Gareth Morgan’s Big Kahuna

Written By: - Date published: 6:17 am, August 24th, 2011 - 106 comments
Categories: tax - Tags: ,

Gareth Morgan and Susan Guthrie’s piece in the Herald brilliantly elucidates the crisis of capitalism and the inadequacy of an economic system that only recognises value in work that produces market goods and services. Their book, The Big Kahuna, on their alternative tax system has just been published and I found these videos of Morgan explaining.

First, Morgan on why there is a need for change (there is a look at the history of taxation too, which is interesting)
http://www.youtube.com/watch?feature=player_embedded&v=F3UxFfewhRo

Next, Morgan talking about the inequity of the current tax system and how the changes would affect that. Basically, it’s a big transfer of taxation from work to wealth – like Labour’s tax-free zone/capital gains tax package but more.
http://www.youtube.com/watch?v=_ox_sVD7xV0&feature=player_embedded

Then, the details of the proposal: $11K negative tax per adult ($8,500 per youth) and a 30% tax on all income, including an assumed 6% income on all capital. Simple and straightforward, it would save $2 billion a year in costs of MSD and IRD.
http://www.youtube.com/watch?feature=player_embedded&v=TA52QhDmaXY

Finally, Morgan deals with the issue of solo parents, the only big losers under the policy. A simple fix is to lift the tax rate to 32% and give every child $3,000 a year.
http://www.youtube.com/watch?v=Z8GTgWaQhm8&feature=player_embedded

The rest of the videos are here and there’s a powerpoint presentation here.

We can quibble here and there, and I have a few unanswered questions (like, what happens with GST) that are probably answered in the book, but small problems can be fixed. This is a brilliantly simple and revolutionary base for a new tax and redistribution system that can potentially eliminate poverty altogether while targeting the biggest inequality in capitalist society – the division of capital.

The components of the Big Kahuna aren’t new ideas but together they are exciting. The new economy that will need to be formed out of this crisis of international capitalism will need a new tax system – the Big Kahuna could be it.

106 comments on “Gareth Morgan’s Big Kahuna ”

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  1. vto 1
    24 August 2011 at 8:16 am

    My 2c says that I have been watching and listening closely to Morgan over many years. He is consistent, logical, honourable and understands the wider structure of society. He has always been well worth listening to.

    … compare this with Key and his ideas (or lack of).

    … compare yesterday’s darkhorse post re state asset sales with Key.

    … Key is the most shallow worthless PM ever.

  2. queenstfarmer 2
    24 August 2011 at 9:10 am

    I too am a big supporter of the flat tax that Gareth Morgan proposes – a flat 25% tax on all corporte, personal and trust income.

    “The most pleasing graph in the Tax Review’s recent report is the one that demonstrates the total futility of having a progressive personal income scale.”

    • Lanthanide 2.1
      24 August 2011 at 9:31 am

      What we really want is a specific taxation outcome: that those who have the most wealth pay proportionally more of their wealth as tax than those who have the least, simply because there is a minimum fixed cost that everyone may pay in order to live a dignified life.

      Progressive tax scales attempt to achieve this outcome through a very blunt method. Starting everyone off with a negative tax balance with a flat rate on all income achieves the same goal but in a much fairer manner.

      If what you’re advocating is a flat tax rate without the additional negative tax component, then you’re not trying to achieve the goal that the current progressive taxation system is attempting to achieve.

      • queenstfarmer 2.1.1
        24 August 2011 at 11:02 am

        Agree with all that. The negative tax balance (univeral allowance, etc) is a great idea.

        The key thing is to simplify the system, get rid of the loopholes that allow people like David Henderson to pay less tax than a minimum wage worker, remove the distortions, stop the legal tax avoidance industry, cut the IRD by three-quarters, and not use the tax system as a punitive tool.

    • Blighty 2.2
      24 August 2011 at 10:26 am

      the negative tax/UBI is very progressive. Do the maths – a person on the minimum wage gets a 26% tax cut, a person on $250,000 gets 3%.

      That means it kind of gets rid of the need for other brackets. no reason you couldn’t have a second bracket though, say 33% from $100,000.

      it’s 30%, btw

      • Draco T Bastard 2.2.1
        24 August 2011 at 11:07 am

        queenstfarmer seems to have been saying that he wanted the flat tax to be 25% no matter what the actual costs were.

        • queenstfarmer 2.2.1.1
          24 August 2011 at 11:58 am

          Gareth Morgan said that. The actual flat rate doesn’t matter, that’s half the point of it.

          • Draco T Bastard 2.2.1.1.1
            24 August 2011 at 1:55 pm

            Of course the flat rate matters you moron as it needs to help cover the costs of running government.

            • queenstfarmer 2.2.1.1.1.1
              24 August 2011 at 2:18 pm

              Of course. What I mean is that because a flat rate applies to everyone equally, the actual rate doesn’t matter – all the loopholes and associate avoidance incentives close.

              As for the “necessary” rate, Govt does need to be able to function (Govts can borrow, cut spending, or do other various tricks) so whatever rate the Govt sets should achieve that, although the Govt is of course accountable to the electorate for its taxation & spending decisions. I’m in favour of a mandatory balanced-budget law.

      • queenstfarmer 2.2.2
        24 August 2011 at 12:20 pm

        Sure, depends how you define “progressive” I guess. However, it wouldn’t be long before the usual suspects started attacking the flat tax as unfairly regressive.

        For example using the tax cuts you mention, even using the very un-flat current rates:

        A minimum wage earner pays about $3,750 in tax. A 26% tax cut = ~ $975
        A person on $250,000 pays about $73,000 in tax. A 3% tax cut = ~ $2,190.

