Hard News: A Big Idea
92 Responses
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OIC. I'm not entirely sure what the exceptions are. Exempting people in distress makes a lot of sense, as does allowing premature access to the funds for people in severe financial distress. Hopefully Labour's nutted that stuff out for their scheme. But also note that if it's a small percentage of income, beneficiaries are probably only going to be putting away a very small sum. I'd think the best thing to do upon phasing it in would be to lift all benefits by that percentage, so that there's no net change. Similarly with taxpayers, a drop in income tax at the time would do a lot to grease the passage of the schmax. That's how the National Party would do it.
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Yes, I suspected it might be distress, soo I've asked him. Some beneficiaries are already in Kiwisaver, and to head toward 9% could put them straight into the distress category anyway so that hopefully is addressed too. I await his answer.
Oh, and thanks for yours too! -
Bart Janssen, in reply to
a drop in income tax at the time
NO. God no. Don't even think about it. The drop in tax is one of the major factors in the US federal budget crises.
Much better to use one of the other existing tools to raise income for people living close to or below the budget line. Like say, working for families (which apparently National invented /sarcasm) and something else for those who choose not to have families.
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Moz, in reply to
I'm not entirely sure what the exceptions are.
In Oz there are so few exemptions that it might as well be mandatory. If you're a permanent resident or NZ'er you can't avoid putting money in unless you stop earning or retire, and you can only get it out to avoid starvation or if you're nearly dead. The main exemption to paying in is guest workers with a compulsory scheme in their home country.
The big thing in Oz is that pay is exclusive of super unless you're on a salary, where sometimes it's "packaged". Which means that for poor people they get $x/hour plus super, rather than the NZ scam where it's $X/hour except oh by the way we're taking some of that and putting it where you can't get it. Which also means that when the government hikes the rate your take-home pay doesn't change, only what you cost your employer.
Where NZ does better is that kiwisaver is a low-fee system, so rather than poor people being forced to donate their savings to the finance industry it actually builds up from the first dollar. Over here it requires each person to work out which fund to use, and the low-fee funds can be hard to find (they are introducing a govt-backed low-fee fund now... after a decade or more), otherwise people with little money in super can find themselves paying an annual fee of $200 or more, plus 2% of their total each year, plus 5% on contributions. I got screwed that way once before they bought in "super choice" (letting employees choose their own fund), because the *ankers I was working for used a fund that charged me a lot of fees and presumably paid them a kickback. The $2000-ish compulsory super I put in over a few months vanished before I could get it out (they charged $500 if you closed the account within two years, as well as every other fee they were allowed).
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Sofie Bribiesca, in reply to
Like say, working for families (which apparently National invented /sarcasm) and something else for those who choose not to have families.
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Moz, in reply to
David Parker says, it helps everyone
Except those poor people who are debt-free, anyone saving money, and those living off the earnings.
Of banking, not prostitution, that is.
I'm in the "trying to save to buy a house" category so the only way this would help me is if it pushed interest rates up or caused house prices to collapse. But since it's designed to do exactly the opposite I'm not seeing how it helps me.
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bmk, in reply to
No. It just isn’t a tax, by any definition of tax I can think of.
I agree with Ben on this. I'm not in KS but if I were it would feel like a tax. Money taken out of my pay before I see it which I maybe able to access in 30 years time or something. Is the ACC levy that gets deducted a tax in your book? Because it feels like it to me as well and I see KS as the same.
I find the idea of compulsory KS scary. I have a tightly balanced budget as it is - I can't afford to pay KS contributions too and especially if the rates are going to vary so I can't even budget for it. And people will say there are low-income exemptions but they won't help me - I have an income somewhere between the median and mean income.
A large chunk of my income is going into paying off interest-bearing debt and the interest on this debt is far higher than any returns on KS will be. I'd be really, really screwed with compulsory KS brought in unless there were a corresponding tax cut for the full-amount that would be deducted and I doubt that's going to happen.
