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)
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.
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.
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.
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.