Yesterday I did some calculations to find out what tax John Key pays compared to a worker on the minimum wage. And I put out this media release for the Mana Movement:
MANA Movement Economic Justice spokesperson John Minto is calling for a radical overhaul of New Zealand’s taxation system with calculations showing that a minimum wage worker pays a ten times higher tax rate than the Prime Minister.
Minimum wage worker 28% tax
Prime Minister 2.8% tax
The minimum wage worker on 40 hours per week earns $29,640 and pays $4,207 in income tax and $4,149.60 in GST giving a total tax of $8,356.60 or 28% of income.
On the other hand the Prime Minister earns $428,000 from his PM’s salary along with this year’s $5,000,000 increase in his wealth (according to NBR’s rich list) which gives him a total income of $5,428,000. On this total income he pays just $132,160 in income tax and approximately $21,400 in GST giving a total tax of $153,560 or 2.8% of income.
This is a national embarrassment. Those least able to pay are under a heavy tax burden while the super-rich pay peanuts.
The National government and its attack bloggers refer to the working poor as scum, bludgers and ferals but it’s clear the real problem is with the top 1% of income earners who get all the benefits of taxpayer funded facilities and services but don’t pull their weight paying for them.
Cleaners, fast-food workers, hospitality workers and security guards are all heavily subsidising the lifestyles of the superrich.
These figures show we need an overhaul of our tax system so the Prime Minister and his rich-list colleagues pay their fair share.
MANA Movement policy addresses this by –
- A robust capital gains tax paid at the same rate as the person’s income tax
- A financial transactions tax on currency speculation to replace GST (Note: GST hits families on low incomes the hardest because the poorest 10% of income earners pay 14% of their income on GST while the wealthiest 10% pay less than 5% of their income on GST)
- Higher tax on higher incomes
- An inheritance tax on estates over $500,000. (National abolished inheritance tax in the early 1990s allowing wealthy family dynasties to flourish at the expense of everyone else.
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Good article here,
The MSM should print this and holler from the rooftops, as Key is fleecing the poor to benefit the top bracket taxpayer including himself.
This is the most unequal distribution country in the OECD today. and a far distant memory from the 1950’s & 60’s when we had a clean safe even distribution of wealth and full employment called Egalitarianism and now look how far we have fallen.
It is disgraceful and unforgivable, and Key/English/Joyce all have blood on their hands, as they destroy what was once a great place to live and bring up family.
We call all opposition Parties to get together in a pre-Election conference behind closed doors and plan a way they can work together to take over this Country from these tyrants before we are all doomed. THIS IS AN URGENT REQUEST PLEASE.
http://i.stuff.co.nz/national/politics/573560/Key-pledges-PMs-salary-to-charity
PC,
From your link we are told FJK was being paid a PM’s salary of $361,000 in August 2008; John Minto states he’s now paid $428,000. A minimum wage earner could only dream of a $59,000 annual pay increase over that time span.
I also note that FJK was very coy about exactly how much of his PM salary he was donating to charity. He also didn’t disclose which charities were to benefit from his largeness – ambergris for Whale Oil perhaps!
I also looked up this article recently, as I found myself in a debate about this. This articles says he pledges his salary, but there is no follow up article to say he actually did it. I imagine if he was actually doing it there would have been some major PR somewhere about it. Right? Funny what people remember, both people who I was debating with cited this. It’s from 2008 and has done it’s job because it stuck in peoples minds. However, I would like to know what charity?
You might also wonder why he is not accepting the payment of the people who elected them. If he doesn’t, he doesn’t have to respond to our demands. Rest assured he is making tons in his secret trust fund with all the shares we don’t know anything about. Could he be receiving funds from overseas? Who knows? I’m sure he will receive expert advice on where to invest his money.
John Key gets tax benefits for donating to charity. If these tax benefits didn’t exist he wouldn’t donate a cent.
Would there be the need for such contributions if tax wasn’t evaded?
Don’t forget investments are bought after tax has been paid… eg save $20 a week from your AFTER tax pay = $1000 per year, and then use that to buy an investment… how is it fair that you should be TAXED AGAIN on investment gains bought with money you’ve ALREADY PAID the tax on???
the tax is on the __gain__, not the investment.
ie. you invest your $1000, at the end of the year you have $1100. you pay tax on the $100 you gained.
that $100 is income. it was “earned” by your money rather than by your labour, but I don’t see why it shouldn’t be taxed.
a well designed CGT would do wonders for both the property market and the economy generally as investment shifts to more productive activities than housing inflation and bank shareholder profits…
Or put another way, The minimum wage worker pays only 5% of the tax that the Prime Minister pays in monetary terms, yet has exactly the same entitlements to public services and to citizenship rights and enjoys the same democratic voting rights as any man under a one man-one vote Westminster parliamentary system.
and so whats the earnings in % terms that each keeps after tax?
PM keeps how much % of his vast wage?
a min wage worker keeps how much % of their meagre wage?
really dumb argument mike
A corollary to this: Who is more generous, someone who donates $10 million dollars having made $100 million, or someone who donates $1,000, having made $10,000? Both are giving away 10% of their income, but which has made the larger sacrifice with regards to their standard of living? Funny how society will likely slap a “Sir” on the the $10M guy…
The problem is, no matter how much you earn, things people need to pay for (food, accommodation, clothes etc) still cost the same, so the percentage argument doesn’t really stack up a the lower end of the scale.
I guess this is the age-old argument of, should people who generate significantly more wealth, be entitled to keep (in dollar terms) a great portion of their income, or should they be only allowed to keep the same proportion and fork up significantly more $ in tax than they already do.
Both sides have merit but unfortunately, the extreme left and extreme right (and some would argue even the moderates as well) are incapable of acknowledging the other side’s points. All you do is bitterly troll each other.
Mike’s argument is not dumb; just not in line with the world view of the left. Just like your opinion is not dumb and has its merits. Those merits would, of course, appeal more to the Left than Right….but merits none the less.
Mike’s argument may not be stupid but it is an incredibly dangerous way of thinking. People in the higher income bracket can afford a very good accountant to find numerous loop holes in the system. Finding ways to get greater tax returns, more exemptions and places to move money around avoiding tax altogether.
Also PMs & MPs receive a huge range of “public servant” benefits, receiving many goods and services at a highly discounted rate, often even free. All of these things are being paid by the tax payer so the argument “you enjoy the same benefits” is quite far from the truth. It is not even on the same playing field.
Yes maybe you have a point. My point was that as a taxpayer and a New Zealand citizen the Prime Minister has the same access to the generic public services provided by the state as us cattle do, such as public health, roads, education, legal aid, the benefit system, national super and tenancy services to name a few.
But maybe you are right. Maybe he can afford a good accountant and the private sector equivalent of any state service that he and his family may require.
So bearing in mind his and his family’s present situation, their son is at a prestigious private school and their daughter is studying in the USA, they probably have private health insurance, they probably eat well, so won’t have too many poor-diet related reasons to require health services. They probably drive a newish car, not only kind to the environment but packed full of safety features too. They probably live in a well insulated energy conserving house, don’t smoke and keep themselves fit. Altogether a very low to no requirement for most public services.
So all credit should go to a family that (allegedly) pays $153,560 income tax and asks almost nothing of the services that that money is claimed to pay for.
Give that man a beer, generous to a fold!
you miss my point – its a dumb argument because its so quickly dismantled
At least he has an argument Framu.
You have none.
What’s a dumb argument is this whole article. No matter who gets into power, they’re all going to only pay a small tax rate? Why? .. because they’re the PM and have to put up with all the crap from everyone with their hands out..!
Every job has it’s ups and downs. Prime minister has extremely high stress levels and nothing but negativity so, in compensation, why shouldn’t they get a lower tax rate?
“The crap from people with their hands out”
What you mean is, the people who need assistance to be able to have a decent standard of living? Why do you think they shouldn’t have a decent standard of living? Do you think you magically got a good standard of living in a vacuum from the people asking for assistance?
they deserve a standard of living, but like everybody else, they should work for it, which plenty, or too many dont! so why should those who have worked harder or smarter pay for that life for them? why is it expected that those who have succeded, should throw their money to those less successful? come one its ok for people to do so, its very nice in fact, but why is it expected, specialy from the poor?
The jobs mate the jobs, where are they. People want to work but they don’t want to be working 3 part-time jobs on the minimum wage, get a grip!
Your suggestion that people on minimum wage don’t work hard is ignorant. Walk a day in their shoes, consider the difference in cultural capital from what they are born with compared to other people that work equally hard but get paid 5 times as much.
No one is a baddie here. Just people that got dealt a worse hand the day they were born than others. Are we a society that just says “too bad”?