I'm glad Labour have at least brought out an economic policy though and we are having this discussion. I could be in favour of it if KS were to remain voluntary. But in this form I'm sadly feeling like this might be the first election I don't vote in.
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bmk, in reply to
Imagine what would happen if we introduced a little supply side economics into this.
The biggest problem facing most people is the cost of housing, rent or mortgage.
Now that's really inspirational. Rather than meaning people get less money in their pockets. Build cheap housing which will both employ people and lower the cost of housing. That's an idea I'd really get behind.
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Sofie Bribiesca, in reply to
I’m in the “trying to save to buy a house” category so the only way this would help me is if it pushed interest rates up or caused house prices to collapse.
I'm in the "trying to sell a house"category and if interest rates stay low, that has to help any mortgage payments. If you are debt free and can buy your house without a mortgage, I don't see a problem. I'm going to that and have no cause to think I should have more than anyone else so would not be upset by lower interest on my savings but that's just me. Wanna buy a house? ;)
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Steve Barnes, in reply to
But since it’s designed to do exactly the opposite I’m not seeing how it helps me.
Apparently we are here to help others. I just don't know what the others are here for.
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Sofie Bribiesca, in reply to
I could be in favour of it if KS were to remain voluntary. But in this form I’m sadly feeling like this might be the first election I don’t vote in.
What does that achieve? I asked David Parker to consider low income and beneficiary situations of which isn't compulsory, and I expect they will make sure it's affordable. They are increasing minimum wage too remember , that's another tool. Labour will consider all who get scared, I'm sure. Darien Fenton would have a hissy fit if she thought it was hurting low income.
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Steve Barnes, in reply to
I’m not in KS but if I were it would feel like a tax.
How about "Deductions for expenses incurred" instead?, sounds more friendly than Tax. Whereas KS is more like "Deductions for expenses that will occur at a time when you ain't got much coming in"
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Steve Barnes, in reply to
Build cheap housing which will both employ people and lower the cost of housing.
Yup, old established techniques that have been tried and tested over millennia, not so much the mock Tuscan micro Mc Mansions we have foisted upon us.
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bmk, in reply to
What does that achieve? I asked David Parker to consider low income and beneficiary situations of which isn't compulsory, and I expect they will make sure it's affordable. They are increasing minimum wage too remember , that's another tool
Well if they raise the contribution for those voluntarily (which is still a large amount of people) it should still have a significant effect on taking money out of the economy. If you say it won't work with only people voluntarily in the scheme then I don't think it will work if everyone is in the scheme. There are already enough people in KS that if the idea is sound it will work and this will save forcing people into it who either don't want to or can't afford it.
As to your other point; they probably will make sure beneficiaries and people on low incomes are ok. But I'm sure there are plenty of people in similar situations to me, where you have a middle income but a fully committed budget. In this situation there are only two things that could work a. Leave KS as voluntary b. Build a tax-cut in at the same time that is equal to the compulsory KS contributions.
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Andrew C, in reply to
can find themselves paying an annual fee of $200 or more, plus 2% of their total each year, plus 5% on contributions
OMFG
And I thought the fees NZ brokers/funds charge was rapacious! That is simply outrageous
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Sofie Bribiesca, in reply to
If you say it won’t work with only people voluntarily in the scheme then I don’t think it will work if everyone is in the scheme. There are already enough people in KS that if the idea is sound it will work and this will save forcing people into it who either don’t want to or can’t afford it.
Oh no I didnt mean that it wont work ,I meant if its compulsory its affordable. Anyway, I’m leaving this big Idea thread now, heading over to the marijuana thread, and calling into the food thread when I get hungry, G’nite
(I might be at the Maaaarijuana thread for some time) -
Bart Janssen, in reply to
Like say, working for families (which apparently National invented /sarcasm) and something else for those who choose not to have families.
David Parker says, it helps everyone
I was specifically referring to assistance for low income workers who don't have families and will need help to cover the increased cost of the KS for them. That assumes they use Working for Families to assist those with families to cover that gap.
I recognise that the package is meant to help all low income workers.
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