ACT’s voodoo economics

Written By: - Date published: 6:18 pm, August 3rd, 2014 - 51 comments
Categories: act, business, capitalism - Tags:

Penny Bright ACT

Not satisfied with playing the Maori bashing card and appealing to some people’s inherent racism ACT has released a further policy that will appeal to the right’s greed.

ACT has announced its policy on corporate tax and, surprise surprise, it wants to reduce it.

Great things are promised.  By reducing the share that the wealthy contribute to the collective good apparently we will all be better off.  According to Whyte European and American studies suggest cutting the rate by 10 percentage points will make economies grow by between 1 and 2 per cent extra a year, and each 1 per cent reduction in the rate will boost wages by between 0.3 and 0.5 per cent.

Huzzah!

Unfortunately for the poor this approach to economics does not apply to everyone.  According to ACT and National paying poor people a living wage costs jobs but letting rich people keep more of the money helps us all.

The cuts are dramatic.  The corporate tax rate would decrease from 0.28c in the dollar to 0.125c.  My quick calculation is that this will reduce the tax take by about $5.5 billion.  But ACT would have us believe that it will all be worth it.

From Stuff:

ACT says it can boost economic growth by a third with a policy to cut the company tax rate to 12.5 per cent.

Leader Jamie Whyte says this will increase investment, and job and GDP by one third, leading to higher wages.

He would fund the tax cut by slashing “corporate welfare,” worth about $1.5bn a year, and carbon trading, worth $164m.

If my figures are right there would still be a further $3.8 billion to find.

Of course the big issue is what does National think of this?  National has been very careful to not announce policy so far.  All that we know is that they will spend $360 million on improving top end pay for some teachers and $212 million on a roading boondoggle.  You would normally think that they would not allow the rump of a far right party to force through doctrinaire right wing policy but it has happened before.

Update:  ACT candidate Stephen Berry has provided me with some more details of the policy.

  • The cut in the first year will be to 20% at a cost of $3 billion.
  • The initial shortfall will be funded by further asset sales.
  • The 12.5% rate will not be reached until 2020 and they presume that the enhanced growth rate will fund this.

Still does not add up …

51 comments on “ACT’s voodoo economics”

  1. Sacha 1

    Act are narcissitic nutjobs.
    Let’s leave talking about them for the 1% who benefit from their lunacy.

  2. Tamati 2

    Ironic that you have tax dodger Penny Bright in the photo!

  3. CC 3

    Isn’t this the sort of policy that did such magical things for the economy of Ireland that some financial genius by the name of Key rorted for a finance firm that went belly-up? Also, aren’t the Irish taxpayers still paying the debts they didn’t incur for this brilliant piece of economic theory? Perhaps someone with a superior and more detailed knowledge can fill in the blanks.

  4. Clemgeopin 4

    ACT’s economic maths is as bad as their selfish principles.

    The 1% ACT is putting on a small stupid act.
    ACT’s, master NATIONAL is putting on a bigger act!

    Vote the ACT fellow in Epsom=Get National and ACT=Self inflicted wound into our Nation.

    If I was there, I would watch which of the other candidates, Michael Wood (Lab),
    Paul Goldsmith (Nat), Julie Anne Gentre (Greens) or any other non ACT candidate is leading, and would give my electorate vote to THAT particular candidate. I suspect that would most likely be Goldsmith, the cunning reluctant very silent bride!

    Vote the National man, GOLDMITH in Epsom=Kick ACT and National out of Government! How cool is that!

    I think Whyte needs about three years of rest and uncontaminated quality time using his brain and conscience to carefully do some serious philosophical thinking about basic human needs and values.

  5. dave 5

    Michael Wood is far the best candate but we need to electrate vote gold smith to get rid of national

    • Gosman 5.1

      If Michael Wood is by far the best candidate why don’t people just vote for him?

      • Clemgeopin 5.1.1

        They will, if he has a good chance of winning. But when the enemy is indulging in dodgy shady stuff, people think smart and try to defeat such nefarious tactics. I am sure Key and Goldsmith will appreciate that.

