Remits seeking to enable single income families to split their income for tax purposes used to be hardy annuals at National Party conferences.
I used to think it was a good idea but patient explanations from people who work on facts rather than emotion persuaded me to change my mind.
One point raised was the difficulty if the income earner had an accident or became ill – his or her ACC or insurance payments would be based on the split income not the full one.
High administration costs; an increase in marginal tax rates if the partner on no or low income started work, worked longer hours or got a pay rise; and the bulk of the benefit going to those who needed it least were other arguments raised.
Lower taxes and a simpler tax system would do more for most people than tinkering which adds compliance costs.
These arguments apply to the income splitting bill Peter Dunne is trying to get through parliament and several government departments have raised other concerns:
Papers obtained by Radio New Zealand News under the Official Information Act show the Government consulted the Labour and Inland Revenue departments, the Ministries of Social Development and Women’s Affairs and the Treasury.
The departments raised concerns the proposal discourages women’s workforce participation, discriminates against sole-parent and low-income families, and increases the gender pay gap.
I’m not going to take issue with any of these points but note all these arguments could be used against Working for Families.