Fiscal Policy and the Redistribution. New Zealand. Income measures & redistribution. Norman Gemmell. Research Question. with Omar Aziz & Athene Laws

Transcription

1 Fiscal Policy and the of Income by Age and Gender in New Zealand Income and Fiscal Incidence_ pdf Norman Gemmell with Omar Aziz & Athene Laws Presentation to Commerce Teachers Development Day, Victoria Business School 22 November papers in public finance series/ Research Question Income measures & redistribution How do taxes, social transfers and government spending affect income (re)distribution by age and gender in New Zealand? Method: Fiscal Incidence Analysis A method of identifying the distributional impacts of fiscal policies on households (or individuals ) incomes by allocating taxes and spending to them. Derives final income measure = market income net of fiscal impacts. Needs to allow for income sharing within households What s new here? Traditional fiscal incidence studies examine distributional impacts of government activities across household income bracketsacross income This research focuses on gender and age related dimensions. $ value of in kind Social Services Health Education

2 Data & Model Assumptions Data: 2010 Household Economic Survey (HES) on incomes and spending Model: Treasury s non behavioural, tax benefit simulation model Taxwell. T bh i lt b i l ti d lt ll Rules of the NZ tax and tax and welfare system Applied to HES individuals Allocate direct tax liabilities and eligibility for income support HES Expenditure data Expenditure data Impute indirect tax i tt (including consumption of liabilities (GST and alcohol, tobacco and fuel) excises) Admin. data on average costs for individuals, based on demographics etc. Allocate health and education expenditures HES data: Expenditure reported at the household level. Assumptions are required to allocate on an individualon an age/gender basis. Taxes: Direct taxes allocated to income recipient. Indirect taxes allocated to consumer Transfers & spending: Family tax credits and transfers are allocated to the carer assumed to be the self reported secondary earner. Health/education spending allocated to user. The consumption sharing rule: Uses OECD income equivalence scale (E): 1 st adult (A) = nd adult (A) = 0.5 Each child (C) = 0.3 Sensitivity analysis i Three types of income s Three types of income s $ 70,000 $ 60,000 Market income Disposable income Final income Average income A $ 70,000 $ 60,000 Market income Disposable income Final income $ 50,000 $ 40,000 $ 30,000 e Average income $ 50,000 $ 40,000 $ 30,000 $ 20,000 $ 20,000 $ 10,000 $ 10,000 group group

3 Net Fiscal Incidence $15,000 act per capita $15,000 Net fiscal impa $35,000 $25,000 N NFI Direct Tax Indirect Tax Income Support Health Education = + Direct tax $16,000 $18,000 $12,000 $14,000 er capita $, Income tax p Income support $25,000 $15,000 port per capita Income supp Indirect tax $3,000 ax per capita Indirect Ta $1,000

4 Health spending Education spending $14,000 $12,000 re per capita ealth expenditur He e per capita tion expenditure Educat Gender income gaps Issues and problems n men and wom men Percentage diffe erence between 150% 120% 90% 60% 30% 0% Market income Disposable income Final income Income sharing within households. Whodecides Who decides on spending? And on spending? who gets what what spent on them? them? Should social welfare transfers and indirect taxes be treated as equally shared within the household (adults)? e.g. who benefits from maternity care? When one adult earns and one stays at home? Whose income is it? Graphs show show average / profiles But at older ages, s > s. So net subsidy to s is greater Much variation within genders

5 Net Fiscal Incidence: Dispersion around the median Males: t fiscal impact Net $30, $30,000 $40,000 Fes: et fiscal impact Ne $30,000 $30,000 $40,000 75th percentile Median 25th percentile Mean