Trotters forgets tax

Chris Trotter writes:

Well, here’s an idea (hat-tip to Danyl McLauchlan). Why not make it a rule that a Labour MP cannot take home more than the average wage of, roughly, $55,000 per year. The balance of their income, $95,000, would go to the party. This would guarantee Labour an annual income, from its current 32-strong caucus, of at least $3,040,000 per year, or, $9,120,000 over the three year parliamentary term.

That’s not a bad war chest – and just think of the effect on Labour’s voters! Knowing that their MPs are unwilling to take home more than the average income earner. That they’re prepared to give up two-thirds of their salaries to ensure that, come election time, the party of the workers stands a fighting chance against the party of the bosses. That they’re not just in it for the money, and the perks, and the power. What do you think that would do for building trust and identification?

There’s one problem with Chris’ calculations. He’s forgotten tax.

Perhaps Chris silently yearns for a low tax economy, where high earners can donate most of their salary to good causes, rather than pay it to the IRD. But we are not there yet.

The IRD will take $40,420 in tax off each MP compared to $9,520 for someone on $55,000. So that is $30,900 less money per MP to be tithed which is $2,966,400 less money over a three year term.

Maybe that would convince Labour to champion low taxes though – so they can tithe more of their income to Labour!