Do we need real income-tax cuts this year? Probably not.
Do we need nominal income-tax cuts? Yes, we do.
The government should go ahead with its proposed tax cuts, but only to low- and middle-income earners.
The tax cuts should compensate for the inflationary component of the cost-of-living crisis. But high-income earners – eg
people receiving incomes in excess of $160,000 per year – should be willing to make a small sacrifice for the greater
good.
To do this, the government – if it wants to be re-elected, and if it wants to do the right thing – should go ahead with
its tax reduction policy; as per the National Party 2023 election campaign promise, but with one proviso.
The government should lower the top tax threshold of $180,000 to about $160,000.
Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and
Statistics. He lives in Auckland, New Zealand.