Labour / NZ First Government

[Zaphod]

Geez a 39% tax rate

Yes but it's only for the top 2% of income earners, so stuff them, that's the attitude we should have right?

[Zaphod]

Pretty much is.
Sometimes they have to be forced to do the right thing. They have never explained why we need to pay more than Aussie or the UK.
We have a high take-up of eftpos in NZ.

We are also seeing vertical integration whereby a company such as Verifone that provides terminals, now also owns the processing network along with various alternative payment gateways.

In terms of what we pay, part of these fees is used to fund the relatively generous loyalty schemes. These companies take higher fees from us to give them back to us as a so-called free loyalty rewards.

[dobby41]

Geez a 39% tax rate

at $180k+
I'll pay it without trying to hide my income.

[Balance]

Yes but it's only for the top 2% of income earners, so stuff them, that's the attitude we should have right?

The ‘4 legs good, 2 legs better’ will be lapping it up without realising that the 39% threshold will progressively move down - Increasing taxes is what Labour has always been about.

[Zaphod]

The ‘4 legs good, 2 legs better’ will be lapping it up without realising that the 39% threshold will progressively move down - Increasing taxes is what Labour has always been about.

Yes, it'll be a very popular policy along with another employed-paid public holiday.

Bracket creep definitely needs to be addressed too. We now have a group of people who are ostensibly poorly paid, in the top tax bracket - teachers. That won't be touched this electoral term though, as no doubt we need every cent to pay back the massive debit incurred as part of the response to the pandemic. The 20's are going to be a lot of fun!

[fungus pudding]

at $180k+
I'll pay it without trying to hide my income.

6% increase on marginal rates levied at one sector of earners only seems awfully harsh. The only 'justification' we're likely to hear from Labour will be the usual 'they can afford it'.

[Rep]

Any bean-counters here to explain what will happen to PIE tax with the 39% rate on income tax? If it remains at the current company tax rate of 28% it should give a lift to LIPTs, and other PIES.

The top PIR rate of 28% has a tax arbitrage wedge against the top marginal income tax rate of 33% of 5% as PIE income taxed at the PIR is generally a final tax and therefore so long as you use the correct PIR you don't have to include the PIE taxable income in your tax return. It's generally accepted that wedge is partly there to encourage savings in the funds sector potentially for retirement savings.

The prescribed investor rate for a person who is an investor in a multi-rate PIE is set out in Schedule 6 of the Income Tax Act 2007 and the 28% is the default rate. The other rates 10.5% and 17.5% apply if in either of the past 2 income years a taxpayer had earned taxable income below a threshold or their taxable income and PIE income was below a threshold.

http://legislation.govt.nz/act/publi...tml#DLM2918738

In the event that the top marginal tax rate would increase to 39% then the government could do nothing to Schedule 6 AND create a larger wedge between the 28% Top PIR and the 39% marginal tax rate but that could reduce the income tax that they hope to collect from the rate hike - but in IMHO an 11% arbitrage wedge is sufficiently large that a new PIR could be specified say at 34% (keeping the 5% wedge) where taxable income and attributed PIE income was over the $180,000 threshold in the past two years. It would also be a windfall if that 34% is the default unless an investor selects their correct and lower PIR.

In terms of paying the marginal rate - given the data I've seen on the distribution of taxable income and the somewhat uneven concentration of the number of taxpayers who have taxable income just below the $70,000 top rate bracket tier then I think it's human nature that we will see taxpayers legally arranging their affairs to reduce their taxable income below that proposed $180,000 tier.

[Balance]

6% increase on marginal rates levied at one sector of earners only seems awfully harsh. The only 'justification' we're likely to hear from Labour will be the usual 'they can afford it'.

Yup - the 'rich pricks' can bloody well pay for the $12m for the Green School and $56m for Pike River non-Recovery but to name 2.

[Zaphod]

In terms of paying the marginal rate - given the data I've seen on the distribution of taxable income and the somewhat uneven concentration of the number of taxpayers who have taxable income just below the $70,000 top rate bracket tier then I think it's human nature that we will see taxpayers legally arranging their affairs to reduce their taxable income below that proposed $180,000 tier.

Robertson asserted that it would raise "up to $500m a year". I suspect that the headline figure is well in excess of what will actually be raised, once taxpayers naturally and logically rearrange their affairs to reduce liability. It's a great sounding policy for many, but like applying GST to all imports, it's unlikely to have the desired effect.

[fungus pudding]

The top PIR rate of 28% has a tax arbitrage wedge against the top marginal income tax rate of 33% of 5% as PIE income taxed at the PIR is generally a final tax and therefore so long as you use the correct PIR you don't have to include the PIE taxable income in your tax return. It's generally accepted that wedge is partly there to encourage savings in the funds sector potentially for retirement savings.

The prescribed investor rate for a person who is an investor in a multi-rate PIE is set out in Schedule 6 of the Income Tax Act 2007 and the 28% is the default rate. The other rates 10.5% and 17.5% apply if in either of the past 2 income years a taxpayer had earned taxable income below a threshold or their taxable income and PIE income was below a threshold.

http://legislation.govt.nz/act/publi...tml#DLM2918738

In the event that the top marginal tax rate would increase to 39% then the government could do nothing to Schedule 6 AND create a larger wedge between the 28% Top PIR and the 39% marginal tax rate but that could reduce the income tax that they hope to collect from the rate hike - but in IMHO an 11% arbitrage wedge is sufficiently large that a new PIR could be specified say at 34% (keeping the 5% wedge) where taxable income and attributed PIE income was over the $180,000 threshold in the past two years. It would also be a windfall if that 34% is the default unless an investor selects their correct and lower PIR.

In terms of paying the marginal rate - given the data I've seen on the distribution of taxable income and the somewhat uneven concentration of the number of taxpayers who have taxable income just below the $70,000 top rate bracket tier then I think it's human nature that we will see taxpayers legally arranging their affairs to reduce their taxable income below that proposed $180,000 tier.

Yes. I get all that. But they have clarified there is no change to company tax, making PIE income all that much more appealing. Robertson was emphatic that there would be no extra taxes in this term, so I doubt they will tamper with the PIR, and he strikes me as an honest politician - a man of his word.