“Just people that got dealt a worse hand the day they were born than others” sorry but people that assume that that wealthy people are where they are because they are born into it piss me off so much! The fact that you assume they didn’t work for it!
My dad is successful now because he worked for it, he grew up in a family of six with a very low income, in a 2 bedroom house.
He had 5 jobs at 16 and over the course of about 2 decades he worked to be where he was now and for people to assume that he and many others didn’t work for what he earned and was “born into it” make me so mad! because he has worked extremely hard to be where he is and the same goes for so many others.
please stop being so narrow minded!
Imagine having to work full time for minimum wage whilst raising a family. Would you then really have time to find a successful job or up skill yourself? Would you have the money to be able to take time out to get training or look for better job opportunities?
Imagine if you’re a child who has to spend time working so he can help provide for the family. You would be less likely to achieve well in school, and again are less likely to have opportunities for success.
I’m not saying its not possible to get out of poverty. But the poor don’t chose to be poor. It is not easy to be poor.
From an educational perspective children who are raised in negative, and/or poverty stricken conditions do have a much harder time getting out of it.
It’s not they are not working hard. It’s that they have to work much much harder to get out and become ‘successful’. Many of the people that unfortunately have to ask for handouts do so to survive, not because they are not working hard.
Just saying.
well then, maybe people shouldnt bite off more tha they can chew. *cough* family planning education perhaps? just saying.
“Prime minister has extremely high stress levels and nothing but negativity so, in compensation, why shouldn’t they get a lower tax rate?” By that logic are you saying the people who are cleaning public toilets and other such jobs should pay no tax at all? Because those are extremely negative work places and if is what your saying I might have to agree with you
Have to put up with all the crap?… ‘ Im comfortable with that ‘… ( on phone from Hawaii mansion beachhouse )…
I tell you son,…next time you ring for security….I might be tempted to walk just a little slower…thinking about my job whereby I get paid virtually nothing to risk getting my head punched in on a regular basis just to protect your sorry little rich boys arse.
Framu; Or put another way, the minimum wage worker pays $8356.60 to the IRD, yet the Prime Minister, for the same opportunities to benefit from health, education, roading, parks and reserves and a myriad of other public services, is expected to pay $153560.
I know you and yours adhere to the Marxist mantra of ‘to each according to his need, from each according to his ability’, but twenty times the amount is one hell of a differential. Twenty times, for goodness sake! I could almost be justified in referring to that as extortionist.
It may be fashionable in your circles to hiss and scoff at those on a higher bracket than the minimum wage, but at a 20 to 1 ratio of individual tax paid, you are, in my opinion, being a tad malicious to suggest that the Prime Minister is not doing considerably more than paying his way.
Yes put in those terms it does sound extortionate but really what else is he going to do with it? Is it not better to give me han receive when you already have so much more than you, your children, your grandchildren and probably your great grandchildren could ever possibly spend in there lifetimes. Disregarding the whole left vs right bull is there not such a thing anymore as being a decent human being and giving back to the country that has given you so much?
New Zealand is in massive trouble for a country that used to pride itself on being unique we are quickly becoming just another statistic in the annals of Neo Liberalism while everyone just sits on either side of the fence slinging mud at each other.
Our country’s tax system does need a drastic oveehaul would it not be better instead of raising the minimum wage $2 which has pretty drastic knock on effects down the line why not slash the under 50k earners tax to 5%? This is effectivley a 15 odd percent pay rise and unlike the rich this is money that will be going back into the economy not into a bank, what do you think is better for the country really?
You’re another one who better not ring security , mate….
Reckon it’d be a turn for the books to see you out there at 03:00 facing down a couple of burglars and doing regular 12 -and sometimes 17 hour shifts – for a minimum wage.
All power to ya, buddy.
Qualanqui; an interesting post, but unfortunately you have fallen into the trap of attempting to use the powers of the state to decide that you (the state) know how to spend a consumers money better than the consumer does. Just because in your opinion a man has been successful in accumulating more money than you think he needs or deserves, that is no justification for you to attempt to confiscate and redistribute a portion of it.
On the subject of giving, we all give what we feel comfortable giving and in my case, the more I get, the more I give. I think most readers of this blog underestimate how much the upper end actually donate. A case of ‘if I didn’t see it, it probably didn’t happen’. Donations can take many forms including cash, time and community projects. My favourite project is wetland planting and the (person who I suspect is the) wealthiest man in our district is about to build two tennis/netball courts next to the local community centre on the condition that the local council proceed with the upgrade of the building as planned.
Donations take many forms. Most of the very wealthy who donate choose to do it below the radar, mainly due to the fear of being unfairly judged by unreasonable or ill informed people, an example being the substantial donations Kevin Costner has made to the Lakota people to allow the completion of a number of projects and the steady progress of the Crazy Horse Monument in the Black Hills of South Dakota. Frankly I can see their logic.
just for the record mike – im in the top tax bracket
as for your twenty times – thats my whole point – if your going to say key pays 20 times the amount of tax without including the % that are left means your being extremly dishonest or not very smart
Its basic stats man
john pays x in tax and keep y
joe pays x in tax and keeps y
its the same idiocy that is used when people say the top 10% pay 70% of the tax (they dont – but just lets go with the flow) without mentioning the top 10% also keeps 90% of the wealth
Yes, I am saying Mr Key pays (in this example) 20 times the amount. What’s dishonest or not smart about that? They are Mr Minto’s figures, not mine.
In the cold light of day, the minimum wage guy is getting more than 20 times the benefit on a return on capital basis on his tax expenditure than Mr Key.
The top 10% do contribute 70% of the tax…..well, sort of. They actually contribute 70% of the INCOME tax. Then there’s GST, company tax, resident withholding tax, etc. but I guess the income tax stat suits some people.
Just for the record, don’t feel guilty about being in the top tax bracket and getting to keep more of your own money than you feel comfortable with. Your tax rate is merely a minimum figure. There is nothing stopping you contacting the IRD to arrange a deposit into their account of a lump sum payment sufficient in size to ease your socialist guilt.
“What’s dishonest or not smart about that? ”
for fucks sake
because you leave out how much he keeps!
I dont know a way to be more obvious mike.
if your going to say that key pays 50% (or whatever) more tax than the average worker – but neglect to mention he keeps 200% more in his pocket your being foolish or disengenious.
your comparing figures in the wrong way – you should be looking at % of income – not % difference between 2 earners
“but I guess the income tax stat suits some people.”
yes – people who are being disengenious
and mike – i dont have any guilt about being in the top tax bracket, socialist or other
your the one who was insinuating i didnt pay a lot of tax with your outdated and ignorant tarring of anyone who disagrees with your argument as a lazy bludger.
The arrogance and sneering attitude doesnt actually help anyone – how about you get back on track and discuss % of income paid as tax – not % of tax of person a, compared to % of tax of person b?
Mike that’s a ridiculous arguement. By your way of thinking, I could say that Key’s income is 180 times that of the minimum wage worker yet he only pays 20 times more tax. Shouldn’t he be paying 180 times the tax that the minimum wage person pays by your logic?
Didnt I just read that his worth actualy just DROPPED by $5million?
and percentage pays is bullshit, no one should pay more than anyone else in $$$ terms for the same benefits. For example, pacific islanders etc use far more of the health serviced benefits etc here in NZ than anyone, yet who would also pay bloody near the least in income tax? they still get to vote, etc. As for the prime minister % of his pay he pays in tax, it doesnt matter if he keeps more than the poor bugger down the road, he earns it, he got himself in that position, so he gets the rewards (pay) for it. Why should wealthy people pay more than poor people? because they worked harder to get somewhere in life? (ok in most instances). Bloody poor people moaners again crying over their own hardship. Oh and im far from rich!
Yep: remember the story of the Widow’s mite.
mike@planetkey…funny how you try make it look like the poor guy is the big winner and bludger here??…if those of us are entitled to the same services,then wheres my backhanders and free travel.lunches,healthcare,military helicopter rides.limosines,and free passes on parliamentary conduct breaches etcetc…and if its so good for us down here bludging on the 5%?? why not come join us bro…?? cos its shite and you know it. But guess what…we are all onto your type….not the rich hard workers paying their share..no sir…your type! the sanctimonious self serving smarmy pious dogs who think theyre better than lower socio economic countrymen. Good news for us though….you will be joining our group real soon. Johnny Keys will see to that.
Dave Hoppy; Go for it mate, let it all out, don’t let spellcheck, grammar check or your own proof reading get in the way!
Most of what you refer to are not actually backhanders, they are entitlements, conditions of employment. Just like our 4 weeks annual leave, etc. You pay, through the tax system, his travel and accommodation because you (as a voter) said you wanted to see him more. After Prime Minister Helen Clarks’s entourage got dragged over the coals for speeding through South Canterbury to catch a ‘plane to an All Blacks game, she told us she was only going to the game because she was expected to be seen there in her capacity as Prime Minister, that she didn’t particularly like rugby and that she would rather be at home with a good book.
