I never knew that you could save so much money through such simple measures.
So many helpful hints. Like, take the kids to a cheaper ski resort this year, or sell your country home. Or (and this one is very revealing)…
“Stop carrying a wedge of cash around with you,” said the ex-Goldman banker. “It reduces the temptation to tip people so much.”
But I think that this one was my favourite one – Make Your Wife Do The Ironing!
Another banker, who used to work at Goldman Sachs and now runs his own business, said he gets his wife to iron his shirts nowadays. “At Goldman there was a service in the basement where I dropped my shirts off for a fee, but now I ask Jane to do it for me,” he said.
“The wife is doing the ironing,” another banker told us. “She’s not loving it, but she doesn’t want to get a job herself so is having to accept it.”
Alas, I don’t have a wife to do the ironing for me.
A fascinating graph, and dicussion, about the pay gap between men and women.
It’s US data, so it won’t translate exactly to New Zealand, but I’m sure that the overall pattern is about right.
The jobs with the biggest pay gaps?
- Insurance sales agents
- Retail sales
- Sales and related workers
- Real estate brokers and agents
- Personal finance advisors
- Education administrators
- Physicians and surgeons
- General and operations managers
- Marketing and sales managers
- Stock brokers
- Inspectors etc. at production lines
And the jobs with the smallest pay gaps are:
- Security guards
- Warehouse stock clerks
- Paralegals and legal assistants
- Data entry
- Cafeteria workers, bussers, etc
- Social workers
- Office clerks
- Buyers for wholesale and retail
- Health technicians
Lam Thuy Vo, who compiled the graph, notes that:
The jobs where the gap is biggest pay more, on average, than the jobs where the gap is lowest.
I think that its interesting to think about which jobs are marked male, and which jobs are marked female. My estimate is that about 10 of the 11 jobs with the biggest pay gaps are marked male, and about 8 of the 11 jobs with the smallest pay gaps are marked female. YMMV on this, of course. I’ve said before, tongue in cheek, sort of, that one way to even up the gender pay gap is for more men to take on “women’s” jobs. The converse of that is that more women can attempt to enter “men’s” jobs. But what this graph shows is that even when women move into those higher paid roles, they still can’t get rid of the gap between their pay, and men’s pay.
And no, it’s not just because women take time out for child bearing and rearing. As the original article says:
Part of the gap in pay is driven by choices, even within single job categories. Among physicians, for example, women are more likely than men to choose lower-paid specialties (though this does not explain all of the pay gap among doctors).
And among all workers, women are more likely than men to take a significant time off from work to raise children, and they tend to be re-hired at lower wages than their counterparts who remained in the workforce.
But not all of the difference be explained by choices such as these.
I have a column in the Dominion Post today.
It’s easy to criticise the welfare system. Beneficiaries get too much money, too many of them cheat, and it all costs too much. But the unrecognised reality is that our comprehensive health and welfare systems create freedom and security for us all.
Those of us who are fortunate enough to be able to pay taxes have a straightforward reason to support the welfare state: it’s simple prudence. One day, it may be our turn to depend on the state.
Our health and welfare systems are based on need, not some notion of worthiness. If we are in need, we are entitled to assistance, and that means that we may live as free citizens. It means that we are secure from economic fear, secure from absolute want, and secure from the interference of our neighbours. That freedom and security makes all of us beneficiaries of the welfare system.
This time, I’ve outed myself as a lecturer in Taxation, and a newly joined member of the Labour Party. I’m not sure how long I’ll be welcome in the party, of course…
As ever, the subbing is by the newspaper, not by me.
You should also read Giovanni’s excellent post on this topic: The Man on the Roof
According to Otago University student paper Critic, John Ansell wants to start a campaign aiming to make New Zealand “colourblind” (sic), because our laws are completely unfair to white people and Maori people get far too much special treatment under the law.
Ansell claims that he’s got plenty of factual evidence to show that Maori get special treatment, and he’s going to cite it in the campaign.
Speaking to Critic, John Ansell, the advertising guru behind the campaign, described the planned advertisements for Treatygate as “short sharp little messages with one piece of evidence in each one”, such as that “Maori companies pay 17.5% tax, [while] others pay 28%.”
So, do Maori companies really pay 17.5% tax, while every other company in the country pays 28% tax?
Let’s start with the definition of a company, for the purposes of taxation. You can look it up on-line, and you will find it in section YA of the Income Tax Act. If you scroll down to “company” you will find that there is no special type of company called a “Maori company”. Scroll even further through the list of definitions, and you still won’t find anything that’s called a “Maori company”. However, you will find a “Maori authority”. The list of definitions tells us to go to part HF of the Act for all the rules to do with Maori authorities. It turns out that there are various entities owned by Maori organisations that can elect to be “Maori authorities”. But those entities are all involved in holding and managing assets for the benefit of Maori. The ultimate owners of the assets are Maori people.
So what is the tax rate for Maori authorities? To find that, you need to go to Schedule 1 of the Income Tax Act. There you will find that the rate for ordinary companies is 28%, and the rate for Maori authorities is indeed 17.5%.
The question is, why?
