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 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.
That’s just magical thinking, but all too prevalent.