Monday, March 28, 2011

Tax and Welfare reforms. Towards Solutions.


Discussion in the Standard.

70k is the median family income. I agree it is hardly rich. Progressive taxation should start about 140k. Equivalent to 30k, about the level of the top rate in 1980. Cuts to the top rate plus leaving the tax on middle incomes to go up by bracket creep and user pays has resulted in a decreasing disposable income for 80% of New Zealanders.

“The so called reforms in the 80′s and 90′s resulted in a drop in income for the majority, 80%, over the period”
“Since there was little income growth, the net effect of the fiscal changes was to switch income from the poor and those on middle incomes to the rich”.
“Weekly incomes have stagnated since 2008.”
“Incomes for most people, have dropped since the 70′s”.
“Almost constantly apart from a brief slow down of the drop from 2000/2008″.
“For the middle class in skilled jobs it has dropped 40%.”

People are borrowing to live because NZ incomes have dropped below costs..

A better option may be to simplify all welfare, tax and tax rebates into a minimum individual income administered through IRD. With a flat rate up to 200k after that. Those earning over 200K are benefiting the most from our society, so should pay the most towards it.
The difference can be made up with FTT’s, a CGT on all but the family home (up to twice the mean house price) and pigonian capital control taxes.

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