Their policy analysis that rich people will restructure their activities to get tax benefits in a way that poor people cannot seams relatively sensible. I don’t claim to know anything about the the tax implications of Kiwisaver so I’m willing to trust them on that. This isn’t the only way that rich people can take advantage of the tax system in NZ. Last time I checked to top personal tax rate in NZ was much higher than the company tax rate, and businesses get gst back which gives people the incentive to structure as much under their company as they can. Incentives are king, this kind of behavior is nothing new.
What does bother me about this article is that they conclude that Kiwisaver has not “inspired new saving but rather a “reshuffling” of existing savings” based upon 598 completed mail surveys they sent out. I don’t know how they do things in Waikato, but I doubt that would hold up in any economics school (or even one of the economics slanted govt departments MED, RBNZ or Treasury) in the world. Seriously a mail survey? I’d like to see aggregate data on savings (while acknowledging that aggregate data has it’s own problems) before I draw any type of conclusion like that.
While I agree that it’s likely that rich people are likely to restructure their savings, kiwisaver does seam to provide some good incentives to people who aren’t rich to start saving. Maybe these people missed the mail??
(as a disclaimer I haven’t been able to track down the original article, if anyone has and my opinions are grossly misinformed please let me know!)
The paper has been tracked down and apparently the necessary data ( The Survey of Family, Income and Employment (SoFIE)) won’t contain sufficient information about kiwisaver to accurately analyze the policy until 2012 so this postal survey is just really a stopgap until then. That said, it’s not unreasonable to think that Kiwisaver as a policy is best evaluated after being around for a few years, especially with the hasty manner the policy was implemented by the government