to consider whether the “concepts” of ACT’s tax policy could be incorporated “subject to no earner being worse off than they would be under National’s plan”.
In simple terms, ACT would immediately axe the lowest tax threshold of 10.5 percent, meaning the government would collect more revenue from all income earners.
Some of that extra revenue would then be returned to low-and-middle income earners through a targeted tax credit to ensure they were not worse off.
The money left over would allow the government to reduce the higher tax rates at the top of the income scale - dropping the 33 percent rate to 30, and the 39 percent rate to 33
"When people look at the current rates, they say, should I take on an extra contract? Should I save and invest? Should I go for that promotion? Should I do extra study?
“When people see that you’re going to lose 39 cents in every extra dollar … there will always be some people that say, you know what, it’s not worth it.”
It’s really rough for these people making $180k+ a year, not knowing whether it’s worth study or extra contracts to help them get ahead.
This comment is also praying on people who don’t understand tax progressive tax brackets. It is never “not worth it”.
I think at a certain point it could come down to how much you value your time. I tend to think of the amount of life left in me as more & more valuable the more I work, and the less of it I have left.
So, if i’m already signed up for a 40 hour week, then doing any more on top of that would ideally pay more for the time than my day to day, as I value my time not otherwise allocated to business quite highly.
At the end of the day, as humans what we’re doing is exchanging our time for money, or entertainment, or hobbies, or chores, or whatever.
I think the steps in our tax brackets are small enough already that this isn’t much of an issue, especially at higher incomes.
I can see it happening in some countries where the top tax rate is in the forties though, that would sting.
And then there’s this nonsense.
Which country has the highest tax rate? 1966 was the year UK celebrities ran for their lives as the whopping 95% supertax rate was imposed by Harold Wilsons Labour Government.
Mick Jagger fled to France and John Lennon legged it to the United States while his Beatles comrades penned a song entitled the Taxman to express their disgust at the sky high charge but even now with the UK’s top tax band being less than half of that the subject of tax still raises hot debates amongst UK citizens.
Top tax bracket in the 40s is still a relatively low number historically though. Kiwis have been fed this cycle of tax too high, must have tax cuts so long that I don’t think they get how low they really are in comparison.
Especially if you start comparing our fairly simple tax system, with other places where there’s all sorts of other fees, levys, mandatory insurance etc that we just don’t have here. And then you couple that with the aberration that we also don’t have capital gains tax, and all in all we are paying pish all compared to other countries.
I decided a few cycles ago, that the only parties I would consider voting for are ones that have policies to increase their tax take; and as I watch our infrastructure age & crumble i’m still on that vibe.
When you have a 10% or more higher tax rate than other jurisdictions, it starts to create a pretty strong incentive for your top tax earners to just leave though, assuming their income is portable enough.
We as a society need to stop wringing our hands about some rich fuckers leaving and instead star worrying about the stuff that makes those rich fucker’s profits possible: the working class, infrastructure and health care.
My point was, if they pack up and leave the country, you would end up with less tax that you would have if you left things as they were.
I never understand this.
The difference between their take-home pay if they were being taxed how they think they are, and what it is in real life, is thousands of dollars.
How can they not notice?
Because they are either stupid, willfully ignorant, or lying.
So wait a minute, he starts with removing the 10.5% tax rate so those earning stuff all now pay more tax on their meagre takings.
Some of that extra revenue would then be returned to low-and-middle income earners through a targeted tax credit to ensure they were not worse off.
WTF? So he’s just stealing it from the poor to give to the middle bracket? What an absolute cunt…
The money left over would allow the government to reduce the higher tax rates at the top of the income scale - dropping the 33 percent rate to 30, and the 39 percent rate to 33.
Oh, and it keeps trickling up? This guy is crazy!
I’d like to point out that poor people (mostly) don’t vote for Act, so from their point of view this is better for their voters.
Though I stand by my previous claims that people who vote for Act (largely) do not understand the Act policies, and are just voting for someone who is not Labour or National.
so from their point of view this is better for their voters.
I think enacting policies that only benefit their own voters is sort of a more sophisticated version of that thing that happens in some third world countries where if you vote for them you get a cash payout or a chicken or something.
Haha it pretty much is! My understanding of a center-right viewpoint is basically that people deserve their position in society based on their actions. It makes sense from that view point that a flat tax is fairer.
And let’s be honest here. The majority of right wing voters stand to benefit financially from right wing policies, but also the majority of left wing voters also stand to benefit financially from higher tax rates on the rich. People tend to vote for things that benefit themselves, and I think MMP helps solve that problem by forcing groups to come to compromises.
