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  Reply # 1123953 8-Sep-2014 00:13
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Geektastic:
kiwirock: Nothing is sustainable? I was talking realtively not absolute. As long as I can brew my beer for the years of my life or until I choose not to, that's sustainable.

What do we do to fund it? Who knows... money is just an idea we give power too. How we use it and what we use it for can be changed whenever we want. We can use the distribution or creation of it to better everyone, or only a few.


Well, how can you give anyone an income of $8000 a year if you can't even decide what money is?!

NZ is a nation in the world, not a hippy commune in the Pacific.


It's marketted as hippies. Its anti-nuke stance and 'pure' is about as hippy as it gets.

Perhaps it shouldn't be by money then. Perhaps it should be a living allowance non-taxed or recognised as able to be used for anything else. A roof, food and clothing. However seeing as everything is monetised, it sounds more like a bill of rights change or protection of life bill is what's needed. That way people don't see it as an income. As an income, I think the mentality behind it may hurt the economy more.



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  Reply # 1123959 8-Sep-2014 00:58
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charsleysa: I think when looking at these kinds of problems we have to think about a few fundamentals such as:

People are just numbers, they need food, water and shelter to survive.

The economy requires people to spend money.

Our largest portion or spenders and the low and middle income earners.


Now with these few fundamentals we can draw a conclusion that if our lowest earners do not have enough money left over to spend on luxuries then our economy isn't going to benefit and the situation is only going to get worse.

A government intervention of simply raising the minimum wage to a level at which low income earners will be left with enough money to spend on a couple of luxuries will improve the economy.


For a short period of time. Then the reserve bank raises interest rates to devalue the dollar because more people have it, or to slow lay-off's by companies that can't afford it.



This conclusion is supported by the spending to growth relationship of economies most notably seen to stifle when people hoard (save) their money and don't spend it but also when they spend too much money they don't have (unrepayable loans and such).

There are concerns that raising the minimum wage can cause businesses to fail, well this isn't the case when we observe other countries including Australia where the minimum wage is $16.87 and even that is still considered to be too low.


Exactly it's considered low in Australia. But it's not in New Zealand. It's all relative. It's the Australian minimum wage not New Zealand minimum wage. Converted to NZ$ and if we were paying AUS rent and the cost of living, what's the overall difference against the NZ minimum wage?



While I do think that those who work hard and earn extremely high are entitled to do so for their hard work, there is a point at which your income becomes disposable funds which are just being hoarded.

We need to rethink what we consider to be a high income because that is currently $70,000 and even that is too low for a family of 6 with mortgage and such.

In order to create wealth you must stifle wealth. What I mean is in order for the low income to become higher earners you must change the distribution of wealth so that the distribution of wealth more closely matches the distribution of who spends the most money.

At the moment those who spend the most money in this economy are those who earn the least.



However greed will always demand someone makes more. Then the process starts to repeat.

When you spend more though, you increase demand... this increases supply cost... and waa laa, the cost of buying a product goes up to reflect the income you have until a natural equalibrium of what the supplier can get away with comes to a grinding halt. It's more about greed and less about supply and demand these days. The difference between school economics classes and reality.

The quickest way would be to cap the price of goods not raise the minimum wage. No billionare needs billions of apples from the supermarket, unless this is exactly what made him a billionare. This devalues hoarded money rather than only temporarily devalues the dollar until the reserve bank acts to increase inflation and you end up in a runaway hyperinflation if not done delicately. But you also throw away investment interest in NZ businesses with regulation. It's all a catch 22.

When ever you impose an artifical limit though or increase monetary supply it HAS to come from somewhere where wealth was created. For I strongly think it's highly unlikely you'll be able to steal from the uber rich or devalue their worth with law changes anytime soon.

Printing money to increase the minimum wage without costing jobs will only further devalue it. A new equalibrium will be established and you'll find yourself close to where you started from again.

In some ways, the current monetary system is perfect. Not for us, but certainly for it's own exsistance self interest. You can try to change one aspect of it, however the consequences elsewhere to reflect those changes will find a way to negate your first changes to it.

I think a great depression is inevitable but in all honesty also a good thing. It's going to take a few more for the economic backside to full out of the monetary system to reboot it and try and look at a new way of doing things.


