Transtasman Tax Rates

The Herald on Sunday has devoted both an editorial and a news story to the Australian tax cuts and how this will attract even more Kiwis to Australia. Both items quote the tax tables I did last week.

The editorial concludes:

But his [Dr Cullen] stony-faced opposition to personal income-tax cuts is now beginning to look like ideological hard-heartedness.

Much as he may wish it were not the case, the average New Zealander needs and deserves a tax cut – now. Next year, when it is likely to look like an election bribe, will be too late.

I’ve done a new table showing how much Peter Costello has cut tax for Australians since 2000, the same year Dr Cullen became our Finance Minister. Dr Cullen’s sole act to date for personal income tax was to increase it for those earning more than $60,000. Look at what Costello has done:

Every person earning $30,000 or less has had their tax more than cut in half. You don’t even start paying tax until you now earn $11,000 in Australia. And everyone between $30,000 to $100,000 has had a greater than 30% tax cut.

Over the break is the revised NZ/Aus comparisons. It differs slightly from last week as I eventually discovered the income levels at which the $750 low earner tax offset phases out. It means you actually start paying less tax in NZ at $230,000 instead of $250,000. Wow wee!

At $30,000 you pay under 10% of your income in tax in Australia, and in NZ it is double that at almost 20%.

For those who want to check the calculations, these are the underlying rates:

And these are the former Aussie rates:

Sources are NZ Treasury Key Facts for Taxpayers and Australian Budgets and ATO.