        So the very high earner gets a bigger dollar tax cut than a minimum wage earner (bar stool economics). The usual suspects would of course go crazy about this, like they always do.

        • Blighty 2.2.2.1
          24 August 2011 at 1:19 pm

          yeah, but the higher earner would likely have more capital subject to the CCT too.

          Morgan’s graphs quite clearly show that this option is more progressive

        • KJT 2.2.2.2
          24 August 2011 at 7:16 pm

          As half the wealthiest people in NZ do not pay tax anyway a CGT and/or FTT will end up catching more tax off them than an income tax.

  3. Afewknowthetruth 3
    24 August 2011 at 9:50 am

    Tax is just a red herring, a form of rearranging the deck chairs on the Titanic. The entire system is crashing. And the crash has nothing to do with tax or misallocation of capital. Most of the capital doesn’t even exists anyway, except as digits in computer systems. The system is crashing because there are just too many people on the planet chasing declining resources and polluting the air, the water and the land.

    The day Gareth Morgan starts talking about the real issues -population overshoot, declining energy supply and environmental collapse- I might become slightly interested in what he has to say. Even then, the chance of him having anything of value to contribute is probably close to zero, since those are not his area of expertise.

    The fact is, most western nations are marching straight down the road to overt fascism and ever greater disparity in wealth distribution -just look at the salaries and bonuses executives of corporations award themselves; meanwhile ‘we’ are attacking yet another oil-rich nation to open it up to looting by BP, Shell etc.. That trend will continue until the people at the bottom find conditions unbearable and revolt. The question will then be, how vicious will the elites be in suppressing the masses and will the ‘security forces’ be willing to gun down innocent people? Usually they are, since their own positions and benefits are dependent on doing so.

    • Oligarkey 3.1
      24 August 2011 at 10:16 am

      Afewknowthetruth

      I think you underestimate the spirit of rebellion in the western countries. You wait until the silly market paradigm creates consistent 30% unemployment. There will be no return to 1930s fascism – people have become far too liberal, and thank goodness the internet is more and more becoming the place that people go to for their news information.

      • bbfloyd 3.1.1
        24 August 2011 at 12:21 pm

        no return to 1930’s fascism? have a good look at what is going on here in nz….. take your pick, justice, social welfare, education, the economy, workers rights, etc….. what’s NOT fascist in the approach the nats are taking? just because it isn’t as obvious, and overtly brutal as the thirties, doesn’t change the reality…

        • aerobubble 3.1.1.1
          24 August 2011 at 1:55 pm

          seconded. When police fail drastically in their duty of care in the autistic light bulb fiend
          and the MSM could figure it out either. That a person entering a Earth shaken unstable
          building seeking fixtures of all things isn’t a threat to public order but suicidally stupid.
          He was no criminal seeking a quick return to pay their drug habit, he had no intention
          of selling on the light fittings. Everyone is innocent until proven in a court of law otherwise.
          So if someone is found involved in a crime does not make them guilt as hell, this
          view would have help police in the Bain case where they should have collected much
          much more evidence and protected the crime scene in case it wasn’t enough.
          We are living in a proto-fascist culture in NZ, our government should be had up for
          treason for their abuse of power of the weakest. Take the food card, one way youth
          get out of trouble is by getting fed by the cousins and pocketting the dole, saving
          it up to build a business, this avenue has now been shut by JK astards.

        • Oligarkey 3.1.1.2
          24 August 2011 at 6:56 pm

          bb floyd – the worsening economic conditions are going to lead people to a more egalitarian spirit, and i don’t think everyone’s suddenly going to start following people like Paul Henry and Michael laws into crypto-fascisim The pendulum is due to swing back, and i think instead of armed conflict between communism and fascisim, we’re going to see a resurgence of community organisations, and peaceful protest. I think we are moving towards a more universal understanding in terms of religion (in NZ at least) – (Buddhism, Christianity, Islam and Hinduism have a lot in common – i.e. universal love and brotherhood) so the fascists will not be able to divide and rule as easily as they once did.

          I’m actually optimistic about our future because of these things.

    • Blighty 3.2
      24 August 2011 at 1:21 pm

      The system may be crashing but there will be a new system to replace it, and it will need some form of taxation, unless we’re all going to be living in as savages in a post-apocalyptic wilderness because the energy available to society declines by , say, 20%

      • aerobubble 3.2.1
        25 August 2011 at 11:18 am

        I disagree, ants don’t have tax systems. They however do have rigid codes that are
        heavily enforced too the point that ants captured from other colonies are set to work.
        The question for the intelligent ape is how to incorporate tax like feedbacks into
        society, that redistribute on a local level, and are fair locally. And then when these
        fail return to the corrupt tax system that central governments use.

        Althought my view should not be seen as a vote against a CGT, GST off food,
        deposit guarentee, these are necessarily steps forward to give investors choice.
        Computers do seen to offer a way to do away with the tax departments.

  4. Oligarkey 4
    24 August 2011 at 9:58 am

    I have an idea for a government-paid employment scheme that will stop the slide into the abyss our young people are currently undergoing.

    Next to every Mcdonalds and KFC – we get a team of people who are otherwise out of work in a kitchen making simple nutritious meals that sell for $3 each (i.e. like the Hare Krishnas do). It gives a sense of contribution to the community to those who don’t just want to sit around on handouts (i.e. most people on the dole). It takes the food bill down for families that are struggling, and ensures good nutrition for anyone that wants it. It would employ thousands of people nation wide, and take billions off the country’s health bill long-term. Deliveries to lower decile schools would be perfect as well. But this is sensible and kind-hearted, so the National Party will not have a bar of it.