Incidentally, anyone who knows me wouldn’t refer to me as a sanctimonious, self serving, smarmy pious dog. They would refer to me as an average guy without a university education, an honest, hardworking self employed middle class kiwi joker in a dirty, heavy-work industry who walks the talk in environmental responsibility and employment conditions for my staff. I am one of those ‘old school’ types of bosses who started at the bottom (for 14 years) before working my way up through the ranks and feel justifiably proud of where I am now.
Shame you didn’t work 500 times harder and become a millionaire like Key.
James; I never said I wasn’t a millionaire……;)
If you are then my guess is you’ve made it from the backs of your workers. There is no such thing as a self made millionaire as most of us know, you screw others to get there as Key has done.
Michal. My staff are well paid for their efforts and qualifications. I started a new guy at the end of June on $21/hr. Nobody is exploiting anyone. Our skills are tradable and I employ someone with skills I think I can benefit from to an extent that I can make more than the cost of employing them. That is a fair trade.
Can you give me a job im a minimum wage student trying to support my family and my partner is on unpaid maternity and nolonger has a job. We have a house to live in which costs more then the pay i get. We went to ask for assistance and got turned away because i earn toomuch i work two days a week while studying fulltime.
I would love to mate but we are fully staffed at present.
Mike@NZ – the sad thing is you don’t see the irony of your 9.52AM statement.
I’ll let you ponder it for a while.
I am reading this with absolute astonishment. I am an ex-pat Kiwi who had to LEAVE New Zealand to get a well paid job. I am now an employer myself in Australia. I pay JUNIOR APPRENTICES AT 17 YEARS OLD $27 an hour to clean my salon. You are absolutely living in a dreamland if you believe that $21 an hour is doing your staff a favour. It may well be all you can pay them, and I appreciate that, I was an employer in NZ many years ago also. I was 21 years old at that time, and my team got a meagre $12 an hour. It was shameful. So shameful I left to make a better life, and I can only hope those girls who worked for me then have made a better life too. Perhaps if the wealthy of NZ were prepared to give more of their money into the taxation system, we could get those girls better educated, get the economy stimulated with government spending or some such plan (the solution to which I don’t have, but there are others who do) and your workers could get a FAIR WAGE because, mate, come on, $21 an hour is a crying shame for a working man.
Natasha, I beg to differ. In their case, $21/hr is a good and fair remuneration. There is a lot more to a pay packet in the productive sector than dollars per hour. Let’s run through it shall we?
Ok, one of my guys receives $21/hr monetary remuneration. He rents a 4 bedroom house off us for the discounted price of $150 per week. He feeds the regional council approved 3 year old low emissions wood burner with free firewood (limited to 20 cubic metres per year). He feeds his family with free meat (limited to one side of beef per year and two sides of lamb (dressed) per month. We pay the first $40 per week of his cell phone bill and pay time and a half for hours worked over 40 per week. You do the math.
In a profession such as yours, I can excuse the unfamiliarity you may have with fringe benefits, perks and conditions of employment. But I cannot excuse your financial ignorance in your thinking that government spending somehow stimulates an economy and makes everyone wealthier. Now that you have made a successful life and career in the consumption side of the economy, take a trip over to the productive side to see where almost all of the money in your till actually came from. You will be surprised, educated and amazed!
Thank you so much Mike for being a voice of reason, even if you are, as it seems, a rather unpopular one.
It seems anyone who calls out any one-sided or ill-researched comments regarding our current PM is instantly labelled a ‘filthy rich national voting scumbag’ regardless of where they actually sit politically.
What it boils down to, is that we need more people like you who can accept the pros and cons of each party, rather than people jumping to preconceived opinions depending on whether they see themselves as ‘left’ or ‘right’.
Surely there’s more of us out there who don’t see handouts as the only way to raise people out of poverty? Surely other commenters would be bummed if they spent years making their own way, only to see someone raised to the same level sans hard work?
Thanks for that Dani. You are a real gem:)
Well, my old son, now how bout you just exchange all that wealth your so proud of earning by pulling yourself up by you bootstraps and swap your life for a family on minimum wages?….
Why do I get the feeling you got a good thing going and dont want it challenged?
See,… I been on both sides of the fence, employer and employee…
And you know what we call people who pay minimum wages?…corporate bludgers…who get their business subsidized by paying peasant wages…kinda a bit like theft….cept..y’know..its made legal and all…
$300, 000,000 is borrowed every week by this neo liberal govt to ‘prop up the welfare state’…but the real lie is that is HOW tax cuts for the top income earners are enabled.
Wild Katipo, I do not, have never, and will never pay even close to the minimum wage. I cannot afford to. I need better staff than the minimum wage will give me, I need enthusiastic, committed and engaged staff who see a future in being on our payroll.
The good thing we have going here is not exploitation, it is production. We produce more than we consume, meaning that we don’t need to grow our share of the pie by shrinking someone else’s. We instead increase the size of the pie meaning everybody wins.
That is something the public sector can never do.
It would seem that Mike@NZ is one of those few bosses (there are some around) who has some awareness that if you pay peanuts you get apes; if you pay chickenfeed you get birdbrains. But perhaps Mike@NZ isn’t aware – not many people are (or were), after all, of the Fourth National administration’s aim of developing in New Zealand the highest educated and lowest paid among the developed nations (this was announced to business types in one of them there multi-dollar seminar/dinner bunfights beloved of political parties and their mates).
It is my firm belief that the Fifth national administration has adopted half that agenda: the low paid bit. How their education … well, let us, for want of a more appropriate appellation, smilingly call it a policy … is supposed to achieve the other half is so beyond me, I am forced to conclude that it has been abandoned. I have yet to see any Government since 1984 at least, that has been really prepared to invest in our future generations.
“Well, my old son, now how bout you just exchange all that wealth your so proud of earning by pulling yourself up by you bootstraps and swap your life for a family on minimum wages?”
“I do not, have never, and will never pay even close to the minimum wage.”
thats not an answer to the question mike – try again
I fail to see your point. I have already done that
When I started in this industry, I was on the minimum wage, $168 per fortnight. I have slowly, oh so slowly(!), worked my way up to where I am now through perseverance and educating myself at the altar of the school of hard knocks. It has been a hard, wild ride, but a rewarding one.
What really pisses me off about the attitude of the next generation is that they seem to think (or have been convinced by a bloody academic) that a) if they go to university and get a degree…..any degree…..they will be qualified for any job and will get money thrown at them by employers keen to employ them because they have a degree. Wrong! They need a useful qualification. The big wide world can only deal with so-many liberal neo hippies with an arts degree and a major in contemporary interpretive dance, or that b) they can go to university and come out with a management degree that will allow them to ponce around saying “I have a management degree, I am a qualified manager and deserve to start at management level on a starting salary of $50000 plus per annum. Dickheads. They are the bosses you have trouble with. Never worked at the coal face.
If the people on this blog spent as much time bettering themselves as they do moaning they might actually find themselves rich.
Nobody in this world owes you a living.
To an African slave, your minimum wage is more money than they will see in their life but I don’t see you giving all your wealth to them and going to live in a slum.
People end up poor due to the fact they make poor decisions. If you just hand out more money all that happens is they make poor decisions with more money.
If you want more money, go out, get educated, get skilled and be thankful you live in a country where anyone can succeed if they take responsibility for themselves and make the effort.
Decent 40 hour week well paid jobs are the way out (it is all in the Internet-Mana policy), but many many businesses don’t want to pay well. I get so tired of the idea that those who work hard can make it and the rest are sitting on their hands. I see the cleaners where I work, rather them than me as I sit at my computer and earn considerably more for what!
Maybe you should have skilled up and got a decent job
Yeah, like the building inspector who ticked off dozens of leaky homes! 🙂
James do you think everybody can up-skill, do you think the playing field is level at birth that we are all born with equal ability?
I used to say that the is no such thing as a stupid question. But then we get this kind of thing. I guess we have to add a criterion for non-stupidity: that the question has been asked in a genuine attempt to elicit information.
Of course we aren’t all born with equal ability, equal intelligence, or equal physical capabilities. No one, from whichever end of the political spectrum you care to select, would assert any such thing. But that does not imply that all aren’t equally deserving of a fair suck of the sav, or of doing their bit to provide a sav for others to suck on. You know the tag: ‘From each according to ability: to each according to need.’ I see nothing to quarrel with in such an ideal, but we need not adhere to it so very slavishly to achieve a more just society than we have now.
