Saturday, June 07, 2008

Who benefits from United Future's tax proposals?

United Future is holding its annual conference this weekend, and have used the opportunity to enter the tax-cut bidding war, with a program costing $4.5 billion a year (a staggering figure equal to the entire cost of primary and secondary schools, or the whole law and order plus defence budgets [source]). So, who benefits? Who do you think?

(Methodology: Total cost calculated from Treasury's 2008 detailed model data; percentage of taxpayers taken from Who pays tax... and how much?, with some kludging from the model data around the 38K and 12K limits. Benefits to each group were calculated from the detailed model and the annual benefit of lower changes; the benefit to the final group was calculated by subtraction. Note that this includes no information on the effects of income splitting).

While it doesn't appear as grossly inequitable as the BRT's proposal, that's because it kludges an extra $2.6 billion a year of lower-rate cuts onto it in an effort to appear to not be pandering solely to the rich. And in fact the rich get even more in the hand from United Future, to the tune of an extra half billion a year. In the end, more than half the benefit flows to the top 15% of the population, and over a third to the top 5%. Meanwhile, the middle classes - the people Dunne claims to represent - get shortchanged, while the poor (who Dunne as a Catholic claims to be interested in) get nothing. And this, apparently, is what passes in Peter Dunne's mind for "moderate centrism".