Fact Check: National party claim of tax cuts on low income earners - LIES!

Fact Check: National party claim of tax cuts on low income earners - LIES!

A fact-checking service says National overstated the benefits of its tax cut plan, which they say would give New Zealanders earning between $50,000 and $70,000 an extra $3000. 

The temporary tax cuts would last for 16 months and are expected to cost about $4.7 billion. National plans to pay for it by cutting back on spending, such as suspending Super Fund contributions and eliminating the fees-free university policy and KiwiBuild.

National plans to increase tax thresholds by lifting the bottom bracket from $14,000 to $20,000, the middle threshold from $48,000 to $64,000 and the top bracket from $70,000 to $90,000 - changes it wants in place by December. 

Kiwis are currently taxed at 17.5 percent on income between $14,000 and $48,000, and National plans to raise that bar so that you're only taxed at 17.5 percent on income between $20,000 and $64,000. 

However, APP FactCheck says National overstated the amount of money someone on an average income would save. 

AAP FactCheck InvestigationWould New Zealanders earning between $50,000 and $70,000 be $3000 better off under National's proposed tax cuts? 

.


.

The statement

"We have focused on the middle income New Zealanders, people earning $50,000, $60,000, $70,000 a year, and putting $3000 in their hand over the 16 months from the first of December."

Paul Goldsmith, National Party finance spokesperson, September 25, 2020.

The analysis

The National Party has proposed a "massive" stimulus package involving personal tax cuts as New Zealand battles its way out of the COVID-19-driven economic downturn.

National released the policy on September 18, claiming it would "put more than $3000 extra into the pockets of hard-working Kiwis on middle incomes" by lifting the thresholds on all three tax brackets for 16 months.

But the tax proposal has been criticised for benefiting high income earners the most.

During a debate with Labour Party finance spokesperson Grant Robertson on RNZ on September 25, National finance spokesperson Paul Goldsmith was asked why the tax cuts didn't target low-income earners.

"We have focused on the middle income New Zealanders, people earning $50,000, $60,000, $70,000 a year, and putting $3000 in their hand over the 16 months from the first of December," Mr Goldsmith said.

AAP FactCheck examined Mr Goldsmith's statement that people earning between $50,000 and $70,000 would be $3000 better off under National's proposed tax cuts.

New Zealand has four marginal income tax rates which apply based on three income thresholds.

The National Party's tax proposal involves lifting the lowest tax bracket threshold from $14,000 to $20,000, the middle threshold from $48,000 to $64,000 and the top threshold from $70,000 to $90,000.

This effectively means that those who earn more than $14,000 a year will pay less tax, and those who earn more than $90,000 will get the full benefit of the change in each threshold.

But exactly how much a person benefits under the policy depends heavily on their income.

The National Party's website has a tool which allows users to enter their income to calculate how much they would benefit from the tax changes.

This calculator shows someone on an income of $50,000 would have a total tax savings of $893 over 16 months, those on $60,000 would save $2,560 and someone on $70,000 would save $3227.

To get a $3000 benefit from the tax changes, a person would need to have an income of over $62,640.

AAP FactCheck independently checked the results of the National Party tax calculator and found it was accurate.

National has previously stated the tax policy targets the average wage earner, at around $64,000 and the party's policy states "as a proportion of income, the largest benefit is for someone on the average income of $64,000".

Mr Goldsmith's office said this figure was based on the most recent figures from the Stats NZ Quarterly Employment Survey, which shows the average income is $1,231.34 a week, or $64,206 a year.

A person earning this income would receive $3227 under the tax cuts.

However, Stats NZ's Household Labour Force Survey shows the median income for wage and salary earners was $1060 a week, or $55,271 a year.

A person on the median income would receive $1772 under the tax cuts.

The median is the point at which half of earners receive less and half receive more. Stats NZ says "greater emphasis has been put on medians, because extremely high or low incomes tend to have less influence on median amounts than they do on an average (mean) figure".

Stats NZ statistical data analyst Jessica Honey said the Quarterly Employment Survey which National used to calculate the average income "isn't recommended as an annual income measure".

"It excludes business owners, the self-employed, and industries like farming and NZDF's military branches," she told AAP FactCheck.

"It also represents a pay week in the middle of each quarter, so can miss short-term jobs, while counting people with multiple jobs several times."

Ms Honey recommended using the latest Household Economic Survey data which showed the average income for all those aged 15 and over was $47,048 and the median income was $33,280.

Using this measure, both those on the average and the median income would receive $560 under National's tax cuts.

.

.

The verdict 

AAP FactCheck found the statement that people earning between $50,000 and $70,000 would be $3000 better off under National's tax policy to be mostly false.

Those earning $50,000 and $60,000 a year would get less than $3000 in tax savings under the policy. A person would need to earn more than $62,640 to get a $3000 benefit.

Mostly False - The claim is mostly false.

The National Party has been contacted for comment.

.



Comments

Popular posts from this blog

ℕ𝕖𝕨 β„€π•–π•’π•π•’π•Ÿπ••'𝕀 𝕙𝕒𝕀 𝕒 π•‘π•™π•–π•Ÿπ• π•žπ•–π•Ÿπ•’π• π•šπ•Ÿπ•₯π•–π•£π•Ÿπ•’π•₯π•šπ• π•Ÿπ•’π• 𝕣𝕖𝕑𝕦π•₯𝕒π•₯π•šπ• π•Ÿ, π•₯π•™π•’π•Ÿπ•œπ•€ π•₯𝕠 π•π•’π•”π•šπ•Ÿπ••π•’ π”Έπ•£π••π•–π•£π•Ÿ

For Black CEOs in Silicon Valley, humiliation is a part of doing business

Fact Check: Trump lied 46 times at recent rallies