There are many out there who fondly imagine that New Zealand is a meritocracy. And it is true that now and then genuine merit does receive its just recognition and reward. But remember that, contrary to a belief (? an attitude) widely held among certain quarters, wealth neither constitutes nor bestows merit. To be sure, neither does poverty….
But real merit – real ability, hard work, virtue and intelligence – can and does exist in poverty. To assert otherwise is frankly insulting.
sigh – that fixes the problem of the existance of the low wage job how exactly?
someone still getting paid low wages arent they
Mike@NZ, if you think the average worker on minimum wage truly has the same entitlements as the PM, you are living on Planet Key.
Stupidest fucking argumentative point I have ever come across MIKE@NZ. So what? should all the people that earn under 30000 pay all of their income to tax, because even then the prime minister is paying 3x that to tax?
In reality, he should be paying the same amount IF NOT MORE.
The main reason why we pay more than half of the total tax demanded of us is because of the demands we place on government, namely government spending. Stop insisting that the government (read…taxpayer) pay for what most of us should be paying for ourselves.
We should know by now that when we ask the government to pay for a new black suit, it will turn up in the wrong size, in red, in last seasons style and delivered to a house in the next town.
And the whole making and delivery process, including approval through a select committee process and the resource consents, will cost $180,000 per suit.
thats an complete straw man – get back to talking %s
That is my whole point, the percentage argument is the straw man in all this.
For you to assert that the Prime Minister, although paying twenty times the income tax of a minimum wage worker, should pay more just because you think he has more to spare is as patently unfair as asking the minimum wage guy to pay more than he can afford. That is how much of a nonsense the whole tax system is, and a perfect demonstration of the point I have been trying to make all along, that the amount of tax revenue collected has nothing to do with government spending. Tax laws throughout the world are not structured around fairness, but around how much they can squeeze the ‘pig’ (the taxpayer) before he squeals. It is only after this extraction process is complete and the money in the public purse that a government spending plan can be created.
My argument with you and centre left/left/hard left/left of hard left and ridiculously slammed hard left of left Monster Raving Loony internet mana cheerleaders is that you are attempting to fix a deep seated injustice with an even bigger injustice, namely even higher taxes. The treaty of Waitangi injustices and subsequent (and deserved) settlements are a graphic illustration of what happens when the public service attempt to correct a wrong with an even bigger wrong.
My argument is not so much that you are wrong, but that you are attempting to create an even bigger wrong purely out of spite. The answer is not higher taxes for anyone, it is lower taxes for the low paid. But with the lower paid being the highest users of government services, are you ready, truly ready for the consequences of your utopian sounding ‘fairer’ society?
That’s because these things are rights afforded to everyone, not just people who are wealthy. This isn’t ancient Rome, we’ve developed a bit since then.
@Mike NZ:
Do you mean that the minimum wage worker has the right to drive around in a taxpayer funded brand new BMW? Awesome!
@Specialbrew:
What? Like GST? ACC Levies?
Once they become an elected member of parliament, then yes they would have that right.
Yes Peter, and it is a well known fact that there is only one job out there that will give a New Zealander an executive lifestyle with all the executive trimmings and a $140,000-plus income, all without a university education…..that of a member of parliament.
This is abhorrent with the rate of increase in inequality we are seeing currently. But what else do you expect from a National government.
Competant governance?
Nah.
Clean, non-corrupt democratic practices?
Nah.
Improvement in standard of living?
Maybe for those earning over $100,000 a year. Not for anybody else though.
Long-term planning for the good of the country as a whole?
HAHAHA! Puh-leese.
‘Responsible fiscal management’?
I don’t bloody think so. Evidence speaks louder than spin.
Which is why we must be out in force to vote stategically against this shortsighted, ham-fisted, greedy bunch of career politicians.
Or it will be us, our children, and their grandchildren that will be left with a mess far too big to clean up. Good on you John and The Daily Blog for helping keep sane debate alive in this country!
The problem for any one who has aspiration for their kids, grand kids, or great grand kids. This lot have not only pulled the ladder up, they have rigged the game, The have fixed the deck to favour the chosen few.
If you want a future for you mokopuna, you have to vote IMP – they the only ones who have the back bone to break up this paternalistic monopoly of privileged.
The Greens have their excellent plan to shift the money into the right places too!
While accepting all the privileges that you rail against Adam. There is nothing more sad than seeing the undeserved vote themselves rich. Example? Try Len Brown
Most working families who receive ‘working for families’tax packages will still pay far more in taxes than they will ever receive under the package, and the claim that abounds that because of this tax package they effectively pay no tax, is a nonsense.
Well, it’ true that some people receive their entire tax back, but it’s not their fault that we’ve got this crazy system.
Because the minimum wage is too low, people on low incomes have to have their income topped up by the government. This top up comes from taxes taken primarily from the middle class.
So not only is the middle class having to make up for the taxes that the corporates aren’t paying but their tax money is then used to effectively subsidise those same corporates so that they don’t have to pay their low income employees a proper wage.
There is never a situation whereby anyone has to “make up for the taxes the corporates aren’t paying”.
Nobody is ‘stealing’ money off anyone. The government of the day work within, or just outside their income from year to year. If the income goes down, they will cut back on frivolous spending and targeted spending that benefits smaller minorities. But if their income goes up, look out! All sensible spending goes out the window, finance ministers turn soft and give in to self interested lobby groups pushing trendy causes (eg, the environment, public transport, dirty dairying), and set up elaborate schemes to buy the votes of influential minority groups offering lump sum payments of taxpayers money to nominated causes.
In short, the more money they can get, the more frivolous and grandiose the spending plans will be.
@MikeNZ:
Do you know why the IRD chase up all the little fellows at the bottom of the ladder for their $200 tax to pay bill, but choose not to bother about chasing up the billions of dollars in overdue tax to pay of the major corporations and wealthy individuals?
I reckon it’s because these dandies who head these private and govt corporations are themselves in the top income bracket, while making all the financial decisions – which almost always leave the man at the bottom of the ladder, now standing in a hole, while the corporate dandies find more money for themselves, and dig the hole deeper for the man at the bottom of the ladder!
Selfish bastards they are, and at the end of their days they will pay in the eternity of hell, and it will serve them right.
FJK and all of his cronies!!
Opinion.
What did you say your name was………? Mistery?
Oho ooh, I thought for a minute that it was Misery
… which means, of course, that the taxpayer is subsidising the bosses.
I think a lot of people are apt to forget: absent some kind of welfare state for the poor, there would have been a bloody revolution long ago.
Spot on !!
i.e change the definition of taxable income and pay less, than the poor. But critise the poor !!!
VERY clever, though CRUEL, of the wealthy elite and their Glove Puppets the Natz party
You sir, and incredibly stupid. You do realise you have provided absolutely no calculation on how you have come up with this figure? You have literally just made up a number and stated that is what John Key pays in tax.
To accurately calculate his tax, you would need a breakdown of the sources of personal income (most of which for John Key is in the form of shares and equity – which has absolutely nothing to do with the personal tax rate), and then based on different investments tax each investment accordingly. This article is literally completely wrong. I specialise in tax law, and can tell you in New Zealand, it is legally impossible for anyone to pay 2.8% tax. So you are wrong. It is literally legally impossible.
@Matt:
So are you one of these lawyers who helps the wealthy cronies to avoid their tax obligations?
Or are you a tax lawyer who works for the Serious Fraud Office and doesn’t actually do anything about bringing these rogues to justice for their tax evasion?
Opinion and belief.
Thats what I thought as well why he was adding in other sources of income like investments or whatever Keys has. Base it off his salary for prime minister & im sure he is paying his fair share. If his house increased by 1mil dollars ya cant just chuck that into the equation.
Great article Mr Minto, another area I believe needs to be looked is the Rates law, farmers I believe are still subsidised , compare the rates of a home owner with a section 1000SqM to a farm owner with a 1000 Hectares. Keep it up the good work Internet/MANA, just get this message out to the masses . Nice comment @CleanGreen
Interesting accusation, John Robinson. Do you know roughly how much money a farmer on 1000 hectares would pay in rates?
We live on a farm in South Africa (but I am a kiwi) and we also have our rates heavily discounted compared to those living within the town boundaries. The reason why is because we don’t get the same services. We don’t get water pumped directly to our house, our sewage isn’t pumped away for us, our electricity isn’t supplied straight to our house. We have to do all of this ourselves, we pump our water in pipes that we paid for from a neighboring farm, we have to pay for a truck to come and pump out our septic tanks which we paid to install. We can’t put our rubbish at our gate and expect someone to pick it ip for us. We pay $200 per month for a electrical source on our farm on top of our already heaftie power bill. If there is anything wrong with any of these, we need to pay for it to be fixed and maintained, we can’t just call the council and they will send someone around to fix it.