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  Reply # 1123969 8-Sep-2014 06:44
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Geektastic:
Aredwood: I fully agree with this min basic income system (aka the big kahuna). As it will solve the welfare trap problem. No more issues with people being on welfare because they are financially better off not working. As even if they can only work 10 hours per week for min wage, they will still be better off than not working. So it makes it easy to enter the workforce.


I'd solve it by taking all benefits away.

That has a way of motivating people to get work like nothing else.

If you have no option but to work at something - anything - or end up getting fed by the state (no money - just basic food) most people will get with it fairly quickly.


You are making a very flawed assumption, that is, there is enough jobs available in NewZealand to employ all working age New Zealanders. You are wrong.
Most of the posts in this thread or the other similar threads they are so divorced from reality to be laughable, but they are not laughable, these are real issues that real people face everyday.




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The views stated in my posts are my personal views and not that of any other organisation.

 

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The great divide is the lies from both sides.

 

 


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  Reply # 1123975 8-Sep-2014 07:34
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charsleysa: I think when looking at these kinds of problems we have to think about a few fundamentals such as:

People are just numbers, they need food, water and shelter to survive.

The economy requires people to spend money.

Our largest portion or spenders and the low and middle income earners.


Now with these few fundamentals we can draw a conclusion that if our lowest earners do not have enough money left over to spend on luxuries then our economy isn't going to benefit and the situation is only going to get worse.

A government intervention of simply raising the minimum wage to a level at which low income earners will be left with enough money to spend on a couple of luxuries will improve the economy.

This conclusion is supported by the spending to growth relationship of economies most notably seen to stifle when people hoard (save) their money and don't spend it but also when they spend too much money they don't have (unrepayable loans and such).

There are concerns that raising the minimum wage can cause businesses to fail, well this isn't the case when we observe other countries including Australia where the minimum wage is $16.87 and even that is still considered to be too low.

While I do think that those who work hard and earn extremely high are entitled to do so for their hard work, there is a point at which your income becomes disposable funds which are just being hoarded.

We need to rethink what we consider to be a high income because that is currently $70,000 and even that is too low for a family of 6 with mortgage and such.

In order to create wealth you must stifle wealth. What I mean is in order for the low income to become higher earners you must change the distribution of wealth so that the distribution of wealth more closely matches the distribution of who spends the most money.

At the moment those who spend the most money in this economy are those who earn the least.


But surely a fundamental point is that by definition luxury goods are supposed to be out of reach of low earners?

Where is the motivation to educate and better yourself to become, say, a partner in PWC if you end up with a painter earning enough to afford luxuries?

I agree with you about needing to reconsider what is a high income. My first job out of University in 1990 paid the equivalent of $55,000 a year with 5 weeks paid leave and 13 paid public holidays.

My father always felt that the equivalent in today's money of $500,000 was what he considered adequate to live the life he wanted the family to have. I believe top rate tax in the USA does not begin until US$250,000 or thereabouts.

$250,000 upwards is high earning. Rich does not begin until you hit $1 million a year IMV.





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  Reply # 1124163 8-Sep-2014 11:25
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Geektastic: 

But surely a fundamental point is that by definition luxury goods are supposed to be out of reach of low earners?


I really disagree with this. Luxury goods are simply those that are desirable, but not necessary, or of a quality that is not needed over and above a basic item.

The notion that luxury goods should be out of reach for "low earners" is offensive. Luxury is a biproduct of the continual improvement of society plus the tradeoffs an individual is prepared to make (i.e. their time via work, or by going without something else for a while).

As it stands right now, families in first world countries on the median wage often have to expend almost all their available time just to get the most basic of modern world luxuries, while those at the top can afford every luxury available multiple times over, without having to work another day in their entire lives.

Geektastic: 

Where is the motivation to educate and better yourself to become, say, a partner in PWC if you end up with a painter earning enough to afford luxuries?


Why is being a partner in PWC such a valued thing? Some would argue that corporations like PWC are a symptom of a broken capitalist society and do no little for the betterment of mankind. :-)

In my opinion, many of the things we actually need to advance us as a species, and improve the quality of life for all on the planet, i.e. scientists, researchers, engineers are actually in the "middle class" bracket. Only the most experienced and most senior engineers would earn >$250k/year, and only in certain industries. IT workers with good experience are only just starting to break into the $100k mark on average in NZ now.

