By John Pagani*
"As someone who earns more than $150,000 a year," lawyer Casey Plunket warns he will leave the country if he has to pay the tax rate he paid three years ago.
Where is he going to go? Australia? That's where he "will still be paying tax in Australia at higher rates but they will be earning much higher incomes."
Yup. He would pay more tax in Australia. The problem is not the tax rates, it's our incomes. If you abolished income tax altogether in New Zealand, we would still have lower after tax incomes than Australia.
He said: "We need every advantage we can over Australia to keep our higher-earning and more-productive people in the country."
How many people have flocked to New Zealand from Australia for our lower top tax rate?
None. Therefore the competitive advantage that logic would say the impecunious Mr Plunket is calling for is a higher top rate.
Property investor David Whitburn has more than $1 million equity in his property portfolio. He asks why property investors would "invest in New Zealand when they can get better capital in Australia?"
I don't know what 'better capital" means, and I suspect it means nothing at all, but his investors will find a nasty shock when they get their capital to Australia: A somewhat higher capital gains tax than is proposed for New Zealand.
The trouble with his sort of thinking is that 'someone who earns more than $150,000 a year', or someone who has spun a $7000 stake into a million, is pretty much going to say everything is fine with the New Zealand economy and nothing needs to change.
But everything isn't fine.
The problem is not that our tax rates are too high, but that our earnings are too low.
Is it possible that if we want to have an economy that performs more like the Australian one, that we should make ours look more like the Australian economy? In which case we would have a broad-based tax system that encourages investment to where it achieves the highest rate of return, rather than an economy that encourages investment into property for tax gains.
*John Pagani is an independent political consultant and writer who has worked as an adviser to Labour Leader Phil Goff. He writes his own blog at http://johnpagani.posterous.