So, Labour have produced a massive carrot for 70% of New Zealand families.
It’s a very, very good package I must say. But it is fundamentally unfair.
Essentialy they are saying if you have a family, and you earn below $x you don’t pay tax.
Personally, if the government wants to target that group, and also keep everyonne else happy, then why not just have a no-tax threshold? Far easier to administer, and keeps everything balanced.
Let’s take an example of someone earning $38,000 per year.
If they have one child, under the new policy for Working for Families, they would be given back $6,700. They currently pay $7,410 or there abouts. Why not just make it the first $38,000 is tax free?
While they are at it, their benefit to people earning all the way up to $110,000 (if they have 4 kids) is way too complicated. Why not just flatten the top tax to 30%
Of course, I am biased. My wife and I get nothing from these current changes, but the tax change would benefit us immensely. In fact we could actually start saving for a house of our own!
I pay $24,420 per annum in tax, excluding ACC levies. That’s $469.62 per week in tax.
Under my proposed taxation, I would pay $14,100 per annum, or $271.15 per week. But guess what, the guy on $38,000 would pay NONE! That would make them about $142.50 per week better off. I would be $198.46 better off, BUT I earn more, so using pure mathmatics, OF COURSE I would be better off! I also use less resources. I service my car regularly, meaning it causes less polution. I buy organic food, so it is better for the economy, and I pay for my own healthcare, so people on lower incomes don’t have to wait as long.
They, just as I, would not be entitled to any handouts, but they would have more money in their pocket.
Oh, under Labour’s adjusted policy, if my wife and I had a second child, we would be entitled to a MASSIVE $7 a week.
But that doesn’t pay for a house, does it. It doesn’t even cover the increase in cost of living.
Now, let’s say we simply make the first $38,000 tax free, and leave the rest of the tax base the same. Then both the person on $38,000 and I are better off exactly the same amount. $142.50 per week. Surely you can’t get much fairer than that? They earn less, but they get exactly the same benefit as I do, and I still pay massively more tax.
Anyhow, National are probably not going to do something as radical as I want. And to be honest, their position on Nuclear policy and USA will ensure they will never get my vote.
Something Labour could do however is use the household split taxation system. Essentially, if you have a couple, their income is combined and then split equally for tax purposes. So, for instance, if my wife earnt $30,000 and I earnt $50,000 the tax liability would be calculated at 2 x $40,000 meaning $8,000 would be taxed at the lower rate of 19.5% That would make us about $21 a week better off.
If you have another couple where both are already on the lower bracket, you get no benefit from it, which the lefties would decry as unfair.
Oh well… the tax regime will not change radically, so I will just have to earn more so my wife an I can buy a house. I can not expect the Labour government to reward hard work, but once you earn a certain amount, tax becomes a non-issue.
Speaking of which, I just got my commission cheque from Jim Rohn Not much, but it will pay next week’s petrol bill.