        • Gosman 5.1.1.1

          Are you implying that Michael Wood is unable to convince enough National party supporters to vote for him?

          • Clemgeopin 5.1.1.1.1

            Will be very hard to do because lots of loyal Epsom National party supporters seem to be as obdurate as donkeys because even their own head hash honcho Key himself can’t even persuade them to vote for some low level ACT upstart anymore!

            Besides, Key has said that he himself will be voting for Goldsmith in Epsom! There you go!

  6. BLiP 6

    Given that ACT is a subsidiary of National Ltd™ I can’t see how the latter is escaping from any fall out from this sort of ‘dog-whistling’. Regardless of what John Key says in public about how atrocious ACT’s Maori bashing and randian economics is, National Ltd™ is still prepared to publicly twerk its way around MMP in order to accomodate such ideology. As my ole mum used to say, you can judge the character of a person by the company they keep.

    Steve Braunias nails it in his “ Secret Diary of Jamie Whyte . . .

    . . . [ ] . . “Well,” I [Whyte] said, “that got them talking!” He said, “I want you to know I really appreciate the perception it gives that ACT is extreme, and National is moderate.”

    “Please don’t slap my head,” I said.

    “I was just giving it a pat,” He said.

    The tea arrived. I said, “Shall we do welfare bashing next week? You hum it, and I’ll sing it!”

    He put the cups on their saucers, and passed the sugar. I said, “I wonder if it’s stopped raining.”

    He said, “Don’t open the curtains! Someone might see us.”

    He poured the tea.

    • Gosman 6.1

      Funnily enough Act is going to release a new policy on welfare reform shortly.

      • tricledrown 6.1.1

        goose welfare reform is ACT speak for CUTS $1.5 billion in cuts to welfare from the poorest to give to the richist, it will be regurgitated not new with Richard Pebble brain at the helm it will be old mutton dressed up as lamb.
        with a another sexual pervert Whyte racist supremacist nut job in charge.
        All the the company tax cuts we have had since the 1980s haven’t changed the unemployment figures yet.Its just a right wing con job!

      • Clemgeopin 6.1.2

        How nice! I will be looking forward to it. So will all the rich pricks, I am sure!

      • Weepus beard 6.1.3

        The reform being to abolish welfare completely?

        • vto 6.1.3.1

          Probably mr beard. These loonies on the far right for some reason think humans are solitary animals ……..

          cant see the evidence for it myself…

          every time I look humans seem to love being together and acting as a group…..

        • Tracey 6.1.3.2

          That is not new

          • Weepus beard 6.1.3.2.1

            It’s unbelievable that someone could come along and make fair minded Kiwis take another look at Colin Craig and think he’s not that bad, but Jamie Whyte has done it.

  7. Draco T Bastard 7

    The cuts are dramatic. The corporate tax rate would decrease from 0.28c in the dollar to 0.125c. My quick calculation is that this will reduce the tax take by about $5.5 billion. But ACT would have us believe that it will all be worth it.

    The idiots have been saying that sort of bollocks since the 19th century and it has never been as they say. Instead, countries end up going into even more debt to the rich and the banks to cover the deficit that they caused by cutting taxes. Then they demand that we cut services to live within our means while demanding that we make even bigger cuts to the taxes on the rich even more. Oh, and that we should sell our assets to the rich as well.

    The only place that Acts policies, that National really like as well, are going to take us is back to feudalism with a few people owning everything and everyone else living only at the pleasure of those owners.

    • Gosman 7.1

      Yet the size of government as a percentage of GDP has not really changed dramatically over the past few decades. In short government is still receiving and spending the same proportion of the economic wealth of the nation.

  8. Dialey 8

    Economics: An ancient form of mysticism not unlike Astrology, Voodoo, and Crystal Ball Gazing and having approximately the same predictive ability. John Maynard Keynes, perhaps the most celebrated economist in history, once said that “if all the economists of the world were laid end to end, they would not reach a conclusion.”