My personal view is that most people vote for what benefits themselves. Something about a society growing great when the old plant trees under which they will never sit - I like to think we’re closer than 50 years ago but we still have a long way to go.
Edit: I feel like I should add a disclaimer that any of my views are point in time, and they change like the wind 😆
When we look at facts and metrics fairer societies actually benefit everyone in them. For example there was an OECD study that found countries with higher income equality recover more slowly from economic recessions.
I also don’t get why the political right in NZ are content to have 20% of kids in relative poverty because those are our future taxpayers and citizens. We’d prosper better as a nation if everyone had access to skill building, proper brain development, and felt a bond of loyalty with the wider society.
viewpoint is basically that people deserve their position in society based on their actions
That’s just magical thinking, but all too prevalent.
Nothing new here. This is the party founded by the people who gave us GST.
I might be a bit smooth in the brain but how is GST a bad thing? To be fair, I’ve never really considered it…
Doesn’t it effectively tax those that use the most? (in a user pays sense)
Its a regressive tax, because the greater proportion of your income you spend, the greater proportion of your income ends up taxed. And if you’re poor, you spend all of your income (and then some), so all of your income ends up getting hit with a 2nd round of tax via GST.
But if you’re rich, you don’t have to (hell, at some incomes, can’t) spend all your money, so you put that excess money in the bank, then leverage it to buy a house to let to the poor person, who pays your mortgage for you, but you offset your costs to reduce your own tax further, then sell the house a couple years later for some sweet tax free capital gains.
Just an edit to add:
Using GST to dampen consumption by raising it when there’s high inflation, and lowering it when there’s not could be a useful purpose for it; but its not used that way here. I suspect taxing excess cash out of the economy would be a less awful way than ramping up unemployment through interest rate hikes, but old white people won’t vote for tax hikes. GST is also a way to get tax off some people who might not have an income otherwise taxable; but I would think wealth taxes, or capital gains taxes would be far better ways of achieving that.
Thanks! That makes lots of sense
GST is also a way to get tax off some people who might not have an income otherwise taxable;
This is its one good point: We collect tax from travellers who, if there was no VAT, would pay zero tax while visiting NZ.
Not quite zero, if you count some airport fees etc. But otherwise yeah, it is a gap. Albeit we do end up collecting tax on that money once its counted as income for the companies or individuals providing services to those tourists.
It also gets around off-shoring profit to avoid income tax.
It’s not perfect, is regressive and, imho, is too high. But it does have SOME benefits.
If I were made dictator I would lower gst to 10%, meddle with the income tax rates (including a tax free bottom bracket and higher tax for the top brackets) and add CGT.
But that’s just me.
Doesn’t it effectively tax those that use the most?
It’s the opposite insofar as the total percentage of your income you pay in taxes is higher if you’re low income.
Back when I worked, I was putting about 1/2 of my income into savings so there was no GST on that.
Now I can’t work I have to spend all of my income on cost of living, which means I effectively pay another 15% on most of it.
@flambonkscious @Dave That’s back to front and complicated. The Australian rates where people don’t pay tax on the first $14-15k or so is much simpler and much more use to people on low incomes. Reducing GST back to 12.5% would also help low-income earners a lot, too. Much less complicated than a rebate or tax credit.
I also found this interesting:
Willis would not elaborate on what elements of ACT’s income tax policy were on the table, but she ruled out reducing the 39 percent top tax rate.
I was sure that getting rid of that $180k+ bracket would be first on the agenda. Turns out I was wrong.
The first mistake is believing anything she says.
Don’t forget that the last NACT government already raised taxes in a way that impacted poor people the most when they raised GST to 15%. And their avatars in the media were in the weekend advocating for sanctioning beneficiaries (Paula Bennett’s column. They actively despise poor people, blame those on low incomes for the situation they are in, and want to punish them for it.
This guy sucks. I truly wonder what kind of people ACT voters are like in real life.
I believe the average Act voter is voting for Act because they don’t like what they see in National or Labour, and not because they support Act policies. I’d put money on it that most Act voters don’t even know the key Act policies.
I can see that for this election, but haven’t they been around for 30+ years? There must be some people that actually believe in their policies
Oh for sure, but I think that’s probably the couple of percent of people that they had in the 15 years before the 2020 election where National fell apart. I refuse to believe that over 8% of NZ think we should remove all building regulations, have private companies write school curriculum, or remove tax exemptions for charities.
