SST on tax bracket creep

The SST has a good article on how much more in tax people are paying due to bracket creep. This was meant to be mitigated by the tax cuts announced in 2005, but lest we forget Dr Cullen cancelled them in 2007. Some useful extracts:

• Wage earners have paid an extra $1.7 billion in tax since Labour took office due to bracket creep.
• 150,000 more people have moved into the top bracket of 39c in the dollar.
• almost one in every five dollars of extra personal tax revenue reaped by the government since 1999 has come from bracket creep.
• When Labour came into office it said there would be no tax rise for those on $60,000 and that the new top rate would affect only 5% of taxpayers. However 11% are now paying the top rate because of the effects of bracket creep, including three-quarters of secondary school teachers
• Average earners, too, are paying more tax because of bracket creep. Average ordinary time earnings rose from $33,968 in 2000 to $44,123 in 2007, putting the average worker into a higher tax bracket. By 2007, 21.4% of their income was being gobbled by tax, up on 19.3% in 2000.
• Finance Minister Michael Cullen would have to move the top bracket back up to $79,000 to keep Labour’s 1999 commitment.

This is worth remembering – if Dr Cullen moves the top tax rate to only $80,000, then in real terms it is no tax cut at all – it is just reducing the extra tax you should never have paid in the first place.