In a capitalist society the only way for a large percentage of these people to get comfortably wealthy (i.e. getting to that $250k/year point) is to start their own business venture - but a) in the increasingly conglomerated world where wealth pools at the top that's getting harder and harder - in many industries it's now easier for an entrepreneur with a ten mil in the bank to hire a few people and build something than it is for the people who actually build the things to risk their home, livelihoods and family situation and do the same, and b) for those who do manage to do it, it often takes them away from doing what they are perhaps best at.

Geektastic:
I agree with you about needing to reconsider what is a high income. My first job out of University in 1990 paid the equivalent of $55,000 a year with 5 weeks paid leave and 13 paid public holidays.

My father always felt that the equivalent in today's money of $500,000 was what he considered adequate to live the life he wanted the family to have. I believe top rate tax in the USA does not begin until US$250,000 or thereabouts.

$250,000 upwards is high earning. Rich does not begin until you hit $1 million a year IMV.


Absolutely. While the likes of MPs earning $150k/year may seem "rich" to many on lower wages, even their wealth is a tiny slice of the pie compared to those who are really rich.

The sad thing is that even highly educated, highly skilled, hard working positions often don't even get you into that bracket. The wage gap between for example, a CEO, and an engineer working at the same company, is utterly ridiculous. Take Telecom, for example - CEO earns $5m/year (probably more now), the average engineer is probably earning under 100k. In other words, it takes the engineer an entire working life to earn what the CEO earns in a single year.

Sure, you can argue that a CEO has much more responsibility than an engineer (though in many cases that's not entirely true - often a CEO's responsibility can be deflected to the company as a whole, other levels of management, the board, or even the shareholders), but does the CEO contribute 50x more to the success of a company than an engineer working in said company? Almost never. Yes, there are cases where CEOs have "single-handedly" turned companies around (but you have to ask yourself whether the CEO was responsible for this, or whether they were simply the catalyst), but the average case is something very different.

Could most companies exist with much less management? Almost certainly - there are plenty of examples of hugely successful companies with minimal or near-flat management structures. Could the company exist without a band of good engineers, or real workers? Definitely not.

An interesting analogy comparison I heard once was that of an engine. You can take two viewpoints - the first is the most logical - that a company is like an engine, and it's management team is like fuel. You need both to work, but the value of the fuel is no more than the value of one of the engine components. You might be able to massively improve the performance of the engine as a whole by using a better grade of fuel, but again, it's a small difference in the grand scheme of things, and ultimately the fuel is still bound by the limits of the engine, and importantly, vice versa.

In our corporate society, we remunerate by paying 50x more for fuel than for any other engine component.

So is it really education and skills that gets you into wealth? Not really. In many professions the "workers" have to be significantly more skilled than the people managing them, despite earning an order of magnitude less.

So even if you're motivated, you can't necessarily improve your situation (much) by furthering your education and skillset. What if you're an Einstein-level genius physicist, but the most diminutive and non-authoritative introverted personality? You could be the single most important person for mankind, but you're very unlikely to be compensated appropriately for it. Chances are you don't want to risk your mediocre lifestyle for a slim chance at glory on your own, which likely leaves your existing employer owning the IP for anything you create, who is hugely unlikely to compensate you fairly for what you produce.

I'm ranting a bit - but this situation gets even worse when you consider that these days because wealth is already so concentrated, with the exception of C-level executives, actually people doing work aren't even the ones earning the most money. That would be the investors, many of whom have so much money that they can spend their time figuring out the best ways to beat inflation, reduce their taxation etc. to the point where they can simultaneously work much less than the average joe, live a ridiculously luxury lifestyle, and continue to grow their wealth relative to poor Avg. Joe.

To rub salt in the wound, it's these guys that take home a disproportionately large slice of the pie when the company built by it's staff succeeds.

Modern capitalism. It's the new form of slavery - with "freedom", but not really.

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  Reply # 1124168 8-Sep-2014 11:33
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spronkey:
Geektastic: 

But surely a fundamental point is that by definition luxury goods are supposed to be out of reach of low earners?


I really disagree with this. Luxury goods are simply those that are desirable, but not necessary, or of a quality that is not needed over and above a basic item.

The notion that luxury goods should be out of reach for "low earners" is offensive. Luxury is a biproduct of the continual improvement of society plus the tradeoffs an individual is prepared to make (i.e. their time via work, or by going without something else for a while).

