A colleague has done some sums, and he reckons Cullen's high-end tax cuts aren't actually tax cuts at all -- what they are is just partial inflation adjustments.
Since Labour came to power 9 years ago, the top threshold (if it had kept up with inflation) would now be $75,000. All they did was raise it from 60,000 to 70,000.
The 33 % threshold has been raised from 38,000 to 40,000. A minor adjustment for inflation.
So, nothing to see here ... move along ...
They're certainly borrowing to pay for what they say is a cut -- this budget signals a savage turn into deficit spending, sucking credit out of capital markets for genuine investment -- but looked at like this Labour will simply be borrowing now to fund the last nine years of theft and overspending.
UPDATE 1: Radio NZ News reports the 21% band is from earnings of $14K to $40K (not to $48K). Says Richard McGrath in the comments here: "What Cullen doesn't tell us is that earnings in the band $14K through to $38K will be taxed at 21% instead of the current 19.5%, a TAX INCREASE. Someone earning $38K will get less than $12 a week tax relief. Cullen's chucking crumbs to the peasants. What a miserable prick."
UPDATE 2: NBR have details of Cullen's auction of your stolen goods, but appear to have missed the substantive point raised in the main post above.
5 comments:
According to Radio NZ News,
http://www.radionz.co.nz/news/latest/200805221546/dbd5d51
the 21% band is from earnings of $14K to $40K (not to $48K).
What Cullen doesn't tell us is that earnings in the band $14K through to $38K will be taxed at 21% instead of the current 19.5%, a TAX INCREASE. Someone earning $38K will get less than $12 a week tax relief. Cullen's chucking crumbs to the peasants. What a miserable prick.
Quite good actually. The more they get kicked, the faster they might work it out. They'll mostly vote labour and national again though, so in the end they all deserve everything they are getting.
LGM
In the Muldoon days this effect was known as bracket creep or fiscal drag. Selling such an inflation adjustment as a tax cut would have not washed with the media at that time.
Just had a customer through who earns $40K. I told her that Cullen is going to tax most of her earnings (the $14K to $38K band) at a higher rate than at present. Of course, Libz would give her a tax break of $150 per week...
It is not an inflation adjustment at all, I used the government's own figures, it has, at best half addressed inflation. People are still paying more in real terms in income tax than they were in 2000.
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