National has finally released its tax-cut policy. It would massively flatten the tax-scale, extending the 15% rate up to $12,500, a 19% rate up until $50,000, and the 33% rate to $100,000, but retaining the 39% top rate for income over that level. I've done some quick and dirty number crunching, and the weekly amount people would benefit by is shown below:
(Interestingly, my numbers differ from those given by National's calculator,
which both rounds upward and seems to overstate the benefits to those on lower incomes. I don't think I've missed anything, but if I have, I'm happy to update the figures and graph, but given that this is about the location of threshholds, I don't think it will affect the significant points below in the slightest)
The policy would deliver next to nothing to anyone earning under $38,000, and of course the big gains would go to those on incomes of over $60,000. By way of comparison, according to the latest Household Economic Survey, the lower bounds for the top three deciles of personal income earners are $35,300, $43,300 and $59,200. In other words, the benefits will flow to the top 25% of income earners, rather than the bulk of "hard-working New Zealanders" that Brash likes to talk about. Just as they did in the 80's and 90's.
And the cost of this welfare for the rich? Around $10 billion over three years. That's about the cost of our entire health system for a year, and there is simply no way National can maintain public services at their present levels, spend more on roads and prisons as they have promised to do, and slash taxes in this way. Well, not unless they intend to create another strategic deficit to "justify" radical spending cuts again.
Update: Tweaked spreadsheet and graph; I was including the 15% low-income rebate. As predicted, it didn't make any difference to the core points above - and in fact, the number of those who would substantially benefit is lower than I thought. According to Treasury, those earning over $60,000 will make up only 11% of all taxpayers in 2006. And they're the ones who will be benefitting by thousands of dollars a year. According to the table on Public Address, national's plan would hand those on $100,000 and over a $5000 a year tax cut. Nice if you're in that 3%, I guess...