As it stands right now, families in first world countries on the median wage often have to expend almost all their available time just to get the most basic of modern world luxuries, while those at the top can afford every luxury available multiple times over, without having to work another day in their entire lives.

Geektastic: 

Where is the motivation to educate and better yourself to become, say, a partner in PWC if you end up with a painter earning enough to afford luxuries?


Why is being a partner in PWC such a valued thing? Some would argue that corporations like PWC are a symptom of a broken capitalist society and do no little for the betterment of mankind. :-)

In my opinion, many of the things we actually need to advance us as a species, and improve the quality of life for all on the planet, i.e. scientists, researchers, engineers are actually in the "middle class" bracket. Only the most experienced and most senior engineers would earn >$250k/year, and only in certain industries. IT workers with good experience are only just starting to break into the $100k mark on average in NZ now.

In a capitalist society the only way for a large percentage of these people to get comfortably wealthy (i.e. getting to that $250k/year point) is to start their own business venture - but a) in the increasingly conglomerated world where wealth pools at the top that's getting harder and harder - in many industries it's now easier for an entrepreneur with a ten mil in the bank to hire a few people and build something than it is for the people who actually build the things to risk their home, livelihoods and family situation and do the same, and b) for those who do manage to do it, it often takes them away from doing what they are perhaps best at.

Geektastic:
I agree with you about needing to reconsider what is a high income. My first job out of University in 1990 paid the equivalent of $55,000 a year with 5 weeks paid leave and 13 paid public holidays.

My father always felt that the equivalent in today's money of $500,000 was what he considered adequate to live the life he wanted the family to have. I believe top rate tax in the USA does not begin until US$250,000 or thereabouts.

$250,000 upwards is high earning. Rich does not begin until you hit $1 million a year IMV.


Absolutely. While the likes of MPs earning $150k/year may seem "rich" to many on lower wages, even their wealth is a tiny slice of the pie compared to those who are really rich.

The sad thing is that even highly educated, highly skilled, hard working positions often don't even get you into that bracket. The wage gap between for example, a CEO, and an engineer working at the same company, is utterly ridiculous. Take Telecom, for example - CEO earns $5m/year (probably more now), the average engineer is probably earning under 100k. In other words, it takes the engineer an entire working life to earn what the CEO earns in a single year.

Sure, you can argue that a CEO has much more responsibility than an engineer (though in many cases that's not entirely true - often a CEO's responsibility can be deflected to the company as a whole, other levels of management, the board, or even the shareholders), but does the CEO contribute 50x more to the success of a company than an engineer working in said company? Almost never. Yes, there are cases where CEOs have "single-handedly" turned companies around (but you have to ask yourself whether the CEO was responsible for this, or whether they were simply the catalyst), but the average case is something very different.

Could most companies exist with much less management? Almost certainly - there are plenty of examples of hugely successful companies with minimal or near-flat management structures. Could the company exist without a band of good engineers, or real workers? Definitely not.

So is it really education and skills that gets you into wealth? Not really. In many professions the "workers" have to be significantly more skilled than the people managing them, despite earning an order of magnitude less.

So even if you're motivated, you can't necessarily improve your situation (much) by furthering your education and skillset. What if you're an Einstein-level genius physicist, but the most diminutive and non-authoritative introverted personality? You could be the single most important person for mankind, but you're very unlikely to be compensated appropriately for it.

I'm ranting a bit - but this situation gets even worse when you consider that these days because wealth is already so concentrated, with the exception of C-level executives, actually people doing work aren't even the ones earning the most money. That would be the investors, many of whom have so much money that they can spend their time figuring out the best ways to beat inflation, reduce their taxation etc. to the point where they can simultaneously work much less than the average joe, live a ridiculously luxury lifestyle, and continue to grow their wealth relative to poor Avg. Joe.

To rub salt in the wound, it's these guys that take home a disproportionately large slice of the pie when the company built by it's staff succeeds.

Modern capitalism. It's the new form of slavery - with "freedom", but not really.


