Couples $15,000 worse off

NZ Herald Jan 04, 2009

Married couples are being penalised by nearly $15,000 a year for choosing to stay together. That’s the view of lobby group Family First, which says the Government has created “perverse disincentives” for people to get married or live together by making it financially more attractive to separate. The group has commissioned research from the NZ Institute of Economic Research (NZIER) showing that a married couple, both working and being paid $40,000 each, with three children, has a joint income $14,715 lower than if they were separated or divorced.

Where one parent chooses to stay at home to raise the children while the other is on a low income ($40,000), the parents could be $12,000 better off by separating, says Family First. Additionally, the group says a small pay increase for married couples can result in the family tax rate on their extra income being as high as 69 per cent. But John Donaghy, manager of single-parent support group Birthright, rejected Family First’s claim that couples were splitting for the money. Donaghy said that would be “rare”.