Could tax cuts in 2017 be quite significant?
Table 1: hypothetical 2017 National Party tax cuts, $1.5 billion
| Current tax rate | New tax rate | Revenue loss, static scoring |
Revenue loss, dynamic scoring |
| 33% | 31.5% | $323m | $274m |
| 30% | 27.5% | $388m | $329.4m |
| 17.5% | 16.5% | $505m | $429.3m |
| Trust tax 33% | Trust tax 31.5% | $135m | $129m |
| Company tax rate 28% | 27.5% | $113m | $90m |
| Total cost | $1.465b | $1251m |
Jim Rose models a possible $1.5 billion tax cut package in 2015. This is made possible by keeping the new spending for this year and next to $1 billion instead of $1.5 billion.
He notes:
No serious participant in public policy debate could suggest that tax cuts of the size in table 1 will not have incentive effects that will lead to growth in incomes and business profits. There will be offsetting tax revenue increases that make a more ambitious tax package possible in 2017.
Using dynamic scoring, Rose calculates we could afford to do the following:
- Top tax rate down 2% to 31%
- Upper Middle tax rate down 3% to 27%
- Middle tax rate down 1% to 16.5%
- Trust tax rate down 2% to 31%
- Corporate tax rate down 1% to 27%
That would see someone earning $70,000 have their tax drop by $1,000 or $20 a week.