So next time ask yourself why? Why would the farmers in NZ have to pay less in rates? There is a reason, don’t jump to stupid conclusions without getting the facts.
Rural NZ is like that too – whether you have a farm or not. Less rates (but only slightly) because you have to install and maintain your own water and it’s source, sewerage/septic tank, electricity etc, and you have to subsidise the town roads which is included in the rates too.
They will find a way to keep you broke any way they can!
Capitalist morons!
FJK!
Opinion.
Totally agree that the tax system needs massive reform, but isn’t the NBR rich list a measure of net worth, not annual income? So John Key’s 5 million “increase in his wealth” isn’t necessarily all taxable income. What if his house is worth more because the property market is in a bubble – that doesn’t equate to “income” that he should pay more tax on. (unless if he sells it, then it’s a question of capital gain). It would be like saying to a poor student, “oh your rent has gone down by $20 a week so that’s a $1040 increase in annual income; you owe us more tax”. I’m totally opposed to the National government but this article is loaded and brings discredit to left wing politics.
Good points everybody. There are 2 major problems with teh NZ tax system:
1. The lowest paid decile lose around 8% more of their gross income to taxes of all types than the top decile.
2. No one is measuring the income substitution effect of capital gain. In NZ a person who inherits say $250K from granny can invest it in equities and expect a 7% return as a minimum which would provide an additional $17.5K. If they sell $10K of equities the capital sum is still protected by inflation and retains its value. This gives them $10K a year of tax free income – legally. This is why we have to have capital gains payable at the same rate you pay income tax at.
Personally, I love the way the Green Party are planning to operate our tax system – higher income higher tax. Lower income lower tax.
That sits well.
A bit like Robin Hood.
FJK!
opinion.
Robin Hood was a thief. Nothing more, nothing less.
Your example is flawed. The example you gave would attract resident withholding tax of no less than 17.5%. But if you used that $10k to put a down payment on a vacant section in a small town and leased it to a horse lover for grazing…..rent to contribute to the mortgage, capital gain to grow the asset which has the effect of increasing equity, sell the land in years to come to realise the capital gain after using the proceeds of the sale to pay back the original mortgage, put a down payment down on a house……..big things come from small beginnings. All made possible because of banks with money to lend and the lowest interest rates in history.
I didn’t know you had access to John Key’s tax records – that’s impressive.
This article is a joke. Very few people even earn 132k a year, let alone pay that much in tax.
He is more than carrying his weight in terms of tax.
I dont think thats the point. Minimum wage earner gets penalized for doing overtime and earning a little more than minimum by paying higher tax for extra money earned … but what he sacrifices is time . John key earns. Shit loads getting benefits that are way more than anyone else can imagine i.e travel allowances of 10,000 .ts a pay rise every year .. how about the rest of us who work overtime to try earn extra? .. get less than 1 percent payrise a year if that. Someone like John Key has no understanding of what the rest of the country feels like. I mean youd think he would treat lower income families better since his mom maid use of it when he was young its not fair. If everyone has to pay taxes like this he should too regardless of how much you earn what makes him so exceptional that he doesnt have to do the same as everyone else in the country?
Well Keys is running a nation not flipping burgers at a fast food shop . The tax rate is fair if you only earn 800.00 a week you are still in the middle bracket earn more pay a higher percentage pretty simple. Nothing wrong with the tax brackets.
except for the fact that 800k pa is in the top not the middle bracket of course
How do you know that Hamish?
FJK has probably got a favoured tax specialist lawyer doing all the dirty tax-dodging stuff for him.
Or maybe he just leaves all his tax stuff to his mate the Commissioner of IRD – who knows? Everything he does is such a big dirty secret.
Not to be trusted that awful excuse for a human being FJK. Not to be trusted at all.
Opinion and belief.
Joseph Stiglitz wrote: “there’s little debate over the basic fact of widening inequality. The debate is over its meaning. From the right, you sometimes hear the argument made that inequality is basically a good thing: as the rich increasingly benefit, so does everyone else. This argument is false: while the rich have been growing richer, most poeple (and not just those at the bottom) have been unable to maintain their standard of living, let alone to keep pace. A typical full-time male worker receives the same income today he did a third of a century ago.
From the left, meanwhile, the widening inequality often elicits an appeal for simple justice: why should so few have so much when so many have so little? It’s not hard to see why, in a market-driven age where justice itself is a commodity to be bought and sold, some would dismiss that argument as the stuff of pious sentiment.
Put sentiment aside. There are good reasons why plutocrats should care about inequality anyway—even if they’re thinking only about themselves. The rich do not exist in a vacuum. They need a functioning society around them to sustain their position. Widely unequal societies do not function efficiently and their economies are neither stable nor sustainable. The evidence from history and from around the modern world is unequivocal: there comes a point when inequality spirals into economic dysfunction for the whole society, and when it does, even the rich pay a steep price.”
Just ask the sycophant neo liberals if they would gladly trade places with the working poor and earn a minimum wage in exchange for all the extravagant lifestyles so many of them lead….
You will be met by a deafening silence or angry tirade about the altruistic values of thrift , ‘working hard’ ‘working smarter’ etc etc….
This neo liberal sycophantic govt has borrowed $300,000,000 every week over 6 years selling it to the public as ‘propping up the welfare state’…..and that is HOW they enabled having tax cuts for the wealthiest earners.
The tragic thing is so many non thinkers were sucked into it and happily use the ‘created poverty class ‘ as the example held up as to why this country is doing so poorly.
The ‘Rockstar economy’…..
But only for the super rich. From the friendly , caring people who were ‘BORN TO RULE’.
Now get back to work , you filthy peasants.
You calculations are fairly unsubstantiated.
The 5m increase in his wealth is not income per annum, but total net worth. This increase can happen simply due the impact of inflation, property values and dividends.
Having said that, I would agree he probably pays less tax % than the average worker due to trust and company asset tax being less than individual PAYE. But it would still be larger in Sum
The trust tax rate is flat lined at 33% which is the same as the highest individual income tax rate.
This is wrong.
The current income rate is below.
Income Tax rate
$0 – $14,000 10.5%
$14,001 – $48,000 17.5%
$48,001 – $70,000 30%
Over $70,000 33%.
How they added a random amount of GST into their salary tax is a bit confusing. They’re implying that the minimum wage worker is spending their entire salary on goods and services.
There is no way that John Key is only paying 2.8% in tax.
They said his GST he pays per year is only $21,400, which means that they’re guessing he only spends $142,000 a year, which $21,400 is 15% of.
But, if he apparently earned $5,000,000 a year, you really think that that is all he is spending?
He would spend far more than that in a year. Mortgages on houses. Holidays overseas. He supports his daughter studying in paris. he supports his son studying in NZ. His wife has all the time on her hands in the world, with all of his money. And we’re meant to believe that John Key is spending less than $142,000 a year? Come on.
Let’s at least use the same calculation for the Prime Minister as a minimum age worker, namely, that the entire salary is spent per year, and therefore 15% of that is GST.
So John Key’s entire yearly net worth is $5,000,000 in personal wealth, and $400,000 in salary. which equals $5,400,000, now lets use the same calculation that we used on the minimum wage worker by coming up with their GST tax of $4,100 to make it look more impressive than it really is. So John Key’s actual GST bill for the year will be $810,000, then plus is tax.
And the supposedly 2.8% doesn’t take into account John Key’s fringe benefit tax, or the fact that he donates 100% of $400,000 (his entire Prime Ministers Salary) to charity every year.
So since 2008 when he was elected. He has donated $2,400,000 voluntarily.
charity? what charity? is it tax deductible?His salary is paid by the taxpayer anyway which you fail to mention.
Please provide evidence of donation of salary to charity…!
If your debate is premised on ubsubstantiated information,then you are just wasting time.
Its a fair question given keys been caught out lying many times now and been economical with the truth to say the least. The failure to back up his public claims of left wing smear and lies is underscored by the complete lack of libel litigation. hello …. hello….?
Key /Nats policy has been over 6 years to borrow $300, 000,000 every week and sold to the public as a plan to ‘ prop up the welfare state’.
The reality is this : it was all this borrowing that has been used to enable tax cuts for the super rich.
And to be able to castigate the working poor as the reason .
Economic good management?… the biggest rort on the NZ taxpayer ever and masked as designated for welfare.
Welfare for the super rich corporate bludgers.
Bludgers that will happily see successive generations in debt they can never pay back.
So to all you sycophantic neo liberal lovers of Key – get with the program.
