International Cat Speculators Since 2006


The claim is made:

For a one-earner married couple with two children on average earnings, by contrast, the tax wedge ranged from 42.8% in Turkey, 42.2% in Poland and 42.0% in France to 2.3% in Ireland, 2.6% in New Zealand and 10.4% in Iceland. The average for OECD countries was 27.5%.

The average income for NZ is variously quoted between $40k and $50k – $45 is both the middle of these and most often quoted.

That equates to $1923.07 a fortnight.

According to the IRD tax tables,  there’s about $462 to come off that as tax. That’s $12012 a year in tax – just on $1000 per month.

There are no provisions in the tax code system for New Zealand for claiming dependents. We must assume this rather massive differrence is from Working For Families.

So we go to their web site.

The tax credit calculator is at the bottom of this page.

Lets say you have:

  • 2 under-5’s (you conceived after WFF was)
  • $45,000 in wages
  • And you work full time.

Weekly Payment

From the details you have entered your weekly payment has been estimated as: $158.00

So let’s do the maths here.

Income:     $45,000

Tax:           $12,012

WFF Tax Credit:$8,216

Tax Paid:  $3,796

But $45,000 x .046 = $1,170

Leaving $2,626 of claimed tax rebates that don’t seem to exist.  That’s a mistake thats 225% bigger than the actual claimed tax credit.

Hm. Looks like someone’s telling big fat porkies here.

But wait, there’s an accommodation supplement here. (Childcare costs only apply if you are both working so don’t count in this example.)

Let’s say:

  • You have a partner
  • Are not a student, beneficiary or housing NZ client
  • You have two kids
  • Own your own home in Hastings, Hawkes Bay
  • You have 5,000 in savings
  • No other assets
  • $233 weekly on the mortgage (that’s 1/3 of your income – roughly about what a bank will lend)
  • No Insurance or ground lease
  • $1000 Rates
  • No maintenance

And this is what we get:

You may be able to get $7.00 a week. The rate of Accommodation Supplement you may be able to receive will depend on exactly where you live and the Accommodation Supplement area you are in. Please call us for more information on 0800 774 004.

So, if you’re an average family, living in provincial NZ, even borrowing the max of what you can will get $7 a week.

Reduce that to $3 if you have 7,000 savings, $0 for $10,000 savings.

That’s $364 a year. Hardly the missing $2626 we’re looking for.

As a side issue, consider the effects of Kiwi Saver – one assumes that this will count against cash assets.

• This will make the scheme almost de facto compulsory as a employee on the average wage of $40,000 will for their $1,600 contribution effectively get $2,248 from the Government and $392 from their employer meaning total contributions of $4,240 for their $1,600.

So, someone who gets their money’s worth from Kiwi Saver will end up with $4,240 in the bank at the end of the year. If you had $5200 at the start of the year, kiss your $7 goodbye!

The Alternative

We have 2.15m people in work.

If we look at DPF’s post, he says:

when Dr Cullen say the 2010/11 forecast surplus is for $5.4 billion, that is including a contingency of $10.3 billion for new expenditure.

Considering that Cullen has massivly increased spending, let’s say he’s been told to keep within his existing budget, but can re-distribute WFF money to whatever he wants.

If we did that, we then have almost $16B for tax cuts.

That’s $7441 per employed worker. Without cutting anything.

That’s only slightly less than $8,216 currently given to an average family. But unlike that payment, this one goes to every single New Zealander.

It also doesn’t have the overhead of WFF – you just change the tax rate numbers a bit and carry on. No applying for this, that and everything else. No automatic payments setup at the Governments expense. No staff to check claims. Nothing.

Incredible.

Comments on: "Working For Families, and Tax Cuts" (2)

  1. Wow, look at all those figures!

  2. […] not even including the money that will be freed up by cancelling Working for Families. (See this post where I previously worked out that we could afford twice what Key is offering here.) Simple: the […]

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