    “The modern conservative is engaged in one of man’s oldest exercises in moral philosophy: that is the search for a superior moral justification for selfishness.” – John Kenneth Galbraith

    “…free enterprise, a term that refers, in practice, to a system of public subsidy and private profit, with massive government intervention in the economy to maintain a welfare state for the rich.”  – Noam Chomsky

    For other pithy definitions go to: http://www.skeptic.ca/Curmudgeon_Business.htm

  9. joe90 9

    Same old Laffer claptrap.

    http://www.vox.com/2014/7/8/5868717/sam-brownback-kansas-tax-cut

    http://www.itep.org/debunkinglaffer/

    Conclusion
    Whether looking at income levels, unemployment rates, or economic
    output per person, states with “high rate” income taxes have economies
    that equal or surpass those in states lacking an income tax. The
    most commonly cited analysis purporting to show the opposite

    http://www.itepnet.org/pdf/junkeconomics.pdf

  10. Jim in Tokyo 10

    From the Herald story announcing the policy:

    “In 1999, GDP per person was 25% higher in Australia than in New Zealand. Today it is 65% higher. No single measure could do more to promote the economic welfare of New Zealanders than cutting the company tax rate.”

    Last time I looked, the corporate tax rate in Australia was still 30%, and has been for a decade?

    It takes a specific kind of voodoo economist to deliver those lines in one breath without specific reference to Australia’s actual tax structure.

    How does Whyte manage to pass himself as an academic philosopher? The chump should have failed logic 101.

    • One Anonymous Bloke 10.1

      To pass as a philosopher he had to move to New Zealand and hope we wouldn’t notice he was lying about his credentials.

    • Tracey 10.2

      Gosman will be along to correct whytes wrong headed thinking.

      • Jim in Tokyo 10.2.1

        I’ve had a go at fixing up the flawed logic:

        “In 1999, GDP per person was 25% higher in Australia than in New Zealand. Today it is 65% higher. No single measure will close this gap completely, but a good start towards promoting the economic welfare of New Zealanders would be to raise the company tax rate to 30c in line with Australia and adopt a more steeply progressive individual tax curve by copying Australia’s generous $18,200 tax-free threshold and 45c top tax rate”

  11. Clemgeopin 11

    Along with all the other extremist ACT policies, today’s policy is another one that does not add up! I wonder if the Epsom voters are smart enough to think through all this, including who to vote for when they are so spoiled for choice with lots of cats and some dogs, some rich pricks and ordinary folk as their electorate candidates, some with strong coat tails, some with long legs and huge ear rings, and some with the smell of an oily rag. I am glad that Key and Harre are voting for Goldsmith!

    Here is a special dedication to EPSOM. Enjoy!

  12. RedbaronCV 12

    And the main benenficiary of this rate is overseas owners who take the profits offshore.
    Locally owned companies eventually , to get the money out, wind up paying tax at individual or trust rates.
    Overseas owned compnaies just send a minimally taxed dividend offshore.

    • Draco T Bastard 12.1

      Dividends needs to be taxed the same as personal income. If that means that foreign shareholders in NZ companies have an IRD number so that they can be taxed correctly then so be it.

  13. tricledrown 13

    Gooseman where is ACTs Whytes evidence (its non existant Goosy provide the evidence instead of regurgitating the pure voodoo BS because you can’t read and study economics you can only read the ACT propaganda headlines) because of all the economic studies I have read and that is 20 or 30 times more than Richard Pebble brain Jamie Whyte and your self combined their is absolutely no peer reviewed evidence that backs ACT bullshit economics quite the reverse GOOSEMAN.
    States of the United States that have low taxes have the highest unemployment highest rates of poverty lowest economic growth poorest infrstucture, while States of the United States that have high taxes have the lowest unemployment lowest rates of poverty and highest economic growth.
    The higher Taxed States can afford to invest in education , research and development , quality infrastructure, while low tax states which leave it to the free market to invest wisely with their taxes they don’t pay fail to see the long term benefits of research and development no or crumbling infrastructure (IE 70,000 bridges need replacing) and cheap education etc .
    You end up with the Lada economy cheap and nasty if you want your economy to grow you have to invest heavily companies are risk averse and pay dividends for short term gain so over the long term dividends decline the business fails to adapt because it is purely focused on profits!
    While govts that invest in good research infrastructure and education capability help take the risk fear away from companies !