Chris,
You make some good points but the idea that JK spends his entire income on goods that attract GST is ludicrous. Overseas holidays and his daughter’s education would mostly be paid overseas, not attracting GST (you seem to know the rates but won’t extend your knowledge to reality around GST). Fair enough you are just trying to make a comparison on equal terms, but it is not possible and not reality,think about it, what wall street schooled supposedly astute investment banker/ trader is going to blow around $15,000 a day? (or worse still, as you suggest, let his wife, with “nothing better to do”, blow it)… not happening. It is a FACT that the poor spend a much greater proportion of their income on goods that incur GST, while the rich, sure they spend more on GST items (as a whole) but proportionally, much less, the rest is spent overseas, because they can, or they invest it. They didn’t get or stay rich by spending their income. Furthermore, if they are smart, they are buying a lot of their larger purchases through companies and claiming back the GST.
So, no, let’s not use the same calculation, thanks anyway.
Now, as for why the rich pay more, and yes he does, in a total annual amount, a lot more… in fact a low income couple with children might be net tax earners, rather than payers (FYI, working for families was brought in to address the “regressive” nature of GST, i.e. that the burden falls more heavily on the poor, this is science you know, actual studies and research)…. so, why is this not only OK, but imperative?
First, how do the rich get rich? They get rich from operating businesses or investments, or by doing professions that other people can’t do… all of these rely on their being people who are not rich (to do the actual work, to be the customers, to build the roads etc etc etc) to put it simply, without poor people, no rich people.
That isn’t really particularly relevant thought when you think what NZ’s tax take would be like without the several billion that the richest 2% of earners contributed. You simply can’t run a government/ society by taxing everyone the same, the poorest simply do not earn enough. Even then, only half of the tax take is from income tax, GST makes up another 1/4.
That brings me to the most important point (assuming you don’t care about equity, which would be the actual most important reason, because equal rights are not the same thing as equality and people should care that all of their neighbours are happy and healthy), the reason the rich pay more tax is because they have more to gain from doing so, or specifically, more to loose…. taxes pay for infrastructure, banking and investment regulation, law, police, armies, all the things that make an economy possible, that make starting a business, buying investment property etc, a safe bet. And who does better out of a regulated and healthy economy? and that includes making sure that minimum wage workers are (just adequately) educated, fed, healthy and have their children looked after so they can work all day to make the rich richer and then get to go to their graves with little more than the knowledge that their children have been born into the same horrible fate… yep, the rich, the ones with most to protect HAVE to pay more, if they don’t… pitchforks.
All anyone has to do with all these pontificating fanboys of neo liberalism is ask one pertinent question …..
‘ Would you gladly trade places with a person / family on a low income in exchange for all your wealth , perks, investments etc…and if not ….. WHY NOT ???
The silence from them would be deafening.
End of case.
You forgot to factor in the tax rebate on his donations @33%.
And you forgot to factor in all the perks and free stuff!
All morons are Capitalist National voters!
FJK and all his cronies!!
Opinion and belief.
While it highlights the need to tax wealth rather than income, the connection between the math and the conclusion are a bit tenuous at best (and I’m no fan of Key).
Key pays about 30% tax on his income (ie: that which he earns from doing his job) vs about 15% from a low wage earner. It’s not really practical to assess GST as part of the tax an individual pays as we don’t know the spending profiles of each, likewise is the inclusion of a $5m wealth increase as income is a little far fetched as this is for the most part going to be an unrealised gain on investments rather than additional cash in the bank.
I still agree with the Mana policies stated, but I think a better analysis is called for in these situations.
…” as we don’t know the spending profiles of each…”
We do know that the spending profiles of the poor, (and now average Kiwi,) is a big fat ZILCH!
opinion.
Well, the poor do spend, pretty much all they have, it’s just a question of how much goes on repayments/rent which won’t have GST on them, and how much is actual consumer purchases of food etc that does have GST on it.
If we include GST in the equation, Key pays 35% tax, vs 28% for the low income worker. Of course, the rich tend to spend more than the poor, but as GST is 15% including it in the equation is just a mechanism to make the rich/poor tax as a percentage of income thing look closer.
In fact, if we take a closer look at the details, we can see there are a few things off with John’s calculations in the post.
For starters, if our minimum wage worker earns $29640 and pays $4207 in income tax, that leaves $25433 net income. 15% of GST on that is $3814.95 rather than the suggested $4149.60, meaning they’re paying 27.06% of their income as tax.
Meanwhile, Key’s $428000 less $132160 is $295840, 15% of which is $44376, for a total of $176536. This gives a 41.25% value for him.
Of course, this is assuming that each person spends all of their income on things which can have GST applied on them, but it does seem like the original post is intentionally skewing numbers in order to prove a point.
I’ll point out that I agree with the ultimate aim of the post, just not the methods.
But he’s looking like chucking low wage earners a cut if he cuts my tax by about 110% It should equal what he gave the top earners in dollar value.
Borrowing $300 000,000 every week for 6 years and justifying it as ‘propping up the welfare state’ is how Key /Nats sold the idea in order to enable giving tax cuts to the super rich.
He’s a fraud.
Get with the program , all you neo liberal sycophants .
Sorry but your income tax calculations for JK are too simplistic and actually completely wrong. Yes he will have PAYE deducted from his PM salary, that I agree with, regardless of whether he then donates his net pay to charity.
A quick search of the IRD website would reveal to you that given his investments are so large he will be caught under the foreign investment fund and financial arrangement rules (the lowest threshold being $50,000). These rules are basically a capital gains tax which track both gains in the value of the investments and foreign exchange movements. Yes if he has anything held in a company it is taxed at 28% rather than 33% but if he wanted to distribute funds to himself from either a company or a trust the personal tax rates kick in through dividend or trust beneficiary income rules. You also seem to forget that he was taxed (maybe not in NZ but still taxed) on all of his earnings which allowed him to fund the purchase of his investments. It’s completely conceivable that he could have paid (through his invesent structure) tax on the full gain this year if it was purely driven by investment/FX gains.
All you’ve done is speculate without the full facts to support your story (I have done this too to offer you a different perspective).
Yet another poorly written attack from the left. Unfortunately these sort of attacks always rely on someone not having the smarts to see through the smokescreen and look at the facts. Apples are never compared with apples in these poorly thought out leftist attacks. John Key’s income is clearly not $5mil+. His income from Salary is $428K as stated, the $5mil is from unrealised paper gains in value (not income!).
If someone’s house has gone up in value $100K in 3 years, that’s not income and if it was treated as such as these morons seem to want, there would be mortgagee sales all over the country and homeownership would be a pipe dream for all except the mega-wealthy as no-one would be able to afford these extra taxes. They would worsen the situation they give lip service to trying to help. Basic 5th form economics seems to escape these people.
The link with GST is tenuous at best. This is full of holes and basically designed to whip up anger and jealousy among those who can’t see through the smoke and mirrors that are created by these sort of blogs.
..”Basic 5th form economics seems to escape these people..”
Wow. An ostrich and a moron in the same brain.
Basic human decency seems to have escaped your brain Cam.
Obviously an over-privileged and over-educated institutionalised National supporter moron!
How incredibly boring!
FJK and all his cronies!!
Opinion.
If you want a really radical idea for progressive taxation, consider Land Value Tax (LVT) instead of income tax. That is to say, we could abolish income tax, and replace it with LVT.
http://en.wikipedia.org/wiki/Land_value_tax
“A land value tax (or site valuation tax) is a levy on the unimproved value of land only. It is an ad valorem tax on land that disregards the value of buildings, personal property and other improvements. A land value tax (LVT) is different from other property taxes, which are taxes on the whole value of real estate: the combination of land, buildings, and improvements to the site.”
“Although the economic efficiency of a land value tax has been established knowledge since Adam Smith,[1] it was perhaps most famously promoted by Henry George. In his best selling work Progress and Poverty (1879), George argued that when the site or location value of land was improved by public works, its economic rent was the most logical source of public revenue.[2] A land value tax is also a progressive tax, in that it would be paid primarily by the wealthy, and would reduce economic inequality.[3] The philosophy that land rents extracted from nature should be captured by society and used to replace taxes is often now known as Georgism.”
Let me just leave this here as a reminder about the relative value of contributions.
http://en.m.wikipedia.org/wiki/Lesson_of_the_widow's_mite
Sycophantic neo liberals hate the Biblical examples….hard to argue against someone who is infinitely bigger and runs an even bigger economy than they ever could ….. 🙂
The thing that annoys me is the fact that our PM John Keys, donates ALL of his PM’s Salary every year!!!
Oh he is such a Bad man!!!
Get real people, sorry but if I need Financial Advice I don’t go ask my sparky, just as when my heart is feeling a bit funny I don’t go ask my Mechanic if I am having a heart attack. I mean FFS people, he is Successful before he was PM, I like successful people leading my country, not people that are no more that life long MP’s that have never worked a day in there life in the real world!!!
