The President of the Jama Party (me) and the Jama Party Finance Minister (a mate) have got together (over a beer) to put together this very fair tax system that applies to all working New Zealanders (not just those who have children). It is part of a wide ranging fiscal stimulus strategy we call Jamanomics.
The Jama Party fair tax system is based on the simple belief that if you earn crap money you shouldn't pay a lot of tax but if you earn shit loads (seriously) we are going to nail you.
Currently the tax system is structured like this:
up to $38,000 20.8%
$38,001 to $60,000 34.3%
$60,001 and over 40.3%
I know you are going to look at this and think that the Jama Party is full of its own hyperbole because the rates don't look right. Well the Jama Party can assure you that the rates are in fact correct because there is a little thing called ACC which adds an additional 1.3% on top of the already high tax rate. We actually think ACC is crap and we would scrap that too but we will leave that for a future policy post.
Our proposed Jama fair tax system is this:
up to $15,000 No Tax
$15,000 to $30,000 20%
$30,000 to 100,000 30%
$100,000 and over 45%
Now lets try a comparison:
Bob and Mary are a childless couple who earn $38,000 between them. Under the current system they pay $7904 in tax. Under the Jama fair tax system they will pay just $5,400 which is a saving of $2,504 or an extra $48 per week.
Miraculously Mary got pregnant and gave birth to little Johnny. This meant she had to give up her part time job as an accounts clerk. Bob and Mary are now on a single income of $30,000 per year. With the current 'Welfare for Families' scheme they receive an additional $7384 per year. This means they pay $6240 in tax and get $7384 back giving them a net take home pay of $598.92 per week. If they vote for Jama they would be eligible for the Jama party income splitting scheme. What we do is split the total household income between Bob and Mary because raising a child should not be unpaid work. This means that Bob and Mary would pay no tax at all as they are now effectively only earning $15,000 each. Their nett take home pay goes up to $576.92 per week. Not quite as good as that other lot but hey at least you are off the welfare.
Bob got a new job with more responsibility which pays $60,000 per year. During the ensuing celebrations Mary got pregnant again. Under the current system with two children and a gross income of $60,000 per year the 'Welfare for Families' scheme will pay an additional $5200 per year which added to their current nett pay gives them $956.73 per week. Crunching this through the Jama income splitting, fair tax calculator gives Bob and Mary $1038.46 per week which is a whole extra $81.73 into the weekly piggy bank.
'Wow thanks Jama we are really glad that we voted for you rather than that other lot. Not only have we improved ourselves and our lifestyle because of your fair tax and income splitting scheme we also feel better being off the welfare. With that other lot we didn't want Bob to get a better job because we would loose our welfare. We were just going to have 5 children to get more welfare payments but now Mary can quit the fertility drugs and Bob can go and get the Vasectomy he has always wanted.'
Bob and Mary - Upper Hutt
Unfortunately not everyone can have children. Don (for example) had a nasty motorcycle accident as a teenager which resulted in him losing his testicles. Don is quite young and only earns $15,000 per year. Under the current system Don pays $3120.00 in tax leaving him with $228.46 per week. Don is quite resentful really because he knows that some of his tax goes to subsidise Bob and Mary's 'Welfare for Family' payments and since he can't have children of his own he feels let down by that other lot. A quick calculation of the Jama fair tax scheme shows that Don no longer pays tax so he is $3120.00 per year better off which is an additional $60 per week more in the hand.
'Jama that is marvelous. I was always jealous that people like Bob and Mary got money for breeding. I am so glad I voted for the Jama party, you guys make me feel like a valued member of society even though I don't have testicles. That other lot made me feel inferior and never treated me as an equal. I don't earn much now but I am going to improve myself through education so that I can get the big bucks. That Jama fair tax system is exactly that - fair.'
Don - Upper Hutt
Believe it or not some people in this country actually earn over $100,000 per year. We the Jama Party do not consider all these people rich and we do not see why they can also not share in the wealth and prosperity of a Jamaconomy.
Blair is a knob who earns $150,000 per year working in his fathers jock strap manufacturing sweat shop. Under the current system Blair pays $51,500 per year in tax. According the Jama calculator he would pay $46,500 in tax. A saving of $5,000 per year.