  14. Cancerman 14

    Mickey you need to put a $ in front of those tax rates or remove the decimal place. It’s incorrect otherwise and arguably misleading.

  15. Th 15

    ” ACT says it can boost economic growth by a third with a policy to cut the company tax rate to 12.5 per cent. Leader Jamie Whyte says this will increase investment, and job and GDP by one third, leading to higher wages………………………………………..Company tax is a “terrible drag” on growth and wages while raising “relatively little” revenue, he argued. ”

    So how does the tax be a “terrible drag” when raising “relatively little” revenue?

    I would think that a tax that was a “terrible drag” would mess with investment decisions due to the massive transfer of funds from company coffers to the Inland Revenue coffers.

    Wouldnt it?

  16. Gareth 16

    If his asserted benefits were actually true, then surely we should abolish the company tax rate altogether. Then we’d achieve a living wage without needing any other legislation to mandate it and our economic growth rate would be through the roof.

    I wish he’d explain what’s stopping him from realising the greatest gains for ordinary NZers and advocate half measures instead.

  17. Tracey 17

    what assets will they sell?

    • Gosman 17.1

      Some or all of the billions of dollars of commercial assets that the State has a controlling interest in.

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    The government has released its Arms Legislation Bill, containing the second tranche of changes to gun laws following the March 15 massacre. And it all looks quite sensible: a national gun register, higher penalties for illegal possession and dealing, tighter restrictions on arms dealers and shooting clubs, and a shorter ...
    No Right TurnBy Idiot/Savant
    1 week ago
  • California bans private prisons
    Private prisons are a stain on humanity. Prison operators explicitly profit from human misery, then lobby for longer prisons terms so they can keep on profiting. And in the US, prison companies run not only local and state prisons, but also Donald Trump's immigration concentration camps. Faced with this moral ...
    No Right TurnBy Idiot/Savant
    1 week ago
  • Why PPPs are a bad idea
    When National was in power, they were very keen on Public-Private Partnerships (PPPs) - basicly, using private companies to finance public infrastructure as a way of hiding debt from the public. They were keen on using them for everything - roads, schools, hospitals. But as the UK shows, that "service" ...
    No Right TurnBy Idiot/Savant
    1 week ago
  • A Movement That No Longer Moves.
    Moving And Shaking: There was a time when people spoke matter-of-factly about the “labour movement” – a political phenomenon understood to embrace much more than the Labour Party. Included within the term’s definition was the whole trade union movement – many of whose members looked upon the Labour Party as ...
    1 week ago
  • NZ ‘left’ politically embracing extreme postmodernism
    by Philip Ferguson Much of the left, even people who formally identify as marxists, have collapsed politically in the face of postmodern gender theory of the sort pioneered by American philosopher Judith Butler. For Butler even biological sex is socially constructed. “If the immutable character of sex is contested, perhaps ...
    RedlineBy Daphna
    1 week ago
  • The obvious question
    The media is reporting that the (alleged) Labour party sexual assaulter has resigned from their job at Parliament, which means hopefully he won't be turning up there making people feel unsafe in future. Good. But as with everything about this scandal, it just raises other questions. Most significantly: why the ...
    No Right TurnBy Idiot/Savant
    1 week ago
  • The moment I found out that you found out, I acted swiftly
    By Prime Minister Jacinda Ardern I am every bit as angry as you are. I am every bit as disappointed as you must be. The people with power, oversight and the ability to do something about these processes within the Labour Party should be ashamed. Whoever those people are, I ...
    The CivilianBy admin
    1 week ago
  • This is why people hate property developers
    Property developers think there is an "oversupply" of houses in Auckland:High turnover rates and falling prices may be a sign that there are too many new houses going in to some parts of Auckland, commentators say. [...] Property developer David Whitburn said there was a "bit of an oversupply" in ...