    • Afewknowthetruth 4.1
      24 August 2011 at 10:29 am

      I take it you are being sarcastic.

      You don’t really think that global corporations who are running the show would permit local initiatives that benefit the community and reduce their profits, do you?

      • El Mutante 4.1.1
        24 August 2011 at 10:46 am

        AFKTT, do you actually have any solutions to anything or should we just all go slash our wrists in the bath? I mean fucking hell, I actually agree with you that we’re in deep shit but we may as well try and do something about it. Without offering at least a sketch of a plan and just jumping into every single thread to tell us all how fucked we are is making you come across like some loon with a thousand yard stare wearing a sandwich board proclaiming that THE END IS NIGH and yelling “DOOOOOMED, YOU’RE ALL DOOOOOOOOOOOOOMED” at anyone unfortunate enough to walk past.

        • Lanthanide 4.1.1.1
          24 August 2011 at 10:53 am

          Yes, it is very tedious.

          • Bored 4.1.1.1.1
            24 August 2011 at 11:51 am

            El M and Lan, methinks AFKTT does us a service being a Cassandra. There is a lot of time spent on this site discussing how the status quo can be made to work, as opposed to AFKTT (amongst others) position which is, “It is terminally fekked”. As a non believer in “sci fi” faith in markets or technology solving energy and resource issues, I too see limited long term utility in status quo arguments.

            I agree that there needs to be some discussion of Plan B, it just gets a little difficult when the discussion just goes straight back to status quo (which as stated may be “fekked”).

            AFKTT, some forward thinking please, surprise us.

            • AAMC 4.1.1.1.1.1
              24 August 2011 at 2:25 pm

              Partial solutions to AFKTT’s doomsaying seem relatively simple to draw from what he/she’s pointing out.

              Walk, cycle, reuse, grow,plant, grow, plan, inform, discuss, research, reduce, inform, plant, plan.

              I have a very small property I’m inner city Auckland, I have chickens to provide me eggs, citrus, apples, guava, fijoa, and veg, a street full of olive treess I have begun to harvest, I intend to invest in solar and water tanks and I intend to start guerilla planting the verges with more fruit trees that my community will benift from down the line. It’s not gonna save the world, but Iifwe each became more engaged, less consumptive, and laed bt example. Since o got my chickens, many of my friends have seen how simple and rewarding it is and have followed the lead.

              Warnings / ravings from the likes of AFKTT motivate me into positive action.

              • Bored …
                24 August 2011 at 2:59 pm

                Good work, guerilla is the way to plant for extra. I am doing a series at the moment on home camera that may be put on Youtube of a year on the garden plus plantings elsewhere..also gathering from offiste of materials and food. Go well with the chickens.

                • AAMC …
                  24 August 2011 at 3:16 pm

                  There’s also a guy I intend tontrack down who will put bee hives on your property, maintain them and share the honey with you.

                  I was in Italy last year and was very inspired in an off the beaten track region, how every spare mm of available land – and they don’t live on our massive 1/4 acre sections – was dedicated to food production. I walk around Auckland looking at all these big lawns not a single piece of fruit in sight.

                  Too well trained to obediently drive to the shops and buy!

              • Draco T Bastard …
                24 August 2011 at 4:28 pm

                …start guerilla planting the verges with more fruit trees that my community will benift from down the line.

                I’ve been looking at the park across the road for that. What puts me off though is that it’s mowed by machine and it’s unlikely that any seedlings planted would survive the next mowing 🙁

                Huge park too – would be great as a community orchard after a few years.

                • uke …
                  24 August 2011 at 5:05 pm

                  Likewise, my local council regularly mows over the huge areas of forage-able green leaf vegetables in the Wellington town belt. A real waste.

                • AAMC …
                  24 August 2011 at 5:28 pm

                  Fruit trees tend to be on special at this time of year, get them big enough they have to stop and think? And plant close to the edges so they can’t as easily be considered in the way.

                  • prosaic …
                    24 August 2011 at 10:03 pm

                    Better still, apply to council to use the land as a community garden/orchard and do it. Many other people/groups are doing this.

    • Lanthanide 4.2
      24 August 2011 at 10:46 am

      I’ve read that Pizza Hut in the US doesn’t bother doing market research for where to open their next store. They just wait for McDonald’s to open a store, and then open up one in the nearby neighbourhood. McDonald’s puts so much money into market research that Pizza Hut can just free-load on them.

      Not strictly related to your idea but I thought it was interesting.

  5. ianmac 5
    24 August 2011 at 10:02 am

    Wasn’t a flat tax one of the things advocated by Douglas? And Act? I guess Gareth is advocating flat tax alongside a whole raft of actions.
    Solo parents are fixable but Super for retirement a problem unless he is targetting the wealthy who don’t need it. Means Testing? Sounds a bit tough on those of us who are debt free, own a modest house but not wealthy.
    Anyway what a refreshing sweep of ideas even if Gareth is not a great salesman. How about a discussion between Key and Morgan? Live on TV. Ha!

    • Blighty 5.1
      24 August 2011 at 10:27 am

      there is no super under the plan – everyone gets the UBI.

      No retirement age either…

      • Lanthanide 5.1.1
        24 August 2011 at 10:52 am

        Makes it harder to pick on beneficiaries when everyone is one.

        I guess they’ll just pick on people with no jobs. But they do that now anyway.

        IMO one of the biggest social gains from a UBI policy would be opening the floodgates for more volunteer work.

      • marsman 5.1.2
        24 August 2011 at 1:59 pm

        Does that mean that people currently on Superannuation would under the $11,000 U.B.I. have to somehow manage on $100 odd less per week? That seems hardly fair.

