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Bill English Accidentally Endorses ACT Policies
Bill English Accidentally Endorses ACT Policies
“Bill English has accidentally endorsed ACT’s tax policy. We aim to cut the company tax rate from 28% to 20% next year and to 12.5% by 2020” said ACT Leader Dr Jamie Whyte .
Mr English does not deny that lowering the company tax rate will increase growth, create jobs and lift real wages. How could he when that is what all the research shows?
Instead, he quibbles that the top rate of personal income tax and the company rate should not be very different: “You just invite people to dodge taxes by setting up structures that make them look like companies instead of people.”
That does indeed happen. But there are two problems with Mr English’s objection.
“The first is that the small economic cost of such behaviour is swamped by the massive benefits of reducing the corporate tax rate. “
“The second is that our tax proposals will close the gap between the corporate and personal rates. Today the top rate of personal income tax is 33% and the company rate is 28%: a gap of 5 percentage points. On our fully costed tax proposal, in 2015 the top personal tax rate will be 24% and the corporate rate will be 20%: a gap of 4 percentage points.”
Dr Whyte said “ACT is grateful to Mr English for drawing attention to an additional benefit of our tax policy.”
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