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Monday, August 29, 2005

Tax cuts vs middle-class family benefits

The Independent interviews three top business people all rooting for National's tax cuts. Three points from the Chairman of PricewaterhouseCoopers:
  1. "It [Labour's package] puts a huge number of people onto the benefit system and, as a result of that, puts some very high tax rates at the margins," he says.
  2. His second concern is Labour's "sharply progressive tax rates." For example, he says a family with two children would pay $1,420 in tax on an annual income of $45,000 but $26,000 on $90,000.
  3. His third concern is the inequity of Labour's proposals. Currently 11% of people pay 50% of all personal tax paid and 3% account for 25%. Few of those people will benefit from Working for Families, he says.
I.e. - Labour's plan discourages parents from moving to higher paying jobs.

And Keith Ng explains Labour's new marginal tax rates:
What Labour has done there is really not only giving extra cash-in-the-hand to households with children, but they've also significantly raised the tax rate that will be imposed on the next dollar that they earn. Two effects of the family package: 1) It would encourage breeding. [laughs] 2) It would discourage work.

Posted by Antarctic Lemur | 8/29/2005 02:55:00 PM