The RPRC Quarterly Update and the Leading Article by RPRC co-director Susan St John – ‘Improving the Affordability of New Zealand Superannuation’, and its links got submerged within a previous post (2 New Discussion papers). The link above and the extract below, allow more consideration of this important article.
“This Working Paper focusses on the degree of targeting, and examines a way the tax system could be used to provide an increased claw-back of some or all of the net cost of NZS from high- income recipients. No one wants to copy the Australians with a full income and asset test.
The innovation in the paper is to offer a much simpler approach through the tax system. The first step is to pay NZS to every 65+ year old as a non-taxable grant or basic income. The paper suggests that the single sharing and married rates of NZS are aligned over time, so everyone gets the same basic amount equal to NZS after tax at the primary rate. This amount is unconditional and does not change. As other income is earned it is taxed on a new scale. The paper suggests 17.5% up to $15,000 and 39% above that will deliver worthwhile savings with very little pain.”