1) We have a different definition of luxury then! To me that is Patek Phillipe, Rolls Royce, Luis Vuitton etc etc
2) PWC is merely an example. A partner would earn over $1million a year in a decent year, easily.
3) As an illustration, if you leave university with a First Class Honours in Law and get a job at a top London firm, you will be starting on $100,000 a year straight out of University. That is how far behind we are here in our view of what is 'rich'.
4) In NZ you can earn a lot - I know a number of people who earn well over $250,000 a year who are contracting in areas like Change Management and other specialised business management consultancy areas. 
5) It is odd to me that aspiration in NZ is quite muted. In most places I am familiar with a PM who started as a State House child of a single mother, went on to make himself $50 million and then came back and achieved more or less the highest office in the land would be held up as a shining role model, not denigrated as a 'rich pr**k' etc. If we do not value success and wealth creation it will not assist the country in becoming a richer and better paid place.





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  Reply # 1124182 8-Sep-2014 11:54
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Geektastic:
1) We have a different definition of luxury then! To me that is Patek Phillipe, Rolls Royce, Luis Vuitton etc etc
2) PWC is merely an example. A partner would earn over $1million a year in a decent year, easily.
3) As an illustration, if you leave university with a First Class Honours in Law and get a job at a top London firm, you will be starting on $100,000 a year straight out of University. That is how far behind we are here in our view of what is 'rich'.
4) In NZ you can earn a lot - I know a number of people who earn well over $250,000 a year who are contracting in areas like Change Management and other specialised business management consultancy areas. 
5) It is odd to me that aspiration in NZ is quite muted. In most places I am familiar with a PM who started as a State House child of a single mother, went on to make himself $50 million and then came back and achieved more or less the highest office in the land would be held up as a shining role model, not denigrated as a 'rich pr**k' etc. If we do not value success and wealth creation it will not assist the country in becoming a richer and better paid place.


1) Yeah, OK - different categories of luxury, but I still think that a Rolls Royce should be attainable by anyone who works a solid 50 hours a week if they put their mind to it ;-)
2) In larger global firms yeah sure - there wouldn't be that many partners at NZ firms raking that sort of money though
3) Yes, yet if you leave with First Class Honours in say, engineering, you'd probably be starting on 2/3rds if you're lucky. If you leave with FCH in an education-related field, you're probably lucky to get half that. In any case, you're not really going to get super rich from that.
4 & 5) I partially agree, but again I don't really like your example. I think a lot of people look at John Key as someone who, while he "made it" for himself, did so in a field that many view as unnecessary and part of the problem. Additionally, I think there's a sort of diminishing returns in terms of people's value of wealth. For most NZers I'd suggest there's probably an attitude along the lines of "50 million is ridiculous when I can't even earn 1"

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  Reply # 1124186 8-Sep-2014 12:04
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Geektastic:

1) We have a different definition of luxury then! To me that is Patek Phillipe, Rolls Royce, Luis Vuitton etc etc
2) PWC is merely an example. A partner would earn over $1million a year in a decent year, easily.
3) As an illustration, if you leave university with a First Class Honours in Law and get a job at a top London firm, you will be starting on $100,000 a year straight out of University. That is how far behind we are here in our view of what is 'rich'.
4) In NZ you can earn a lot - I know a number of people who earn well over $250,000 a year who are contracting in areas like Change Management and other specialised business management consultancy areas. 
5) It is odd to me that aspiration in NZ is quite muted. In most places I am familiar with a PM who started as a State House child of a single mother, went on to make himself $50 million and then came back and achieved more or less the highest office in the land would be held up as a shining role model, not denigrated as a 'rich pr**k' etc. If we do not value success and wealth creation it will not assist the country in becoming a richer and better paid place.


I would consider a luxury item to be anything you would not be able to afford on a regular, or even periodic, basis such as a flat screen TV or a new car. What you mention I would consider to be items of extravagance.

There are workers who earn quite a lot but the majority of the workforce earns less than 60k yet it is this workforce that works the hardest since companies would fail without the.

You say we should value success and wealth creation but what about valuing the hard work of your employees that made you wealthy? If you don't even value your employees enough to give them a decent wage/salary that reflects how much value they put towards the company then you are the problem. (not directing it at you, just using you in the general sense).




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  Reply # 1124262 8-Sep-2014 13:20
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I am an above average income earner, but by no means wealthy. I have a small two bedroom house with a mortgage, and even though I know our household income is above the average, it often feels like we are still struggling to get ahead. Don't get me wrong, all our bills are paid and we eat well - but there generally seems to be little left for saving towards holidays, vehicle upgrades, etc.