        • KJT 5.1.2.1
          24 August 2011 at 7:13 pm

          I think that more work would have to be done on the actual UBI level. It would have to be enough to live on.

    • queenstfarmer 5.2
      24 August 2011 at 12:12 pm

      Phil Goff supported the flat tax proposal. Great to see it getting more airtime now.

  6. Policy Parrot 6
    24 August 2011 at 10:27 am

    Does anyone know if under the BK policy prescription, GST would be retained or axed?

    • Lanthanide 6.1
      24 August 2011 at 10:57 am

      I imagine it’s sort of a separate issue. The BK policy is really about replacing the income tax system. I guess we’d need to look at the numbers to see if his proposal has excess tax gains/savings that could be used to remove GST, or if his proposal as-is is break even.

      Long term, the UBI would have to rise with inflation, too, which could make it unsustainable.

      • Draco T Bastard 6.1.1
        24 August 2011 at 11:22 am

        Long term, the UBI would have to rise with inflation…

        If you maintained a static population level rather than increasing it, stopped the banks printing so much money and banned interest then there would be no inflation. Unfortunately that’s not likely to happen as the politicians actually think having more people is good (grows the economy don’t ya know) rather than the reality which is that having excess population (which I believe NZ is on the border of now) is insane.

        • Lanthanide 6.1.1.1
          24 August 2011 at 12:31 pm

          The funny thing about NZ, is that for a modern OECD economy, we’re really underpopulated. San Francisco has more people living in the Bay Area than we have in the entire country. We have many thousands more kilometres of roads, hospitals and infrastructure to service fewer people. It’s no wonder we can’t keep up with the Joneses (21/30 in OECD rankings).

          On the other hand, for a sustainable low-energy future, NZ has about the right population.

    • marsman 6.2
      24 August 2011 at 2:01 pm

      GST up, to 15%. It’s in the second video above.

  7. Todd 7
    24 August 2011 at 11:01 am

    You can bet GST will remain.30% tax +15% gst= 45%.

    • Draco T Bastard 7.1
      24 August 2011 at 11:24 am

      Yeah, GST really should be removed if you have a UI and replaced with a Financial Transaction Tax.

    • mikesh 7.2
      24 August 2011 at 1:39 pm

      “You can bet GST will remain.30% tax +15% gst= 45%.”

      I think the 30% tax rate would apply only to the “earned” component of income not to the $11,000 handout; whereas GST, if it remained, would apply to all consumer spending regardless of which component of income that spending came from.

      eg Handout 11,000
      Wages 30,000 (say)
      Total Income 41,000
      Income Tax 9,000 (30% of 30,000)
      Net Income 32,000
      GST spending 20,000 (say)
      GST @ 15% 3,000
      Effective GST rate = 3,000/41000 = 7.32%

  8. Draco T Bastard 8
    24 August 2011 at 11:03 am

    Finally, Morgan deals with the issue of solo parents, the only big losers under the policy. A simple fix is to lift the tax rate to 32% and give every child $3,000 a year.

    How much does it cost per year to keep a child in good health? Because that’s how much should be paid to parents for each child. Personally, I think you’d find that it’s far higher than $3k.

    And why is it expected for youth to have to live on less than an adult? Are their living expenses really all that different?

    Far easier and better just to make it a Universal Income that’s paid to everyone at the same rate.

  9. KJT 9
    24 August 2011 at 11:07 am

    Sort of restores some of my faith in human nature. And some confidence we may actually work our way out of the shit. Not all the rich, are “Rich pricks”.

    Buffet, Morgan, and others, are aware they live in, and benefit from, a community.

    We have been talking about something like a UBI/GMFI on various forums, including Frogblog, for some time. Simplifying both taxation and welfare.

    A flat tax plus UBI is progressive and simple. Both desirable for a taxation system.

    CGT also would be better simplified by removing exemptions. The only reason to exempt family homes is to make it politically palatable. In actuality that is going to cause lots of problems. Like every rich kid suddenly acquiring a family home.
    Similarly removing GST on food causes unessary complications which may cost more than simply helping people to buy food with a GMFI.
    There are other ways of helping people into a first home. (E.G. Rent to buy State housing).

    GST would be better replaced by a flat financial transaction tax and/or transaction taxes.
    GST is only a transaction tax with exemptions, anyway.

    • Draco T Bastard 9.1
      24 August 2011 at 2:03 pm

      There are other ways of helping people into a first home. (E.G. Rent to buy State housing).

      Do people actually need to own their homes or would it be better if they just rented from the state? IMO, renting from the state would be the better option.

      GST is only a transaction tax with exemptions, anyway.

      Yep. Realised that a while back and the big exemption is financial services.

      • uke 9.1.1
        24 August 2011 at 3:31 pm

        Yeah, now you mention it, strange there’s no GST-type tax on purchases of shares, futures, options derivatives, etc. Doesn’t the financial sector call a lot of these things “products”?

        • KJT 9.1.1.1
          24 August 2011 at 7:21 pm

          Exactly.

          One of the reasons why those with money prefer to spend it on, untaxed, financial gambling in existing assets rather than productive investment.

      • Lanthanide 9.1.2
        24 August 2011 at 4:36 pm

        “Do people actually need to own their homes or would it be better if they just rented from the state? IMO, renting from the state would be the better option.”

        Then no one has any incentive to maintain their property or invest in it.

        • Draco T Bastard 9.1.2.1
          24 August 2011 at 7:58 pm

          The whole point of renting is that the property is maintained by someone else. In the case of renting from the state that someone would be the state. Throw in reasonable penalty clauses so as to minimise intentional damage and the rent could be far below present “market rates”.

