The tax rate for Maori authorities
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.
He doesn’t speak for me, but does he speak for John Key?
Act backer: we all dislike Maori
It turns out that that one of the biggest donors to Act has some very nasty views about Maori. And he claims that all “white New Zealanders” (his phrase, not mine) share his views. Just for the record, I don’t.
Louis Crimp gave $125,420 to Act, in order to get support for his opinions. His views about Maori are racist, and factually inaccurate, exactly the sort of thing that any responsible political leader would reject. But Mr Crimp has been encouraged in holding these views by Don Brash and John Banks, both of whom have snuggled up to him, and taken his money, which he gave to Act in order to support more Maori bashing.
“I supported Act because I thought Brash would go along the way for Maoris to be treated like equal New Zealanders … they don’t get any more than a normal New Zealander and we’re all the same.
“The money I gave was to get Don Brash in to go with his things about the Maori.
Act has defended him on the grounds that he is entitled to his views. Well… yes. But Act did not have to take his money. It’s one thing to cherish freedom of speech, and another thing to endorse outrageous racism by cosying up to someone who speaks hate.
Any responsible political leader would have walked away from this man. But all Don Brash and John Banks could see was the big cheque he was waving about.
And it turns out that Act intends to continue taking Louis Crimp’s money and racism.
Act’s president, Chris Simmons, said he disagreed with Mr Crimp on some areas but respected his right to have a view.
He said he saw Maori culture as “part of our culture”.
“One of the beauties of the Act Party is we believe everyone should have their say.
“That’s his view.”
Mr Simmons said the party would take Mr Crimp’s money again.
Mr Banks, Act’s sole MP, did not respond to calls.
One thing that intrigues me about this is story is exactly why the NZ Herald is giving space to this man’s views. But the by-line on the article is revealing: David Fisher. Journalist David Fisher has been pursuing the links between Kim Dotcom and John Banks with vigour, and in the process, revealing more and more about Banks’ character. This is more of the same.
I welcome it. Our MPs do not need to be perfect, but we do expect them to be reasonably decent people, with a bit of integrity. Fisher’s ongoing revelations about John Banks and the type of people he likes to associate with are exactly what journalists should be doing: holding our political rulers accountable for their words and actions.
I wonder if the good people of Epsom will ever hold their noses and vote for Banks, or any Act candidate, again?
And for just how long does Prime Minister John Key want to be associated with Banks and his merry band of racists?
“Free” contraception: disingenuous, or just plain nasty?
I’ve seen three sets of arguments supporting the government’s plan to provide limited free contraception to women on the DPB. The first two are positive arguments in favour of the plan, and the third is a response to arguments raised by people opposing the plan. They are: (1) it’s free contraception; (2) it’s all about improving choices; and (3) it’s not eugenic or racist at all. Let’s look at each of them in turn.
(1) It’s free contraception.
No, it’s not. It’s free contraception of a certain type. It’s only free if you make a government approved choice to use long lasting contraception, such as an implant or an IUD. If it was genuinely free contraception, then the government would be supporting all contraceptive choices, not just the ones that constrain women’s choices.
(2) It’s all about improving choices
It doesn’t improve choices at all. It actually decreases choice with respect to contraception, by weighting the choices heavily in favour of one choice. Of course, women can still “choose” to use other forms of contraception, but when one choice is free, and the others cost money, then a woman who is already poor (remember, this is available only to beneficiaries) may find that she can’t afford to make any other choices about controlling her fertility. If it’s a choice at all, it’s a Hobbesian choice.
Fear and liberty are consistent: as when a man throweth his goods into the sea for fear the ship should sink, he doth it nevertheless very willingly, and may refuse to do it if he will; it is therefore the action of one that was free: (Thomas Hobbes, Leviathan
Of course, the “choice” offered is not nearly so extreme as Hobbes’ choice, but it is nevertheless a choice that is badly skewed by the costs attached to some options, and as such, it does not improve choices.
(3) It’s not eugenic or racist
Morgan Godfery and I (one, two) have both argued that the policy has racist overtones, in that it is seeking to control the fertility of poor women, and poor brown women, who make up about 53% of those receiving the Domestic Purposes Benefit. The response has been to say, “No, it’s not!” I would stop short of the word “eugenic”, but I do think that there are very nasty overtones about controlling women’s fertility, and given the high proportion of Maori and Pacific Island women amongst beneficiaries, a racist overtone as well. This can be seen in the type of contraceptive that is approved for use: it is long-term contraceptives, which controls fertility for years at a time. But more than that, it is the fact that the “free” contraceptives will be available not just for women on the benefit, but for their sixteen to nineteen year old daughters as well. In other words, not only does the government want to stop poor women from having babies, but it wants to stop their daughters from having babies too. The government is extending its control of women’s fertility to the second generation. It’s that extended reach that makes the policy worrying.
I think that many of the people supporting the policy, or at least not opposing it, have brushed over the details, focusing on “free” contraception, instead of contraception of certain approved type, the weighting of choices, and the reach into the second generation. The government has glossed over these details, but they make all the difference.
As the Dim-Post has pointed out, the government is only spending a million dollars on this policy. It’s chicken feed, and for that small price, they have generated a huge amount of discussion. I’ve said it before, and I think that it’s still valid: there’s a giant dogwhistle in all this, National pandering to its base, inviting them to hate on the beneficiaries. How despicable is that.
This isn’t really news: doctors like controlling women too
From New Zealand Doctor’s twitter feed:
NZ Doctor tweet
H/T:@pictorialjack The organisation is New Zealand Doctor, and the twitter feed is NZDoctor_news.
The tweet reads: NZMA “strongly supports” policy enabling women on benefit & female dependents of beneficiaries to get financial assistance re contraception.”
Except… it’s not financial assistance for contraception in general. It’s long term contraception only, whether it’s suitable for the woman or not, and it’s part of a policy designed to control the fertility of a particular group of women in our society.
Check out my previous post for the details on this horrid policy: Making those slappers cross their legs. The effect of the policy is to control what women may or may not do with their bodies. More than that, given that over 50% of people receiving the DPB have brown skins, it’s hard not to read this policy as one of stopping all those poor people, and all those brown people, and especially those poor brown people, from breeding.
And the NZMA is supporting it. I guess I shouldn’t be surprised.
Racism on offer in Epsom
John Banks on TV3′s program, “The Nation”.
For my friends in Australia and beyond, John Banks is leader of the Act party. His party is currently polling at 1.5%, which means that under New Zealand’s MMP electoral system, they won’t get any seats in Parliament, unless someone from Act wins an electorate seat. John Banks may win the seat in Epsom, if enough National party voters there hold their noses and vote for him.
This is the man they are being asked to vote for.
Transcript:
Well, we’re all victims of crime. All victims of crime. If we continue the bankrupt response of just paying young Polynesian, young Maori men in south Auckland the dole to sit in front of TV, smoke marijuana, watch pornography and plan ..ah.. more drug offending and more burglaries, then we’re going to have them coming through our windows regardless if we live in Epsom or anywhere else in the greater Auckland, we have to deal with the root cause of law and order.
I don’t think this needs any analysis at all. It’s just out and out, vicious, nasty racism.
Yesterday, our Prime Minister John Key, leader of the National party, had a cup of tea with this man, in a clear signal to people in Epsom that they should vote for him, and so get the Act party into Parliament.
John Key wants people in Epsom to vote for racism.
