Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 

Penalty Tax For Being Married As High As $15,000

MEDIA RELEASE
20 October 2008

Penalty Tax For Being Married As High As $15,000

A married couple both working and on low incomes, or a family with a full-time parent are being penalised by up to $15,000 in their household income compared with a couple who separates or divorces. Low income families are being hardest hit by NZ’s ‘marriage penalty tax’ and poverty trap.

Following today’s release of a report estimating the price of family breakdown and decreasing marriage rates to be costing the taxpayer at least $1 billion per year and $8 billion over the past decade, Family First has released calculations obtained from the NZ Institute of Economic Research (NZIER) showing that under current tax schemes, married couples from low income families would be up to $15,000 better off in terms of income in the hand if they separated.

For a married couple who are both working and receiving low incomes (for example $40,000 each) and have 3 children, their joint income is $14,715 lower than if they were separated or divorced because of the interaction of  family income assistance programmes such as the Working for Families Tax Credit and the Accommodation Supplement.

For a married couple where one parents full-time and the other is on a low income ($40,000) the parents could be $12,000 better off by separating before allowing for Child Support and changes in expenses. In addition, if the parents each receive a small pay increase, the family tax rate on this extra income can be as high as 69%.

“The government has created a system which contains perverse disincentives for parents to get or stay married,” says Bob McCoskrie, National Director of Family First NZ. “The NZIER report and calculations show that the presence of marriage penalties in our tax system means that some people are discouraged from entering into or remaining in a relationship in the nature of marriage because of the family income assistance system.”

Poverty traps occur when, due to taxation and the clawback of assistance, there are few or no financial incentives for people to enter into or remain in work, or to increase their hours of work or wage rates.

According to a 2002 OECD report, NZ has some of the highest effective tax rates in the world. It is argued that this is contributing to high levels of family breakdown.

“With the report showing the huge fiscal cost of family breakdown and these figures showing the tax disincentives for marriage, it is urgent that these factors be included in research on policy issues  concerning poverty and family breakdown, and that the government get over its ideological opposition to talking about and strengthening marriage,” says Mr McCoskrie.

Download the Marriage penalty Calculator http://www.familyfirst.org.nz/files/MarriagePenaltyCalculator.xls

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On Why Labour Isn’t Responsible For Barnaby Joyce

As a desperate Turnbull government tries to treat the Barnaby Joyce affair as a Pauline Hanson fever dream – blame it on the foreigners! We’re the victims of the dastardly New Zealand Labour Party! – our own government has chosen to further that narrative, and make itself an accomplice.

Evidently, the National government is similarly desperate for anything that might discredit or derail the Ardern juggernaut, even if that means throwing Internal Affairs Minister Peter Dunne under a bus More>>

 

Treaty: Agreement In Principle Signed With Moriori

“The Crown acknowledges Moriori was left virtually landless from 1870, hindering its cultural, social and economic development. The Crown also acknowledges its contribution to the myths that the people of Moriori were racially inferior and became extinct." More>>

ALSO:

Susan Devoy: Call For Inquiry Into State Abuse Reaches UN

Race Relations Commissioner Dame Susan Devoy is in Geneva and has asked a United Nations committee to urge the New Zealand government to initiate an inquiry into the physical and sexual abuse of children and disabled people held in state institutions. More>>

ALSO:

(Not National): Cross-Party Agreement On Pike River Re-Entry

The commitment was signed this afternoon by the leaders of Labour, United Future, The Maori Party, and the Green Party and, together with the earlier commitment by New Zealand First, means that there is now a Parliamentary majority behind the families’ fight for truth and justice. More>>

ALSO:

Earlier:

Mental Health Foundation: 'Positive First Steps'

“The heavy reliance on pilots and targeted approaches in the package announced today makes it plain that additional funding will be needed so that activities that work can be made available throughout New Zealand,” says Mr Robinson. More>>

ALSO:

'Gift' To NZ: Synod Considers Third Christchurch Cathedral Option

Members of the Anglican Diocese of Christchurch will consider three, not two, options regarding the future of the ChristChurch Cathedral... The new option is for the Synod to gift the Cathedral building to the Government for the people of New Zealand. More>>

ALSO:

PM's Presser: Labour's Water Policy 'Reckless', Says English

The Labour Party has "bumbled into" its policy to charge for water in a "reckless" way that would put a Labour-led government on a collision course with both Maori and other water users, Prime Minister Bill English said at his weekly post-Cabinet press conference.. More>>

ALSO:

 
 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

Featured InfoPages

Opening the Election