To understand why, you need to understand a little bit about the way we tax companies.
We tax company profits at 28%. Then companies pay out dividends to shareholders, out of the tax paid profit, and the shareholders have to pay tax on those dividends, at their own individual tax rates. So if you are someone who earns say, $100,000 a year salary, then you will be on the top tax rate of 33%. When you get dividends in addition to your salary, you will pay tax on them at 33% too. And that starts to look unfair, because you’ve already paid 28% tax on the company profits, via the company itself.
However, the New Zealand tax law is very clever. Through what we call the dividend imputation system, you get a credit for the tax that has already been paid by the company. The mathematics is a little complicated for a blog post, but take my word for it, please. The overall effect of the dividend imputation system is to make sure that you pay tax on your dividends at exactly the right marginal rate for you, even after the credit for tax paid by the company is taken into account.
Most investors in companies have reasonable incomes, so they pay one of the higher rates of tax. At present, for every dollar you earn over $70,000, you pay 33% tax, and for every dollar you earn between $48,000 and $70,000, you pay 30% tax. So given that companies only pay tax at 28%, most people who earn dividend income end up having to pay a little more tax on their dividends, to bring the overall rate up to 30%, or 33% (depending on how much other income they earn). Some shareholders get a refund. If you earn less than $48,000 a year, then the top rate of tax you pay is 17.5%. So given that the company has already paid 28% income tax, you will get some tax back (or in some circumstances, you will get a credit to carry forward to your next tax return).
It’s all a bit complicated, but in the end, it works out. We describe this as an integrated system of company taxation, because the taxation of the company is integrated with the taxation of shareholders.
As it turns out, when it comes to Maori authorities, we have an integrated system too. People who receive income from Maori authorities also get a credit for tax paid by the Maori authority. However, they only get a credit for 17.5% tax paid, because that’s the rate of taxation set for Maori authorities.
And the rate of taxation for Maori authorities is set at that much lower level for very good reason. There is an increasing number of highly paid Maori people. We can all name Maori lawyers and doctors and university lecturers and business owners and senior public servants, all people earning good incomes, and paying a higher rate of tax. However, sadly, because this is one of the many ways in which Maori as a group are simply not equal in New Zealand, we know that a greater proportion of Maori people do not earn high incomes. Accordingly, the applicable tax rates are lower, just as they are for other New Zealanders who earn low incomes. Someone who earns less than $14,000 per year pays only 10.5% tax on that income, and someone who earns between $14,000 and $48,000 pays 17.5% on that income (that is, the income between $14,000 and $48,000).
The Maori authority rate is set at 17.5% because it more accurately reflects the underlying tax rates paid by the people who are entitled to the income from Maori authorities. And ultimately, when those people who have received distributions or dividends or income from Maori authorities pay income tax themselves, it all gets evened out. It’s as simple as that.
But evidently, that’s far too complicated for John Ansell. It seems he would far rather distort the truth of the situation in favour of a quick and nasty headline grab. This is a poisonous approach.
I can’t stop Ansell from spreading his distortions. But what I can do is tell the truth. Consider this post a start.
First of all, you buy a packet or two of Choco-ade biscuits.
Then you select one.
(Description: round biscuit with fluted shortcake edges, topped with chocolate)
You nibble away the shortcake edges, so that just the bottom layer of shortcake is left under the topping.
(Description: base of Choco-ade biscuit, showing shortcake, hints of jam under it, and edges of chocolate topping)
Then you lick off the jammy filling, and eat the circle of chocolate.
(Description: round of chocolate with bits of jam on it)
I can’t show you the eaten biscuit, because, well, it’s eaten.
The last step: you think carefully about whether or not you should eat another one. You need to be careful about this, because eating two at once is really half a Choco-ade too much, as you know from previous experience.
You haven’t been able to go through this process for twenty years! But thanks to Griffin’s and one woman who campaigned for the return of Choco-ades, now you can. Amber Johnson, I am very grateful to you.
Griffin’s has done a stunning job on the relaunch of Choco-ade biscuits. There were big stories in the major daily newspapers on Monday morning, and a segment on a popular news show on TV3 on Monday evening. The first batch of the biscuits is being auctioned on Trade-Me (NZ’s on-line auction site), with the proceeds going to Amber Johnson’s chosen charity, Plunket. The biscuits weren’t in my local supermarket on Monday, but they were there by Tuesday, and apparently they are available all over the country now, so Griffin’s got the logistics right too. It’s all very well done feel good stuff. Also, the biscuits taste delicious.
But buried in the story in the NZ Herald is a clue about what’s really going on.
Mrs Johnson has been involved in the production, flying up to Auckland to take part in a taste test at Griffin’s Papakura factory.
She was keen to make sure the new biscuit is as close to the original as possible, especially as they are now manufactured by machines, not handmade as they were in the 1980s.
They were dropped because they were too expensive to make, and now they’re back because they can be made by machine. No doubt Amber Johnson’s campaign came along at the right time, and helped to persuade Griffin’s that there was a market for the biscuits. But ultimately, it was about the economics of making them.
And the price? At my supermarket, $5.29 for a pack of 12. Ouch.