Here are a list of things that grind my gears with our current system, and I'm sure a lot of the below will be quite unpopular:

- Tiered tax system. I have never agreed with a system that taxes higher income earners at a higher rate. Even with a flat tax rate someone who earns $200,000 is paying 5 times as much tax as someone who earns $40,000. To me it seems wrong that higher income earners are penalized by having to pay at a higher rate. E.g why does someone who earns 5 times as much have to pay 7 times as much tax. Now I'm not going to get into loopholes or specifics, I would just like to see a tax system where everyone pays their fair share. And to me a fair share would be the same percentage of income for everyone.
Suggestion: Pretty obvious, flat tax system. They obvious problem is that it will mean tax cuts for the wealthier and hikes for the poorer, which on the face of it this seems unfair. But it seems to be it would actually be making an already unfair system fairer.

- Part time workers, who can work more hours if they choose to, but don't because they will lose some of their benefit.
Suggestion: This is a tough one as I think the current policy is fair, at no point are your receiving less money in your pocket from working more. This is 100% down to people's sense of entitlement, and attitude of "why should I work for $15, when i can get $10 for free".

- Families who apparently can't afford breakfast and footwear for their children, but can afford cigarettes and visits to the pub.
Suggestion: A good portion of their benefit should be in the form of food and clothing vouchers, it should be made illegal to on-sell these vouchers, and they should not be redeemable for alcohol or cigarettes. Rent, power, and phone should be legally required to be paid directly out of their benefit by WINZ.

- Families that can't afford two children, but go on to have 3, 4, or 5. And don't talk about lack of education about birth control, any 12 year old knows how women get pregnant.
Suggestion: Additional benefits per child should be capped at two children. Means tested government funded birth control - if you legitimately can't afford birth control it should be provided free of charge.

I realize that these are not clear-cut problems, and I am not suggesting that the majority of people on benefits don't legitimately need them. I just think we need a system that doesn't disincentivize working harder if you can to improve your own circumstances, along with systems to help ensure benefit money goes toward what it should.

Edit: Missed words changing entire meaning of sentence!




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  Reply # 1124277 8-Sep-2014 13:28
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Paul1977: I am an above average income earner, but by no means wealthy. I have a small two bedroom house with a mortgage, and even though I know our household income is above the average, it often feels like we are still struggling to get ahead. Don't get me wrong, all our bills are paid and we eat well - but there generally seems to be little left for saving towards holidays, vehicle upgrades, etc.

Here are a list of things that grind my gears with our current system, and I'm sure a lot of the below will be quite unpopular:

- Tiered tax system. I have never agreed with a system that taxes higher income earners at a higher rate. Even with a flat tax rate someone who earns $200,000 is paying 5 times as much tax as someone who earns $40,000. To me it seems wrong that higher income earners are penalized by having to pay at a higher rate. E.g why does someone who earns 5 times as much have to pay 7 times as much tax. Now I'm not going to get into loopholes or specifics, I would just like to see a tax system where everyone pays their fair share. And to me a fair share would be the same percentage of income for everyone.
Suggestion: Pretty obvious, flat tax system. They obvious problem is that it will mean tax cuts for the wealthier and hikes for the poorer, which on the face of it this seems unfair. But it seems to be it would actually be making an already unfair system fairer.

- Part time workers, who can work more hours if they choose to, but don't because they will lose some of their benefit.
Suggestion: This is a tough one as I think the current policy is fair, at no point are your receiving less money in your pocket from working more. This is 100% down to people's sense of entitlement, and attitude of "why should I work for $15, when i can get $10 for free".

- Families who apparently can't afford breakfast and footwear for their children, but can afford cigarettes and visits to the pub.
Suggestion: A good portion of their benefit should be in the form of food and clothing vouchers, it should be made illegal to on-sell these vouchers, and they should not be redeemable for alcohol or cigarettes. Rent, power, and phone should be legally required to be paid directly out of their benefit by WINZ.

- Families that can't afford two children, but go on to have 3, 4, or 5. And don't talk about lack of education about birth control, any 12 year old knows how women get pregnant.
Suggestion: Additional benefits per child should be capped at two children. Means tested government funded birth control - if you legitimately can't afford birth control it should be provided free of charge.