          As for “investing in it” – what a load of bollocks. Appropriate rules and regulations ensures that the houses are properly maintained to high standards which includes upgrading and even installing fixings such as solar water heating.

      • Vicky32 9.1.3
        24 August 2011 at 4:46 pm

        Do people actually need to own their homes or would it be better if they just rented from the state? IMO, renting from the state would be the better option.

        Currently I rent from the State, and I would much rather not.. This is because and it seemed to coincide with Mark Bennett declaring on talkback that it was so, State housing is now considered a form of ‘welfare’. (This was long before income related rents, by the way.) 
        State houses are cold, badly maintained and tenancy managers are hostile and lazy. It’s impossible for tenants to get any maintenance done, because the tenancy managers and HNZC themselves regard us as beggars and one step above street-people… therefore we don’t have any right to such luxuries as outside doors that lock, rat-free ceilings, toilets with seats, safe light fittings and in my particular case, natural light! (The house is ringed by large trees, I am 155 cm and 43 kg, and so my tenancy manager’s “do it yerself” when I begged her to have the trees pruned was insulting and ridiculous…
        At least if everyone rented from the State, they’d have to lift their game. I’ve been in a State house only since Mark Bennett declared that state houses like ACC, were welfare. When Shonkey lived in one, they were not welfare. Obviously!
         

        • Draco T Bastard 9.1.3.1
          24 August 2011 at 7:59 pm

          State houses are cold, badly maintained and tenancy managers are hostile and lazy.

          Then, as you say, we would need to lift their game.

    • aerobubble 9.2
      24 August 2011 at 2:29 pm

      Like every rich Kid suddenly acquiring a house. Oh, please like their trust doesn’t.

      Its good for society to have people retain and transmit wealth to their kids.

      Having everyone start from nothing is not feasible, or justifiable.

      It means there is money around to invest in keeping the economy going.

      The problem with the NZ economy is not rich people, its dumb poorer people who
      think rich people need a hand out.

      Capitalism is all about stressing risk takers over the first hurdle to secure
      efficiency and other social good gains.

      Capitalism is not about giving the rich a tax cut, or pushing the citizenry into
      indebtedness.

      JK is not a capitalist, he is a proto National Socialist in my personal opinion.

      Most of the right wing are now, they’ve been rewarded from cheap oil.

      The right wing needs to clean house of the tea party wankers, and their
      neo-liberal economic heros.

      • Colonial Viper 9.2.1
        24 August 2011 at 7:18 pm

        Its good for society to have people retain and transmit wealth to their kids.

        Having everyone start from nothing is not feasible, or justifiable.

        It means there is money around to invest in keeping the economy going.

        Nah man you got it sorta wrong here.

        1) Retaining and transmitting wealth tends to create a class structure based on inherited wealth. We know what this looks like very well from the UK. The families which do not have tend to keep getting more; the families which don’t suffer intergenerational poverty.

        2) We wouldn’t have everyone starting from nothing. Wealthy families would still be able to transmit enough to the next generation to ensure they had a good start. But not so much that the next generation could just sit on their asses. And with the funds gained from an estate tax, the kids from families who did not have could be provided with equipment, education, incentives to move up.

        3) The money the economy needs to keep going needs to be spent and circulated. Masses of collected up capital do not perform that function. Therefore you tax capital and then redistribute it by spending it into the economy. That is what keeps the economy going; not keeping it locked up in a bunch of rental houses and a share portfolio.

  10. randal 10
    24 August 2011 at 1:34 pm

    morgan still sees the world from an externally referenced viewpoint. i.e. if i have a big motorbike then I am a big man. yeah right.

    • Bored 10.1
      24 August 2011 at 1:49 pm

      I think Gareth is actually a very clued up man with a positive and generous bent. I dont necessarily agree with all he says but it is very informed. I suspect he would be the same positive and generous man whether he was a big man on a big bike or a totally unsuccessful person.

      Conversely John Key is a mean hearted man a big bike would frighten unless he could bribe the manufacturers to add chrome and rate limit the power……

      • Tiger Mountain 10.1.1
        24 August 2011 at 2:09 pm

        Bored, as another poster pointed out to me during the “Goff the biker showing off” debate, Shonkey is unlikely to use any vehicle that does not come with a chaffeur.

        Gareth seems better than the 99.99% of squillionaires who adopt the Crosby/Textor National Party strategy of not engaging. He went for a personal look at how aid is applied in Africa and supports UNICEF rather than any of the guilt trip christian buy a child ones.

  11. mikesh 11
    24 August 2011 at 1:49 pm

    Since a two parent household would receive two $11,000 handouts, such a policy could encourage one parent to remain at home in the role of housewife or house husband. This could ameliorate many social problems as well as ease unemployment.

  12. Tiger Mountain 12
    24 August 2011 at 2:00 pm

    A UBI is worth it for the various reasons put up. One of my faves is that it would help put an end to the second favourite national sport-Dirty Filthy Bennie Bashing.

    It would be a bonus to see the sadistic MSD/WINZ lot dis-established. Sure there are a few PSA members in there, but like the cops these two organisations sure know how to recruit ’em and develop repulsive cultures with an active dislike for their customers.

    Unpaid work is one of the dirty little secrets of this country particularly in caring and family settings that allows NZ society to operate on such low wages.