Oh yes…money trading….which helped to contribute even more to our dollar being traded and upping interest rates…
Sure must be a hard life sitting in that office dreaming of the day when after knowingly ripping off a country…he gets to run it even further into the ground…
‘Oh, – to sail the seven seas….a pirates life for me ‘ !!! ….
“The thing that annoys me is the fact that our PM John Keys, donates ALL of his PM’s Salary every year!!!”
he doesnt – its a myth
Wow, Just wow. You don’t pay tax on capital gains in New Zealand.
I also found the maths a little misleading, however it doesn’t really detract from the message that our current tax system is stacked against the poor and lower middle class and benefits the high earners.
Joseph Stiglitz again: “We do have a divided society, but the division is not, between freeloaders and the rest. It is between those who see NZ as a community and recognise that the only way to achieve sustained prosperity’s to have share prosperity, and those who don’t; between those who have some sympathy for those who are less fortunate, and those who don’t.
Many of the persons at the bottom – who have become so dependent on government benefits – are there partly because government has failed in one way or the other. It has failed to provide them with the skills that would make them productive, so they could earn an adequate living. It has failed to stop banks from taking advantage of them through predatory lending and abusive credit card practices. And it has failed to manage the overall economy in a way that sustains full employment.
Those at the top have tried to sell the idea that discussions about inequality are just about redistribution, taking from some to give to other, taking from the job creators to give to freeloaders. But it’s not. Part of NZ ’s problem today is that too many of those at the top don’t want to contribute their fair share to the public goods that are necessary if our society, and our economy are going to function. While there may be some disagreement about what fair means, when those at the top part a smaller percentage of their income that those with much less income, it is clearly unfair.
Not only doesn’t the money given to the top not necessarily for into job creation and innovation; some of it goes into distorting our politics…What we have seen quite clearly is that a common use of wealth is to gain advanced in rent seeking, perpetuating inequalities through the political process. The same old myth that we should celebrate the wealth of those at the top because we all benefit from it has been used to justify the maintenance of low taxes on capital gains. But most capital gains accrue not from job creation, but from one form of speculation or another. Some of this speculation is destabilising and played a role in the economic crisis that cost so many jobs.”
This from a Direct Democracy leaflet from the 2005 elections
As at 2005 ish …
It cost $54 billion to run NZinc
There was $35.4 billion in transactions through the banking system EVERY WORKING DAY
A 1% transaction tax would give the govt $92.04 billion per year
No other taxes needed NO tax department needed No tax lawyers
Every night the money would just appear in the government’s bank account.
No more bullshit at election time.
But no the bankers wouldn’t like it and our ‘leaders’ would not like to lose the carrot they dangle to the wage slaves ………………………………..
Wow. That works! Like that DirectDemocracy.
Yes, of course the bankers wouldn’t like it – and you have to ask yourself why they wouldn’t like that.
Wouldn’t everything be so simple then.
However we would have to make sure that our govt were honest folk. Not like this bunch we’ve got right now.
So, lets hurry up and chuck out FJK, and get some truth and honesty, and reality happening in our govt.
Go the people with life skills!!
FJK!!
Opinion.
So the PM pays 36% income tax vs Minimum wage paying 28%. From the income he doesn’t give away in tax he then invests and increases his wealth. What a terrible country we live in huh? Love the statement that he ‘just’ pays $130,000 in tax!
Id have to agree…such a terrible country whereby the poor pay a disproportionate amount in tax as juxtaposed with the super rich…
And dont forget the $300,000,000 borrowed every week with the lie it was to ‘prop up the welfare state’…..when in reality it is the method used to enable tax cuts for the super rich.
Yet another example of how neo liberals ,cheat , lie and defraud a country in their wreckless psychopathic greed for power and wealth.
Fail.
The article misses tax paid by his trusts.
The article misses company tax paid by his shareholdings.
The article misses RWT paid on his dividends.
He also won’t receive multiple benefits like WFF rrom the government.
The debate around CGT and wealth distribution is moot, but this whole article’s premise is flawed.
A) the guy donates the money he makes as PM, all of it!
B) the money he made before standing as PM was done on own merit.
Grow up!!!
He is still doing more than you
a) thats a myth – there is no evidence to supprot such a claim
b) he worked for an existing business – pretty sure they would have some impact on his ability to get rich
Love to know how John Minto works out the GST amounts considering you only pay GST on what you spend. On top of that as reported all of JK’s PM salary is given to charity and if you build wealth through asset accumulation in NZ you don’t pay tax because we don’t have capital gains tax. So it’s a stupid argument unless your prepared to do something about it. If you don’t like the system then change it. ….whinging but doing nothing is a waste of time.
John Key worked in the industry which gave the world the GFC.
This was caused by greedy, unscrupulous parasites ( like john key ), who never actually produced anything but found ways to exploit our artificial man made ‘financial systems’ and suck out obscene amounts of money for themselves…….. they were stealing from us.
The industry John Key worked in used shonkey figures to show 1+1 =3, which is why the whole house of cards came crashing down…… but not before greedy types like John key had sucked their money out.
Greed and lack of ethics would characterize the industry Key came from.
Key cares about money before all else and it is what he judges people by.
I’d have greedy fucks like him paying 80% tax and restore the social contracts which greedy fucks like him have reneged on paying.
Here Here Reason!!
Well said.
Dear John Minto,
I have never commented on anything like this sort of article before but feel compelled to do so now. I clicked the link for your article thinking this could be interesting as I am an undecided voter. What I have found is a ridiculous set of “calculations” meant to trick people into believing your point of view.
Please DO NOT misinterpret what I am saying, I am not arguing whether Key should pay more or less tax or the morals of either side.
What I am arguing, is that summarising John Key’s tax calculation to a 4 line paragraph is misleading. You say his wealth has increased 5mil this year, that includes the value of all his assets. So I take it that every year when you pay tax you include the increased value of your house as income…?
Come on mate, your are better than this.
I find that the comment:- “pays peanuts” a little strange. I would be quite happy to earn what John Key pays in tax:- $153,560! I agree that it seems a little unfair that the %age he pays is much lower. However if we put aside his capital gains of 5M & just repeat the calculation on his PM income the %age becomes 36% (including his estimated GST). Personally I think that it is actually unfair to include his capital gains. There are 2 ways to gain capital:- spend less than you earn, take calculated risks that on average payoff. The first requires self discipline & the 2nd requires self belief in your own judgement(+ a good brain & education). The first should certainly be rewarded(by a capital gain), the 2nd is more debatable. To some extent the 2nd quality is inherited from/provided by your parents. In a perfect & fair world I guess that we would all get the same IQ & education. However because our ancestors all prospered differently (mainly due to their life choices/self discipline etc.) we all receive a different inheritance. If we extract more tax from those that received a better inheritance then we are actually penalizing them for something that they had no choice in. This also is not fair, so there U have it.
My personal income is well within in the bottom 25% on the overall scale of NZ incomes. But as I have a house I call my own, a car & enough food every day I count myself as being very rich compared to most people in the world
One last comment, I have no sympathy for the those that exploit those less fortunate than themselves (either by paying them peanuts or by ‘stealing’ a exorbitant proportion of the wages as expenses)
Indeed…in fact, …if many of these unscrupulous corporate bludgers were to pay back in real terms the amount of wages they have stolen from those on low incomes (created by them and their lobbyists in the first place ) over the last 30 years in this country…many of them would be near going bust.
Corporate bludgers being subsidized by working people in tandem with neo liberal political lobbyists such as the Business Roundtable .
For far too long they have been stealing , bludging and cheating the people of this country.
I think you might find that John Key donates his salary to charity.
Well said. Yes he does. How may of those minimum wage earners donate 100% of their salary to charity? Let’s be thankful he lives in New Zealand and pays all that tax every year to us! He could easily go and live over seas in a tax haven and pay even less. If we look at what the man has achieved he contributes a lot to our country, and if he chose to be doing a minimum wage job and earning minimum wage salary then yes he too would only be paying about $4200 a year to the smooth running of this country, even though it would be 28% of his wage. Fact is he chose to work extremely hard when he was young and got himself into an educated position to be able to pay a low % of tax. There is NOTHING stopping min wage earners starting their own company and paying even less tax. Let’s be thankful he is contributing so much to us in tax and charitable donations, and if we have a problem with how much tax we are paying, let it be a motivation to be like our PM and educate ourselves into figuring out a way to pay less tax 🙂
john key DOES NOT GIVE HIS SALARY TO CHARITY!
for gods sake – its a myth. stop being so foolish
where is your proof he takes it?
