A proposed change to New Zealand’s Income Taxes would make it similar to the US—and yet, it would be very different.
Peter Dunne, who is Revenue Minister and leader of the mildly conservative United Future Party (a Parliamentary caucus of one), has proposed that couples with children under 18 living at home be allowed to average out their income in order to reduce their income taxes. That’s similar to the US’ “married, filing jointly”, but NZ’s would be limited only to couples with children under 18.
Actually, there’s one other difference from the US that’s huge: It’s not just married couples that could take part (only opposite-sex couples can marry in New Zealand, like most of the US); couples in civil unions or de facto relationships could also take part—same sex couples, in other words, would be included.
To a New Zealander, that’s sort of a duh! moment because the Human Rights Act prevents discrimination against gay people or couples. However, in the US the inability of same-sex couples to marry (and have that marriage recognised by the US Government) means they cannot file jointly; in many cases this means they pay higher taxes than a married couple of the same income.
This disparity is one of the reasons for the push to legalise same-sex marriage in the US. Taxes are only one small part of the many legal advantages that heterosexual couples have over same-sex couples, despite them all being taxpayers and citizens who are supposed to be treated equally under law.
There will be a lively debate on the NZ proposal, and at the moment it looks unlikely to become law. I don’t even have an opinion on it yet. However, this struck me as yet another example of how New Zealand is similar to the US, but NOT the same. Quite frankly, in a number of ways, New Zealand is better—but, then, regular readers of this blog have probably already seen plenty evidence of that.