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
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.
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 do not for a second think the total tax take would fall if the top brackets was raised 10%.
Those that leave the instant they pay more tax often mitigate their tax obligation already. Off-shoring profits is very common, for example.