Wednesday, October 08, 2008



Comparing the packages

So how do National's tax cuts compare with Labour's? Here's a table showing the distribution of Labour's remaining package:

labtaxcuts2

(Methodology: Effects calculated from Treasury's 2008 detailed model data, percentages and numbers of taxpayers from Budget 2008 Who pays income tax and how much?. There's a slight kludge around the threshold shift to $42,500, where I assumed income in the 42 - 43,000 band was evenly split. This is a slight underestimate, but the effect is not significant).

While it still over-rewards those at the top who need it least, Labour's package is much fairer than National's. That doesn't change the fact that it is irresponsible and unaffordable and should be scaled back (personally, I'd chop everything beyond the lower bracket threshold change, which benefits everyone; total saving $850 million a year) - but if forced to choose between the two, I'd choose Labour's.