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Has Tax & Inflation Negated Wage Rises?

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  • Has Tax & Inflation Negated Wage Rises?

    Wages Up So Where's The Money Gone?

    Workers on the average wage are at the centre of
    a political row after figures show thousands of dollars
    in pay rises have been whittled back to a few hundred
    by higher taxes and inflation.

    A "Joanna Average" is at the centre of the tussle,
    with National's figures showing she is only $500 a year
    better off than seven years ago once inflation and
    higher taxes are taken into account - despite her
    earnings increasing from $33,968 a year to $44,123
    a year. Her earnings mirror the average fulltime wage.
    - Excerpt
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

  • #2
    Right on Perry. Similarly people who invest cash in managed funds etc. have the same problem.
    If you're getting say 9% interest people go yippee. Except take out 2% management fees, 3% tax and 3% inflation you make a whole 1%. And you pay the fees even if the fund makes a loss.

    That's why Ilike property, inflation proofed and tax friendly!!

    Comment


    • #3
      Isn't it actually worse than that? I seem to recall it was
      possible to have to pay tax in a year that such a hapless
      investor's unit share total value went down.
      Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

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      • #4
        Yes I was being kind. I think most funds do OK, but not after tax and inflation.

        Comment


        • #5
          So your comments on the Gov't KiwiScrewer scheme are . . . . .

          (It's OK - I can guess )
          Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

          Comment


          • #6
            Kiwisaver is a bit different - you get a few more benefits than a normal managed fund.

            e.g. $1000 starter, $1080 tax benefits per annum, $40 towards fees per annum, 1% employer paying into from April.....etc

            Comment


            • #7
              Imagine earning $40k per year. How would you survive? How would you bring up a family or pay a mortgage. And this is the average wage! So a lot of people earn a lot less!
              Squadly dinky do!

              Comment


              • #8
                It's better than nothing but it's a savings scheme designed by poverty mentality people for pverty mentality people basically.
                However the impact of it once it becomes compulsory will be good for NZ. Look at Oz, (who we are copying), it has been fantastic for their economy.

                Comment


                • #9
                  If it is good for the economy it will be good for New Zealanders. Sure, many can do better on their own, but many people have neither the interest or the smarts to lift a finger for their future. For these people it is better the government has in place some form of compulsory savings and investment scheme. I am normally against socialist intervention, but in this case I think it's a good thing - for all of us. The thinkers and workers would end up paying for the lazy and stupid through higher taxes - at least this way the lazy and the stupid will themselves be contributing something towards their future.
                  Julian
                  Gimme $20k. You will receive some well packaged generic advice that will put you on the road to riches beyond your wildest dreams ...yeah right!

                  Comment


                  • #10
                    Considering myself rather than everyone else for the moment, I just worry about the successive governments between me and a pay out.
                    The employer contribution law hasn't been passed yet.
                    The IRD are fighting against the 2% salary sacrifice payment.
                    You can't take the tax portion if you cash up and leave the country.
                    Then what happens if the government decide with our new healthy lifestyles that we should work until we are 75 before we get our money.
                    Doug

                    Comment


                    • #11
                      I don't worry so much about what effects government policies, inflation and the like have on my (our) financial position. There is no point worrying about that over which I have no (or very little) control.

                      What I do "worry" about, and focus my energies on, is what I can do to better my lot. I do have some control over the wealth I can create, so that is where I focus my energies.

                      If taxes and inflation eat into that wealth, there is little I can do about that. What I can do is try and negate these effects by generating more wealth.

                      I also focus my energy on my family - here I can make the largest difference of all.

                      Paul.

                      Comment


                      • #12
                        Hi Guys

                        If the old Bill Rowling compulsory super scheme was still running today somebody estimated that it would be worth $240billion.

                        A very nice pile and it would have made NZ a very wealthy country.

                        Unfortunately Rob Muldoon dismantled it and it has taken 32 years to get a near compulsory scheme up and running again.

                        Regards
                        "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

                        Comment


                        • #13
                          [email protected],
                          I think it unlikely that you wouldn't get your money, but remember taxes are your money as well. It is about the lesser of two evils. As for this being your money a good portion of it isn't. Aren't you forgetting the employer contribution and the $1,000 taxpayer funded contribution at the beginning.
                          Julian
                          Gimme $20k. You will receive some well packaged generic advice that will put you on the road to riches beyond your wildest dreams ...yeah right!

                          Comment


                          • #14
                            Julian
                            The employer contribution isn't in the law yet and you are correct that the tax contribution and the employer contribution are not mine but these are meant to make it attractive.
                            My key point is that for me personally there are all these uncertainties for a locked investment with time of locking in goverment hands. I will probably just do my own thing and have funds available when I want them. I am not ready to pass responsibility for my future to the government and I believe that no one should as we are all individuals with different needs.
                            Doug

                            Comment


                            • #15
                              Originally posted by Davo36 View Post
                              Imagine earning $40k per year. How would you survive? How would you bring up a family or pay a mortgage. And this is the average wage! So a lot of people earn a lot less!
                              They get handouts from the Government. 75% of NZers are getting some sort of hand out - and that costs us over $7 Billion each year.

                              Cheers,

                              Donna
                              SEARCH PropertyTalk, About PropertyTalk

                              BusinessBlogs - the best business articles are found here

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