    • aerobubble 12.1
      24 August 2011 at 2:32 pm

      The only problem I have with it is it must reflect the economy. If the economy
      is doing well then everyone who misses out in the boom should get more,
      but when the ecnomy is worse, then the amount should reduce but not too
      far. It incentivises the whole nation not to litter, to helpful to tourists, and
      look after their lot for the good of the economy. People who feel a stake in
      the economy will be less apathic towards what is going on.

  13. Galeandra 13
    24 August 2011 at 3:40 pm

    AFKTT-‘You don’t really think that global corporations who are running the show would permit local initiatives that benefit the community and reduce their profits, do you?’

    Heard a great interview on Natrad last week with a chap who runs a cheap ‘soup kitchen’ (Auckland, I think) which offers homeless etc the chance to purchase nutritious $3 meals or take the free one. He said that the pay for option treated the clients as people, and that they were very pleased to be able to choose and pay for at cost. All is not lost!
    Enough with doomer news btw; we either agree or don’t, but most of us have heard it many times by now. Some of us saw it coming back in the seventies, and we’re happy to stay on post.

  14. Vicky32 14
    24 August 2011 at 4:03 pm

    He seems to have undergone a radical change of mind since the 1990s, when he had a column in the Herald, and gave it up, to work for the poison dwarf, Ruth Richardson.
    I remember reading his column and almost projectile vomiting at his praise of Singapore for its economic and neo-liberal purity!
     

    • Frank Macskasy 14.1
      24 August 2011 at 4:24 pm

      I concur, Vicky32. It’s like Evil Morgan has been replaced by Sensible Morgan – and I’m liking it. Even when I don’t necessarily agree with one of his points – he is still rational in his argument.

      Contrast that to neo-liberals, who have one foot in Fiscal Fairyland.

  15. Frank Macskasy 15
    24 August 2011 at 4:22 pm

    A flat tax, balanced with a UBI. Sounds logical. Sounds fair. Sounds practical.

    And sounds like it would be open to political interference.

    Take WFF and Kiwisaver. Labour implemented it – National is undoing it.

    Now apply the same to a UBI/flat tax; Labour implements it. Then the Middle Class elects National to office, along with ACT MPs. Next thing you know, the eligibility of the UBI is reduced or otherwise wound back.

    This is perhaps the only major reason against it: political interference. It would have to be enshrined in law, with a CPI indexation for regular increases to protect against inflation.

    However, if the UBI is only $11,000 per adult – and welfare is abolished, then that effectively cuts incomes for some on welfare, such as invalids with Special Needs. Problems loike this would have to be carefully addressed.

    But as I said… sounds practical.

    • Lanthanide 15.1
      24 August 2011 at 4:40 pm

      There would have to be top-ups on top of the UBI for various people who qualified for them. A small top-up for those on pensions is probably also required to get it implemented – pensioners aren’t going to vote for a new system that sees them being paid $2k less per year while working people go from getting 0 to $11k.

      • Frank Macskasy 15.1.1
        24 August 2011 at 7:00 pm

        Indeed, Lanthanide.

        As long as any system can achieve three standards (excuse the pun), it seems a good system;

        The three provisos are;

        1. No one at the bottom of the socio-economic “heap” are to be worse off.

        2. It must be CPI indexed.

        3. It must be made tamper-proof so that no National/ACT government can mess around with it.

        I recall that a UBI was discussed within the Alliance membership, but nothing much came of it.

        Imagine if a broad concensus could be reached between Left and Right on this issue!!

        • KJT 15.1.1.1
          24 August 2011 at 7:37 pm

          With our present system of three yearly rotating dictatorships, nothing can be tamper proof.

          I imagine it is something both the left, and old style conservatives, the ones that cared about NZ, could agree on.

  16. Afewknowthetruth 16
    24 August 2011 at 4:50 pm

    To all the knockers and detractors who keep saying I don’t provide solutions, let me remind you that I have frequently refered to POWERDOWN and PERMAUCLTURE as the ONLY viable options for even attempting to negotiate a path through this mess. I have written three books on solutions centred on those strategies.

    By and large people are not interested in solutions that require a change in habits, and most people are still fiimly locked into denial of reality anyway. I liken them to organising a picnic on a railway track and at the same time refusing to accept the existence of trains.

    Of course most of the knockers and detractors totally ignore what I repeatedly write about the REAL SOLUTIONS to this crisis because they:

    a. can’t be bothered to do the necessary research

    b. enjoy knocking

    c. are only interested in ‘solutions’ that allow the present dysfunctional lifestyle to continue, uninterrupted.

    d. refuse to even accept that we have a problem

    By the way, the time to implement solutions was 5 years ago, when I and many other people, such as Robert Atack, were screaming at the tops of our voices ‘Wake the f**k up!’

    Were ignored by ‘the sleepers’, of course. And I hear Robert has been banned from this site foir losing his cool with the morons who want to wreck what is left of this planet.

    [I am unaware of the details of if or when Robert was banned, and because I had nothing to do with it at the time I’m not going to re-litigate it. However I can be fairly certain he was not banned for the reason you state. The Standard accepts comments from a very wide spectrum and allows a pretty robust level of debate. The reason why most people get their butt’s kicked here is because of their behaviour, not their opinions. ….RL]

    • El Mutante 16.1
      24 August 2011 at 5:30 pm

      I’m no knocker, I just hadn’t seen much apart from the doomsaying. I’d pretty much agree with the permaculture thing. As far as power down goes I do have an interested in algae based bio-fuel. Got to be better than using food crops anyway. I’m in the process of trying to turn our backyard into something useful too. I would do the front as well but the missus might not like that. Lawns are bourgeois rubbish as far as I’m concerned.

      Have you seen about this? http://nzfoodsecurity.org/

      I’m still finding out more about it but bloody hell…

      Anyways, off topic, so I’ll get back to work.