Blair gets a pay rise and now earns $250,000 per year. This means currently paying $91,800 in tax. Blair is not happy, so lets see what Jama can do for him. Actually Jama can not do much, he will end up paying $106,500 in tax if he votes for Jama.
'Jama you thieving prick when I get out I am coming after you'
Blair - now in prison (forever) for tax evasion
Now I know that you are all wondering how the Jama Party can perform such a Jamanomic miracle with out fueling inflation and where exactly these tax cuts are going to come from?
Well we thought about this quite carefully (after 12 beers) and I am trying to remember exactly... I think it goes something like this:
1. We cut out the money laundering business where your taxes are taken off you only to be given back as welfare. You see collecting money and redistributing money costs more than the money is worth. Cutting the money laundering means less bureaucrats so we save money here as well.
2. We scrap business tax to encourage overseas companies to set up in NZ which means they no longer have to launder money themselves to avoid paying tax. For example banks send $3b per year offshore to avoid paying tax. More quality business means better paying jobs. At the same time we introduce an education tax where these companies pay directly into education schemes that will improve the quality of the workforce and lower the cost of student course fees.
3. We tier the GST system so necessities like condoms and nappies no longer have GST but your new BMW or LCD TV attracts 30% sales tax. The more consumers spend on luxuries the more money Jama makes.
4. We build up a huge wad of cash that we put aside and force the banks to borrow off the Reserve Bank of Jama rather than getting money from those cheap skate Japanese. This means less money coming in and leaving the country which keeps inflation lower and levels out the exchange rate
5. We reduce the countries debt. After all we don't want to be paying that IMF loan for ever and as we well know it is better to repay debt early to save on the interest. A debt free country is a happy country
6. We invest more money in R&D and sign an exclusive intellectual property agreement with the Chinese where for $5b per year they get first rights on all the cool stuff developed here. If they don't want it we sell it to the Americans. If we don't do this the Chinese are going to nick it anyway and why do we back the Americans when China is going to be the biggest economy in 5 years. We call this 'Dragons Den' without Anette.
7. We hedge against the Chinese Yuan rather than the US Dollar. This is another money merry-go-round where all stuff is made in China but you have to pay USD for it. Stupid! and we all know that China owns $230b of US debt anyway.
8. We increase productivity. We have some of the lowest productivity in the OECD but in 1974 we were the 8th most productive. At our current rate of growth it will take us 50 years to equal the current Australian GDP. Something needs to be done now.
9. With the $5b we get off the Chinese Jama will build world class, nation wide broadband at the highest possible speed which will be owned by the people. We call it 'communist broadband'.
10. We would introduce a capital gains tax on all property except the family home because its not fair that those rich people get to profit from renting property to poor people.
12 beers and 10 good points now this is how policy should be decided. Down at the boozer not at the Beehive. In fact that was number 11 we refurbish the Beehive with apartments and sell them all off. Parliament will instead meet at the local RSA.
Now if you are all interested we are in the process of formulating our alternative to KiwiSaver. We call it JamaCanSaveYa and we will exclusively release this on GZ some time soon.
Other related posts:
Finally some sense in politics
I want my BMW
Least we forget
Comment by freitasm, on 30-May-2007 19:21
Vote for Jama!
Comment by Grant17, on 30-May-2007 20:11
BLOODY EXCELLENT tax policy and a very entertaining read as well
JAMA for Prime Minister!
You REALLY should be in Parliament Jama. You have more common sense than those other 120 overpaid leeches put together!
Comment by alasta, on 30-May-2007 20:19
Mate, I would be honoured to join your party. With you, your mate, Freitasm and myself, you only need to find another 496 members between now and the election!
Comment by bradstewart, on 30-May-2007 21:11
Great work there Jama or do I call you the Rt Hon Jama? Seriously have you considered running for Parliament?
Comment by sbiddle, on 30-May-2007 21:20
You are a genius.
Comment by stevonz, on 31-May-2007 08:46
Mate! I'll vote for you too... although I may need to setup a small company in the Caymans to launder my $$$... Your tax rates would cripple me!
Comment by inane, on 31-May-2007 09:03
what would your policies be on child support?
Comment by Noviota, on 31-May-2007 09:21
Other than the GST increase I think this is brilliant.
I'd rather be either taxed on my income or taxed on my spending. Not both!
When are you going to actually run?
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