    No Right TurnBy Idiot/Savant
    1 week ago
  • Australia to Pacific: “Fuck you, you can all drown”
    World leaders are meeting in New York in two weeks for the 2019 Climate Action Summit, where they are expected to announce new and more ambitious targets to stop the world from burning. But the Australian Prime Minister won't be there, despite being in the USA at the time:Scott Morrison ...
    No Right TurnBy Idiot/Savant
    1 week ago
  • Implausible ignorance
    Labour Party president Nigel Haworth resigned yesterday over the party's sexual assault scandal. But while that's good news, its unlikely to take away the stench of a coverup. Because according to Paula Bennett in Parliament yesterday, pretty much everyone in the Prime Minister's office was involved as well:I have been ...
    No Right TurnBy Idiot/Savant
    1 week ago
  • Labour’s Fatal Flaw.
     Two-Faced? Labour insiders' commitment to the neoliberal status quo puts them at odds with their party’s membership; its trade union affiliates; and a majority of Labour voters, but this only serves to strengthen the perception they have of themselves as a special elite. Among the lesser breeds, they’ll talk up a ...
    1 week ago
  • Ten reasons the Tories do NOT want an election
    There has been a lot of talk about Boris Johnson wanting an election, and he has blustered with great gusto about 'chicken' Jeremy Corbyn refusing one, but I think there are many reasons why he is secretly glad he has been refused the opportunity:The Tories are an utter rabble,tearing themselves ...
    2 weeks ago
  • Prorogation Illegal, rule Scottish judges
    Scottish appeal court judges have declared that Boris Johnson’s decision to suspend parliament in the run-up to the October Brexit deadline is unlawful. The three judges, chaired by Lord Carloway, Scotland’s most senior judge, overturned an earlier ruling that the courts did not have the powers to interfere in the prime ...
    2 weeks ago
  • Let me explain what I meant by Everyday New Zealanders
    By Simon Bridges. The following is a press release from the office of Simon Bridges, leader of The National Party. Key ora, New Zealand. Happy Maori Language Week. Look, I’m writing to you today because I want to clear something up. There’s been a lot of kerfuffle around some things ...
    The CivilianBy admin
    2 weeks ago
  • Yes, the SIS is subject to the Public Records Act
    I understand there's some stuff going round about how the SIS "was removed from the list of public offices covered by the Public Records Act in 2017". The context of course being their records derived from US torture, which will be disposed of or sealed. The good news is that ...
    No Right TurnBy Idiot/Savant
    2 weeks ago
  • An evidence-based discussion of the Canadian fluoride/IQ study
    Dr. Christopher Labos and Jonathan Jarry discuss the recent Canadian fluoride/IQ research. They provide an expert analysis of the paper and its problems. Click on image to go to podcast. The critical debate about the recent ...
    2 weeks ago
  • Climate Change: Australia in denial
    Australia is burning down again, and meanwhile its natural disaster minister is denying climate change:Australia’s minister responsible for drought and natural disasters, David Littleproud, has said that he doesn’t “know if climate change is manmade”. Clarifying earlier comments that the question is “irrelevant” when considering the Coalition government’s response to ...
    No Right TurnBy Idiot/Savant
    2 weeks ago
  • Philippines activist speaking on the Duterte tyranny
    Auckland Philippines Solidarity is excited to host Professor Judy Taguiwalo for a speaking tour of NZ in September. She is a well-known activist in the Philippines and was a political prisoner under the Marcos dictatorship. Professor Taguiwalo briefly served as a Cabinet member under President Duterte but was forced from ...
    RedlineBy Daphna
    2 weeks ago
  • Disgust
    I have no special insights to offer on the Labour sexual assault coverup. All I have is disgust. Disgust that an organisation could fail its people so badly. Disgust that they punished the victims rather than the perpetrator. Disgust that its party hacks are apparently blaming the victims for demanding ...