      • AAMC 16.1.1
        24 August 2011 at 6:33 pm

        ‘Have you seen about this? http://nzfoodsecurity.org/‘

        “The Government has created this bill to keep in line with its World Trade Organisation obligations”

        So that Monsanto can control everything we eat, stockpile organic seeds is all I can say

    • McFlock 16.2
      24 August 2011 at 6:01 pm

      Maybe you wrote books on those solutions. All I know of you is here – and all I have seen here is you merely being a doomsayer, poo-pooing anyone else’s perspective.
       
      You might get 10/10 for foresight, but 2/10 in winning friends and influencing people – which I think is the gist of your comment here.

  17. tc 17
    24 August 2011 at 5:00 pm

    mmm liking that sea breeze coming in from the likes of Morgan/Buffet etc to offest that humid tea party/neo lib rhetoric.
    Smart enough to see the systems broken and needs radical fixes or else it continues to benefit few and causes great distress, and that it’s served them well so about time to share some.
    Whereas the NACT…….

  18. AAMC 18
    24 August 2011 at 5:50 pm

    And the opposition parties should be grabbing hold of that sea breeze and directing it into this election and pointing out that some of the most successful capitalists and leading thinkers & economists are calling for change. Not just Buffett & Morgan, but Bill Gross, Jeremy Grantham, Nouriel Roubini, Steiglitz, Reich, Krugman.

    As AFKTT say’s, the politicians are too scared to LEAD the debate and talk outside the mainstream, but the mainstream just opened the door to the debate. Why aren’t Goff and Norman n co already taking advantage of this shift in narrative? Ah that’s right, they’re governed by the focus group.

    • neoleftie 18.1
      24 August 2011 at 6:10 pm

      surely to realign the system a system event is required that will provide the necessary condition for that change…not just a realisation or observation by commentators or system experts but a full blown system event that allows for the shift in system rules and acceptance by the masses.
      Some of us still beleive in the ‘holy trinity’ and have waited patiently for the system to provide the right condition… resource and liquidity scarsity. Pax Rome falls again.

  19. Colonial Viper 19
    24 August 2011 at 7:35 pm

    Labour’s CGT was a little brave; Morgan’s tax policy is facing the fraking firestorm.

    • mik e 19.1
      25 August 2011 at 10:28 pm

      A better sell for CGT would be to raise it even more to the same level as business tax but reduce business tax by the same level as the increase in tax collected from CGT. That would go down very well in the productive sector.

  20. James 20
    24 August 2011 at 7:47 pm

    If there were a UBI, how would prices (like rent) be controlled to stop even the cheapest rental property becoming more than people purely on a UBI could afford? Is that inflation?

    • Colonial Viper 20.1
      24 August 2011 at 10:20 pm

      Housing NZ to add a thousand new houses to its stock per month and rent them out at competitive rates to ensure that the market remains fair.

      Although to be honest the only area with extreme difficulty in terms of an uncompetitive rental market is…you guessed it…Auckland.

  21. randal 21
    24 August 2011 at 7:55 pm

    anybody interested in the workings of the monetary system should read “The Secrets Of the Temple” for an outsiders view of how the US FEDERAL RESERVE controls the US money supply.
    Now the point is the then chairman Paul Volcker was cowed into submission by the holders of US long treasury bonds.
    Since then the neo-cons have constructed and peddled an elaborate myth that it was the market wot done it and more importantly that it cannot be changed by governments and only by the market as if there was some magical force behind it.
    Which of course is not true.
    New Zealand is not the United States and the government can do what it likes and at the moment the government is involved in peddling state assets for private profit and claiming that the God of economics has so ordained it.
    yeah right.

  22. RedLogix 22
    24 August 2011 at 8:20 pm

    This is why I was so lukewarm about Labour’s CGT package by itself… lots of fiddling about for no real gain. Whereas this is close to the complete package I’ve long advocated and the circuit breaker we need.

    I know that a UBI was at least for a time Green Party policy, now all it needs is for Labour to pick it’s ball’s up off the floor and run with it. The way this election is shaping they really have very little to loose.

    I’m hugely appreciative of Gareth Morgan getting up and putting himself on the line with this. Get out, buy the book and talk about it.

    • Afewknowthetruth 22.1
      24 August 2011 at 9:02 pm

      Today I had a very long and very interesting session with a Labour candidate (who shall remain nameless, for obvious reasons). He bought a copy of my recently-published book and we went through the whole thing in considerable detail: how we got into this mess, why the present system is collapsing and why none of the strategies presented by mainstream thinkers will work.

      He could see why all the current paradigms are failing, why we need to adopt a completely new set, and what the real issues are!!!

      I have to say I was very pleasantly surprised by his keeness to become informed about all the issues which are never normally even mentioned. He certainly had his eyes opened about a lot of stuff he was totally unaware of.

      The big test will be the follow up, of course, because in many respects this is all worse than Pandora’s Box. However, he could see that the longer the present system continues, the worse off EVERYONE will be. That is a HUGE step forward!!!

      This is in complete contrast to the National candidate I attempted to speak with a while ago, who asked me to leave after a few minutes because he did not want to hear what I had to say and had no answers to the questions I asked. Indeed, as far as he was concerned climate change is a myth, there is enough oil to last for hundred of years and the financial system is sound!! What a dickhead! And, being the sitting MP, he is currently voting on the future of this nation.

      I am not going to suggest there will be an immediate breakthrough but today’s meeting could result in some radical change.

      Needless to say, I will be hammering the Labour candidate mercilessly if he backtracks.