I realize that these are not clear-cut problems, and I am not suggesting that the majority of people on benefits legitimately need them. I just think we need a system that doesn't disincentivize working harder if you can to improve your own circumstances, along with systems to help ensure benefit money goes toward what it should.



Tiered tax rate are fair, but it is a left policy. The reason it is fair, is because  society has put bands on  salaries, which it considers to be low, medium, high and extreme. NZs rates are less that they are over in Oz for high wages.  So for those higher wage earners, for the amount that is over the high level, it will tax those people more. If you don't want to be taxed more, then earn less. You do have to remember that without tax, there would be no free hospitals, education, and all the family benefits that most families now get. For many families the net amount of tax they effectively pay is zero, when offset against the benefits they get from that tax they pay.

I am more annoyed about all the taxpayer money being wasted down in Christchurch on shoddy repair jobs. Apparently a lot of the repairs need to be redone becuase they weren't done properly, and the government are underwriting the EQ repairs. eg a 200k repair on a house needs redoing, and it will cost 400k to redo it . I think the government should have stepped in to regulate the rebuild and repairs down there,  as their appears to be some people who are making a killing down there.

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  Reply # 1124280 8-Sep-2014 13:31
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Paul1977: I am an above average income earner, but by no means wealthy. I have a small two bedroom house with a mortgage, and even though I know our household income is above the average, it often feels like we are still struggling to get ahead. Don't get me wrong, all our bills are paid and we eat well - but there generally seems to be little left for saving towards holidays, vehicle upgrades, etc.

Here are a list of things that grind my gears with our current system, and I'm sure a lot of the below will be quite unpopular:

- Tiered tax system. I have never agreed with a system that taxes higher income earners at a higher rate. Even with a flat tax rate someone who earns $200,000 is paying 5 times as much tax as someone who earns $40,000. To me it seems wrong that higher income earners are penalized by having to pay at a higher rate. E.g why does someone who earns 5 times as much have to pay 7 times as much tax. Now I'm not going to get into loopholes or specifics, I would just like to see a tax system where everyone pays their fair share. And to me a fair share would be the same percentage of income for everyone.
Suggestion: Pretty obvious, flat tax system. They obvious problem is that it will mean tax cuts for the wealthier and hikes for the poorer, which on the face of it this seems unfair. But it seems to be it would actually be making an already unfair system fairer.

- Part time workers, who can work more hours if they choose to, but don't because they will lose some of their benefit.
Suggestion: This is a tough one as I think the current policy is fair, at no point are your receiving less money in your pocket from working more. This is 100% down to people's sense of entitlement, and attitude of "why should I work for $15, when i can get $10 for free".

- Families who apparently can't afford breakfast and footwear for their children, but can afford cigarettes and visits to the pub.
Suggestion: A good portion of their benefit should be in the form of food and clothing vouchers, it should be made illegal to on-sell these vouchers, and they should not be redeemable for alcohol or cigarettes. Rent, power, and phone should be legally required to be paid directly out of their benefit by WINZ.

- Families that can't afford two children, but go on to have 3, 4, or 5. And don't talk about lack of education about birth control, any 12 year old knows how women get pregnant.
Suggestion: Additional benefits per child should be capped at two children. Means tested government funded birth control - if you legitimately can't afford birth control it should be provided free of charge.

I realize that these are not clear-cut problems, and I am not suggesting that the majority of people on benefits don't legitimately need them. I just think we need a system that doesn't disincentivize working harder if you can to improve your own circumstances, along with systems to help ensure benefit money goes toward what it should.

Edit: Missed words changing entire meaning of sentence!


The problem with your flat rate tax is that it means you will lose more of your income to tax since a flat rate will need to be a lot higher to keep the amount total of tax the same.




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Stefan Andres Charsley

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  Reply # 1124286 8-Sep-2014 13:35
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charsleysa: 

The problem with your flat rate tax is that it means you will lose more of your income to tax since a flat rate will need to be a lot higher to keep the amount total of tax the same.


Will also probably mean higher tax on other things, such as GST will need to be raised up to 17.5 or 20%. Also other taxes would need to be introduced, like CGT, so effectively people will still be paying that tax, but in different ways. I do get a little annoyed when people who earn high wages think they are paying too much in tax, because our tax rates in NZ for wages are relatively low compared to other countries, and that tax has to come from somewhere. Also some of those people who do earn the highest wages tend to pay less in tax because they structure their earnings by offsetting them against expenses, to minimise the tax they pay.