    No Right TurnBy Idiot/Savant
    2 weeks ago
  • Speak Up for Women calls out Greens’ censorship
    This open letter to the Green Party was penned after an opinion piece by Jill Abigail, a feminist and founding member of the party, was censored by the Greens’ leadership. (Redline has reprinted her article here).The intolerance of the Green Party leaders and their acceptance of the misogyny of gender ...
    RedlineBy Daphna
    2 weeks ago
  • Member’s Day: End of Life Choice, part 3
    Today is a Member's day, and David Seymour's End of Life Choice Bill continues its slow crawl through its committee stage. They're spending the whole day on it today, though the first hour is likely to be spent on voting left over from last time. After that they'll move on ...
    No Right TurnBy Idiot/Savant
    2 weeks ago
  • Flight to Los Angeles turned back after passengers decide they don’t want to go anymore
    An ambitious plan to fly to Los Angeles petered out into a brief sight-seeing trip and a desire to return home and get some sleep before work tomorrow. Air New Zealand has confirmed a flight to Los Angeles last night was turned back about a quarter of the way into ...
    The CivilianBy admin
    2 weeks ago
  • Indigenous Futures: defuturing and futuring – an analytical framework for policy development?
    There appears to be consensus – by omission – that the concept of indigenous futures should be accepted at face value. So I scavenged the internet to see if I could locate an academic descriptor or a framework around how we think about it as a concept, and whether it ...
    EllipsisterBy Ellipsister
    2 weeks ago
  • Cadbury rumoured to be releasing the Pineapple Trump
    Here’s another novelty chocolate to shove in your gob, New Zealand Cadbury could be seeking to make itself great again with a rumoured new release: Pineapple Trumps, a spin on its classic chocolate-encased pineapple treat and do-it-yourself tooth remover. The global confectionery manufacturer and bumbling “before” character in an infomercial, ...
    The CivilianBy admin
    2 weeks ago
  • The coming resource war.
    During my time in the Pentagon I had the privilege of sitting down with military leaders and defence and security officials from a variety of Latin American nations. Sometimes I was present as a subordinate assistant to a senior US defence department official, sometimes as part of a delegation that ...
    KiwipoliticoBy Pablo
    2 weeks ago
  • Māori Language Week with The Civilian
    Kia ora, Aotearoa. It’s that magical time of year. Te Wiki o te Reo Māori. In English, the week that frightens talk radio. As you probably know by now, all your favourite media outlets are participating, some more successfully than others. Stuff has changed its name to Puna for the ...
    The CivilianBy admin
    2 weeks ago
  • Will Horizons act on climate change?
    Local body elections are coming up next month. And it looks like all Palmerston North candidates for Horizons (the Manawatu-Whanganui Regional Council) want to take action on climate change:Climate change is set to be a key issue in Palmerston North for the next three years if those wanting to get ...
    No Right TurnBy Idiot/Savant
    2 weeks ago
  • BORA reform is stalled
    Eighteen months ago, the government promised to strengthen the Bill of Rights Act, by explicitly affirming the power of the courts to issue declarations of inconsistency and requiring Parliament to formally respond to them. So how's that going? I was curious, so I asked for all advice about the proposal. ...
    No Right TurnBy Idiot/Savant
    2 weeks ago
  • Corbyn and Brexit
    As the Brexit saga staggers on, the focus is naturally enough on the Prime Minister and his attempts to achieve Brexit “do or die”. But the role played by the Leader of the Opposition is of almost equal interest and complexity. The first problem for Jeremy Corbyn is that he ...
    Bryan GouldBy Bryan Gould
    2 weeks ago
  • A ditch for him to die in
    Last week, English Prime Minister Boris Johnson boldly declared that he would rather die be dead in a ditch than delay Brexit. Unfortunately for him, the UK parliament accepted the challenge, and promptly dug one for him. The "rebellion bill" requires him to ask for and secure yet another temporary ...
    No Right TurnBy Idiot/Savant
    2 weeks ago

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