      • Colonial Viper 22.1.1
        24 August 2011 at 10:27 pm

        A few people in Labour get it. And I tell every Labour MP I happen to meet. Not all are receptive (as you already know) but some do entertain the notions.

        OK that’s not quite enough and we are basically already out of time…

  23. darkhorse 23
    24 August 2011 at 10:16 pm

    We are all so timid. While a good start and great to see someone such as him being so passionate – Gareth doesn’t go anywhere near far enough and he still views tax largely as a mechanism for raising govt revenue not as a means for achieve economic and social change.

    Our biggest problems lie at the border where we have a grossly over valued currency that equates to a subsidy on imports and a tariff on exports. Then have a great foreign debt burden that is essentially parasitic on our economy and much of it does little to grow the economy and much to weaken it, there should be a tax on foreign investment into the country and that tax should be able to be manipulated to do the money supply function that the RBAct presently does. All the factors of production should be taxed – at present labour carries much of it which means that it suffers a price disadvantage over capital and energy. Gareth’s tax on capital is a good idea. There needs to be a holding cost on assets – if they are not being used for best purpose there needs to be an incentive to put them back on the market.

    Capital gains tax is a waste of time – as it is so arguable, and is essentially punitive – better to tax inflation at its source – by taxing debt than through its consequences in asset prices. The most important thing that Gareth does is that he is thinking critically and he is doing something and he is passionate about it. A rare set of responses – good on you. The country is paralysed by talk and by debate over trivia. Good to see the big issues on the agenda -where is labour on this – time for some bold statements about the future of this country not carping criticism of the tired and the lame about parliament.

    • Colonial Viper 23.1
      24 August 2011 at 10:29 pm

      You are correct that a tax policy is only one part of a much wider economic policy. But he got it nailed IMO.

      Now, if one were to ask him his views on wider economic policy for NZ…put it this way, I reckon he will have enough framework for a sequel.

    • aerobubble 23.2
      27 August 2011 at 10:47 am

      Taxing capital gain will cap speculative traders and make it harder, yes punitive, to make
      money in NZ, because its too darn easy and that’s why our currency is so desireable.
      Shifting managers to think about keeping their customers, rather than as they
      do now shafting their customers. We need to invest and end the pathway for many
      kiwis that grow businesses only to sell up and move them to Australia, where they
      do charge punitive capital gains taxes.

      NZ has made it so easy that we just keep building cheaper, and selling it off faster,
      to huge cost down the track, poverty, foriegn ownership, our best and brightest
      leaving. Please stop being so damn lazy and cheap it creeps me out.

  24. Oligarkey 24
    24 August 2011 at 10:38 pm

    AFKTT – did you know that the road blocks are occult spiritualist beliefs within secret societies? These people want mass starvation. They believe that it’s written in the stars.

    So we’ve got to do it forming our own organisations. That said, mainstream democratic change will be very difficult, but ultimately need to happen if we’re to have a chance.

    • Afewnkowthetruth 24.1
      24 August 2011 at 11:51 pm

      I am aware that there are a lot of very evil bastards out there behind the scenes, pulling the strings, and that many have weird beliefs that may go back to Egyptian times -the third eye symbolism on the US dollar note being an example.

      The bit I cannot yet understand is that by causing abrupt climate change, acidification of the oceans etc. they risk making the Earth uninhabitable for their own progeny. It is a really evil and weird belief system that requires people to exterminate their own blood lines! Nevertheless, that seems to be the game they are playing.

      Some say that rather than relinquish their power, the elites will orchestrate a global nuclear war. We will undoubtedly find out over the coming years, since the present system is going down fairly fast now, and if they are going to use those ballisitc missiles they will have to use them while they are still operable. The ‘China syndrome’ meltdown at Fukishima may render nuclear war unnecessary, of course: from what I have been reading it is already Hiroshima/Chernobyl on steroids!

      In the meantime I’m awaiting the update on the US drought monitor, which has been looking dire for many weeks. (the present hurricane system, Irene, is forecast to drift northwards and skim the US coast, delivering zero rain to the regions worst affected by the severe drought). US grain harvests are likely to be disastrous this year, though Russia will be better than last year (when they lost around 40%, due to the extreme heat and drought conditions they endured).

      All I know for certain is there is very little sanity and zero planning for the future anywhere in manstream.

      • Colonial Viper 24.1.1
        25 August 2011 at 12:12 am

        US grain harvests are likely to be disastrous this year

        No doubt what is left will get turned into ethanol for cars.

      • Thomas 24.1.2
        25 August 2011 at 12:36 am

        Afewknowthetruth: The Eye of Providence? China syndrome? Seriously?

        Are you a real person or just a parody of a conspiracy theorist?

      • El Mutante 24.1.3
        25 August 2011 at 4:04 am

        So I should cut one of the arms of my leather jacket and make sure I have enough fuel for the last of the V8 interceptors then.

      • lprent 24.1.4
        25 August 2011 at 8:48 am

        The basic problem is that there is no effective global body to deal with global issues because global as a technicallity wasn’t even a useful concept until we got into orbit to look down on the topic and started a global net to talk about it below the political level.

        Previous attempts to envisage globally were completely constrained by the time delays

  25. Oligarkey 25
    25 August 2011 at 12:44 am

    Thomas – the craziness of the elites is very real. The rituals that many of the elites partake in are mind blowing and sickening. I have only recently had my eyes opened to it. Go watch the doco about “boys town” called “conspiracy of silence”. You can find it on google video.

  26. mik e 26
    25 August 2011 at 10:31 pm

    Gareths figures are some what dodgey massive amounts of money required he needs to work out his figures a lot more but the basic idea is very good.

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