Here we go the same garbage, he worked extremely hard. Tell that to the cleaners and security guards, it is clearly all their fault in your view. You’re another one that seems to think we are all born with the same brains and ability. Key made his money by speculative trading, disgusting really, does nothing for anyone else and screws sum. We need a financial transaction tax amongst other taxes.
I will reiterate the same question :
If you were to ask these pontificating sycophants of neo liberalism if they would gladly trade places with a family /individual on a low income , ….and if not …..WHY NOT ???
You will then be met with a blank stare and a deafening silence.
I rest my case.
A) an increase in wealth doesn’t necessarily result in a tax bill in NZ as there is no capital gains tax. This is the same rule for everyone.
B) even if there was a capital gain tax, generally no tax is payable until you realise the gain (eg you sell your house)
C) John Key donates his PM salary to charity.
D) You idiots.
“C) John Key donates his PM salary to charity.”
will one of you lot, just one, provide any shred of evidence that he does this
The simple truth of the matter is that the tax system is archayic and from an elitist outdated era. People with wealth a very good at hiding it and people on the line have no choice but to pay. Tax doesn’t need to be complicated, everyone should be paying the same percentage. It is the fairest way to chop it. If everyone was paying the same percentage, perhaps that percentage could even be lowered and the tax free threshold raised.
There should be tax breaks for farmers etc because they are the back bone of the food industry and it should be easier for them to supply the entire country and feed themselves. Churches should be paying tax on everything without exception because they are multimillion dollar corporations.
If people are going to harp on about the dollar amount instead of the percentage then we will never get anywhere. I would have to mention that it would be those who benefit from the current system that would be fiercely protecting it. Millions live hand to mouth in order to fund the country, while those who can afford it, don’t have to.
Everyone should be paying the same percentage. The tax free threshold should be $15k. That is the fairest way. It’s time to give lower income a chance to live, not just survive.
Im all for fair comparisons but John your post ill informed and completely misconceived. The facts are these. The 5 million is already taxed at the company tax rate of 28%. So unless your proposing to tax that income twice your misinforming people. These are the corrected figures: He earnt $7,372,444 before tax and paid (by your calculations and including the tax he has ALREADY paid on the 5 million. He also paid $2,098,004 in tax equating to 28.5% of his total income.
I also need to add that everyone zooming in on the fact that the PM donates his salary to charity needs to stop. The PM was used as a recognisable example of the top 1%. The point, which everyone is so conveniently ignoring is that the top bracket do not pay their weight in tax. Not only do they not pay their weight, the can hide their wealth in many different ways to avoid paying tax on it. If the lower bracket could hide their money and dodge tax they’d be called bludgers and users. The system is geared to empower the top bracket. The rich stay rich and the poor stay poor. Working harder is easier if you have an education but some of the most intelligent people are still struggling to feed their families, so that ‘argument’ doesn’t fly with me either. Sometimes life throws you one curve ball after the other so our system needs to be fairer in such a way that those who can’t, can still survive. Disability, old age. We need to take care of each other and stop being so money grubby.
This is of course true of pretty much anyone earning more than a 6-figure income thanks to accounting loopholes in our tax system.
Blame the accountants.
Blame the government that doesn’t see that the tax loop holes. And blame the government who love telling the public that they have recovered thousands from beneficiaries who shouldn’t have been getting a benefit but don’t fund the serious fraud office and other department to get to all the white collar crime that could bring in many millions more.
What a load af absolute tripe! So Mana will tax ANY capital gains at the same rate as income??? Between 2012 and 2013 John Key’s net wealth DROPPED by $5,000,000 according to the NBR Rich List. If Mana are serous about this extortionate Capital Gains Tax then surely if you capital assets depreciate you should get a tax credit????
^ Sadly , there’s always a bigger, meaner neo liberal above you that will happily ingratiate themselves to you then stab you in the back once you’ve fulfilled their purposes for them…
Please observe NZ history over the last 30 years.
In the meantime …they will act as you’re best friend .
Total slime.
Morgan Williams – Short answer, no.
Now don’t get carried away about Key giving away his salary, this is in fact what he said:
National Party leader John Key has vowed to donate “a good part” of his government pay to charity should he be New Zealand’s next Prime Minister.
Key, named in this year’s Rich List as worth $50 million, said he was planning to give away a chunk of the $361,000 PM’s salary if his party won the upcoming election.
The self-made multi-millionaire said he already donated money from the $224,500 a year he earned as opposition leader.
“I already donate a good part of the pay I receive as Leader of the Opposition to charities and other good causes. I will continue that practice should I become Prime Minister,” Key, above, told Sunday News.
Key wouldn’t elaborate on what charities he supported, nor how large a portion of his salary he donated. He said his “personal decision” was not something he wanted publicised.
To add to that I am sure I and my partner give away more proportionally (given our incomes and assets) than Key, this is really what you should be comparing instead of going ‘jolly hockey sticks’ isn’t the PM wonderful he gives away his PM’s salary. Giving away what he does makes absolutely NO difference to his living standards whatever.
Now someone in there says Key’s wealth has gone down, the 2014 NBR rich list quite clearly states his wealth has increased by $5m.
Retirement homes for over – the – hill neo liberals and other globalist ‘BORN TO RULE ‘ colleagues.
Usually in the form of large swathes of a nations land mass.
and if he did actually give any part of his salary away the nats would be using it as part of the PR machine
9 houses …….. Says No to capital gains taxes
Made his money without producing any good or service.
Lives a life style which could be described as that of a greedy planet fucker.
Greed is not good ………….. In fact greed can not co-exist with justice, fairness or doing the right thing.
A slippery dishonest two faced Wall Street Banker type does not make a good prime minister.
And its even worse his chief of staff is from the booze industry.
Because the booze industry dodges the fair amount of (excise) tax that it should be paying too.
How is someone inheriting money from a family member detrimenting everyone else? It’s their money to pass on, in many cases, this is hard earned money. Don’t bs people into thinking people who work hard, strive to succeed and save hard are tyrants. Plus, the capital gains taxed at a persons tax rate is farcical, too many loopholes here to mention. Manas tax policies are rubbish policies.
3 real world cases:
My brother is 34, he worked at a pizza joint while he was at Canterbury uni, saved up, went to the USA to study. Completed a MBA, whilst working at a coffee shop there, and still has a massive student debt and loan from our old man. He works for a mobile phone company in Australia, earns a very good wage, but is far from rich.
My cousin is also 34 has never been employed for longer than 1 month. Smokes weed heavily, is on the unemployment benefit, and is a heavy computer gamer.
I am lucky enough to be my own boss. I employ 18 staff, all of whom I am grateful to give a living. As you could imagine, some are good workers, some are appreciative, some are slack and some are unappreciative. I have a flat rate of $15 per hour, $18 for managers, which I understand is low. I recently advertised a position and had almost 100 people apply. My business is on the cusp, I don’t make outlandish profits, my pay is $300 per week and I don’t take drawings. The risk I am taking is just over $150,000 and the humiliation of bankruptcy.
Beautiful house and pool. I am inspired to work harder (smarter). Do you have a higher resolution version so that I can see what watch he is wearing? Thanks for posting such an aspirational photo. By the way, he did pay $132k in PAYE. That is a hell of a lot and feeds several families.
I just can’t understand the sense of entitlement and envy so many people on this thread are showing.
To say Key only pays 2.8% tax is a very crude and factually incorrect statement.
I don’t doubt he could pay more tax, without harming his standard of living, but why do so many people want to attack a guy who has made his own money in his lifetime – and paid tax on it as he has worked?
Instead of being jealous, why not get off your backside and improve your own circumstances!
And before people start slating me for attacking the poor, I didn’t come from a wealthy family and went to a low decile school. I worked from the age of about 12-13 delivering the newspapers, then cleaning at a pet food store and finally worked at McD’s 25+ hrs a week to pay my way through Uni, as well as taking out about a $20k debt on my student loan, which I paid off in full about 7 years after graduating.
I was eligible for government assistance while at Uni, as my parents earnings were below the thresholds at that time, but I chose to work and rack up a student loan, rather than take money for nothing from the tax payer!
I now live overseas, have recently started up my own company and have just employed my first employee – paying a lot more than min wage by the way!
So I find it so frustrating that there are so many people wanting to knock down those who have drive, ambition and make a success of their lives. I certainly don’t begrudge Key any of his money and think the worst thing a country can do is start over taxing successful people, it’s a sure fire way to send people off shore or have them use loopholes to avoid taxation altogether!
And how did he come by his millions. Oh yes; trading Forex at a time when the market was rigged to favour the dealers? (Events now being investigated by the Fraud Squad. And who was running the desk – Merrill Lynch – that handled 23% of the entire Forex trade in London.) You guessed it – J. Key.
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