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  Reply # 1124295 8-Sep-2014 13:37
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spronkey:
Geektastic:
1) We have a different definition of luxury then! To me that is Patek Phillipe, Rolls Royce, Luis Vuitton etc etc
2) PWC is merely an example. A partner would earn over $1million a year in a decent year, easily.
3) As an illustration, if you leave university with a First Class Honours in Law and get a job at a top London firm, you will be starting on $100,000 a year straight out of University. That is how far behind we are here in our view of what is 'rich'.
4) In NZ you can earn a lot - I know a number of people who earn well over $250,000 a year who are contracting in areas like Change Management and other specialised business management consultancy areas. 
5) It is odd to me that aspiration in NZ is quite muted. In most places I am familiar with a PM who started as a State House child of a single mother, went on to make himself $50 million and then came back and achieved more or less the highest office in the land would be held up as a shining role model, not denigrated as a 'rich pr**k' etc. If we do not value success and wealth creation it will not assist the country in becoming a richer and better paid place.


1) Yeah, OK - different categories of luxury, but I still think that a Rolls Royce should be attainable by anyone who works a solid 50 hours a week if they put their mind to it ;-)
2) In larger global firms yeah sure - there wouldn't be that many partners at NZ firms raking that sort of money though
3) Yes, yet if you leave with First Class Honours in say, engineering, you'd probably be starting on 2/3rds if you're lucky. If you leave with FCH in an education-related field, you're probably lucky to get half that. In any case, you're not really going to get super rich from that.
4 & 5) I partially agree, but again I don't really like your example. I think a lot of people look at John Key as someone who, while he "made it" for himself, did so in a field that many view as unnecessary and part of the problem. Additionally, I think there's a sort of diminishing returns in terms of people's value of wealth. For most NZers I'd suggest there's probably an attitude along the lines of "50 million is ridiculous when I can't even earn 1"


And that's the problem. There is tendency here to be very jealous of success.

Why, if JK can earn $50 million from what can only be described as a less than promising start in life, from his own intelligence and hard work, is the response not "Wow - how did he do that and how can I emulate what he did?!" rather than "Bah! Rich twonk, tax him more and give it to me"? In an Asian tiger economy, they study people like him at school to learn how they did what they did - they don't mock them!

At it's most simple, intelligent and hard working people will do very well in life. Hard working people will do ok. Thick and/or lazy people will not do so well.

I'm 100% fine with that.

On top of that there are some lucky people in the world too, who inherit money or other assets. Well, there are lucky people who inherit good health, who win the lottery, who missed out being on MH370 because their train was late or whatever. Life has an element of luck. 

I'm 100% fine with that too. I've seen it up close and personal - Tara Getty was at College with me. He popped out and bought a Porsche one day and just wrote a cheque out to the dealer, according to someone I know who was with him. He was 21. That does not make me want to tax him until he is as poor as I am. I accept it for what it is - his good fortune.





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  Reply # 1124304 8-Sep-2014 13:40
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mattwnz:
charsleysa: 

The problem with your flat rate tax is that it means you will lose more of your income to tax since a flat rate will need to be a lot higher to keep the amount total of tax the same.


Will also probably mean higher tax on other things, such as GST will need to be raised up to 17.5 or 20%. Also other taxes would need to be introduced, like CGT, so effectively people will still be paying that tax, but in different ways. I do get a little annoyed when people who earn high wages think they are paying too much in tax, because our tax rates in NZ for wages are relatively low compared to other countries, and that tax has to come from somewhere. Also some of those people who do earn the highest wages tend to pay less in tax because they structure their earnings by offsetting them against expenses, to minimise the tax they pay.


Well my father complain that the highest tax level is too high because that starts at 70k and he has 6 mouths to feed. 70k is too low to be considered a high earner, it needs to be pushed up.




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Stefan Andres Charsley

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  Reply # 1124310 8-Sep-2014 13:48
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The problem with your flat rate tax is that it means you will lose more of your income to tax since a flat rate will need to be a lot higher to keep the amount total of tax the same.


That may well be the case, but i would be interested to know what the tax rate would have to be.




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