Russian Retreat
Any of us that have advocated reform of child support are well aware that the methodology of the tax is to attack the isolated and vulnerable recently separated father. The ideology of the tax is if I have your child, you have my income. The essence of father is reduced to a puerile and degrading farce of the state family. Increasing invasive mechanisms will not only garnish wages, collect money from bank accounts, but will also divert financial transactions in the name of expediency for the child. The crippling financial effect not only undermines the individual, but a society’s future potential. If you don’t leave the country you probably won’t aspire to much more than Joe 6 pack. In essence the state has traded the future potential of the individual for cash up front, but here’s the mockery: others can’t see the same game being played with them, with just a different form of the same abuse. Middle New Zealand’s aspiring young parents pay by a different method. As the Government controls the ocr it dictates interest rates. This brings overseas money into our investment banks, which in turn is leant to the community. It also raises the value of our dollar, which as we know lowers export productivity. This makes our imports cheaper, which is good for the retail sector. Banks have got to lend this money somewhere and they lower the threshold for property ownership and credit. Plenty of money and plenty of demand and this fuels our property market, and retail markets. The interest rates we pay are not staying New Zealand, only the margin is, the balance is being taken out of the country by foreign cash investors. Banks are not going to be inclined to invest in export oriented business, while there is a high dollar, they have a higher risk. By stimulating the retail sector, it does something else. With all due respect to our retailers the reality is it is generally a low wage, low skill, industry. You think you’re not just handing over money to a growing underclass, then look at it this way. Your high interest rate makes imports cheaper and money available to lend, and raises the spending power of low income earners. The Government has also signed up to Kyoto. What this means is that someone has to be taxed to create a carbon balance of payments. Rather than tax the man in the street it has tried to impose the tax first on agriculture which didn’t work, and now on forestry, which is an equally unwelcome move. In all three situations above the same principle is being applied, and is not only to seize current income or wealth, but future income and wealth. In terms of an economic strategy this is now creating serious uncertainty in future investment in New Zealand by its own citizens both productively and financialy with limited outcomes for the Government.
Wealth redistribution
Low unemployment
Voter capture.
But it has many more negatives.
Low skill work force.
Encourages high skill departure.
Indebted consumer society.
Excessive investment in property.
Low productivity from primary produce and exports.
Undermines Kiwimade products.
Undermines wealth retention, and reinvestment in New Zealand.
Undermines our economic independence.
Which all adds up to social degradation.
I liken Mr Cullen’s financial strategy to something along the lines of a Russian Retreat. After having mounted an economic offensive against his own country he is walking backwards leaving a trail of destruction as he goes. Rape and pillage always starts with the vulnerable. We care about Rape but not about Pillage. The inevitable result is that one day those that do bother to stay will inherit a hell of a mess to clean up if we continue to run our country this way.
Mostly this website is dedicated to the social outcomes for fathers and children. Economically we to tend to talk about child support in isolation, rather than in the context of the economic strategy of the country. For high income earners child support is either avoidable or affordable, but for Joe 6 pack, you don’t care about him, chances are his kids won’t care about you either.
Bevan,
Agree that CS is part of a much larger picture but dont agree that it affordable or avoidable for high income earners.
Regards
Jim N
Regards
Jim N
Comment by Jim Nicolle — Wed 14th March 2007 @ 12:41 pm
How could you not agree with that statement? There is a salary cap for employees and mechanisms for avoidance for self employed.
Comment by Bevan Berg — Wed 14th March 2007 @ 1:00 pm
Salaray Cap is $100157 and income is assessed as % figure based on the number of children based on gross.
If you are a PAYE empolyee you are screwed.
Your notion of affordability equates to the Acts premise of capacity to pay equating to liability.Its a fiction to suggest that payments are affordable when debt levels are so high and a large number of debtors are PAYE “high income” earners.
Take for example a Parents earning 80k with a Student loan who pays PAYE and has 3 children who he is levied for.
Income 80000
CS -13149
Sub 66851
Tax -22470
Sub 44381
ACC -900
Sub 43481
Sudent Loan -6284
Sub 37197
So every week that dad gets $715 as a take home pay.
He has his kids 39.98% of the time (just under 140 nights per year) and kids are 2 boys,1 girl. This requires a 3 bedroom house that he rents at 350per week (no acc subsidy because he is a high income earner)
He now has 365 dollars left for anything else.
Lets assune it costs him 50 per week to take public transport to work. Now down to 315 pw available.
Feeding himself and the kids lets set it at 150 per week. That leaves $165
Transporting the kids for “access” 20pw
now he has 145.
Power chews up say 25pw.Now he has 120
Other necessary expense will chew up more than the remaining 120!
I could go on but I think the point is made regarding affordability.
As to avaoidance, the law change to CIR initiated reviews was only ever done with the aim being to stop the current available avoidance mechanism of self employment and increse assessments.
Thats briefly why I dont agree with the statement.
Regards
Jim Nicolle
Comment by Jim Nicolle — Wed 14th March 2007 @ 2:07 pm
Sorry got the CS Figure Wrong in 3.
Income 80000
CS -18050
Sub 61950
Tax -22470
Sub 39480
ACC -900
Sub 38580
Sudent Loan -6284
Sub 32296
Weekly in hand 621.08
Rent -350
Food -150
Work Transport -50
Transport for access -25
Remainder 46.08
Its $46 that is left after all the tax and necessary expenses are taken off.
That $46 will disappear on basic needs very quickly.
Regards
Jim N
Comment by Jim Nicolle — Wed 14th March 2007 @ 2:28 pm
I recently calculated that, because father-removal tax (affectionately called child support) is paid for out of already-taxed income, I as a father with two dependent children am taxed at about 65% of my gross income. That includes ACC accident tax but it doesn’t include local body taxes, additional accident taxes on each of my vehicles, part charges for hospital and other services that I already pay for through taxes, GST on my purchases, special alcohol taxes, special petrol taxes, special taxes on an occasional lotto ticket, children’s school taxes (oh, I forgot, they’re “voluntary”!) or the cost I bear in being a GST tax collector on behalf of the government. Including those and probably a few others I have omitted, I guess I am taxed at about 85% of what I earn. Without the father-removal tax, this would be around 55%, for me that would be viable though I still think it’s far too much.
Hans
Comment by Hans Laven — Wed 14th March 2007 @ 2:40 pm
I tend to view high income earners by disposable income, what you have adequately pointed out is that the perception of high income in New Zealand is somewhat misleading.
Comment by Bevan Berg — Wed 14th March 2007 @ 2:47 pm
A very good observation Bevan, noted and agreed.
Regards
Jim
Comment by Jim Nicolle — Wed 14th March 2007 @ 9:46 pm
Bevan,
You missed one: Dilution of the native vote with persons dependent on your continued government.
And “unemployment” needs to be measured as ONLY persons employed outside the government in employment. So, every ministry employee, every quango and every parliamentary employee is excluded.
Comment by Mark Shipman — Fri 16th March 2007 @ 4:44 pm