Now well into a new century that social gap I observed as a child has grown into a gargantuan chasm. We have the super-rich and we have an underclass neither of which existed two generations ago.
The neoliberal experiment has created a new aristocracy who prey on the poor. Labour did manage to narrow the gap a little but not enough.
Successive governments have always attempted to find a bridge, or at least a dirigible to fly those left behind, across the divide. They have often used the taxation system to do this slamming upper income earners with their own tax brackets and denying them the universality applied elsewhere. As a consequence, higher earners have sought the dark arts of accountancy and the law to evade their punishments.
In nearly all the OECD countries that are wealthier than us, the well-off pay more tax and those on low incomes pay less. Those same countries have less poverty, higher standards of living, and lower crime rates.
On Thursday, this Key/English administration decided to abandon the pretence that we are an egalitarian society, or that we should ever attempt to be so. The wealthy are the wealthy because they merit that status, was the prime minister’s underlying message. And we need them way more than we need welfare beneficiaries in fact, without them the latter could not exist. We wouldn’t have the income to support them.
See, the Mark Hotchins and Paul Reynolds of this world deserve a tax cut because they contribute so much to the world, whereas a factory worker or a nurse or a retail worker doesn’t really merit anything.
For many New Zealanders, including the Labour Party, this is anathema. Government should be about evening the odds and redistributing income. Advancing the concept of noblesse oblige via the tax system. Although that’s the charitable interpretation. Getting the rich bastards to bail us battlers out is the subtext. But Key’s argument has one outstanding virtue. It is true. We need the wealthy and the talented more than they need us. Their skills are international, their enterprise is universal. They can make more money, live better lifestyles and generally advance their family’s prospects better in countries more developed than our own. Australia, North America, the UK and even the new Asia.
Yeah, Fay and Richwhite so much, aren’t you?
And you don’t have to be brilliant to know that. The annual migration of the middle-income, middle-aged across the Tasman is an annual export of our hard-working aspirational core. What’s left is why we have Whanau Ora. Now the young have joined that trend too. They leave and, sure, they come back. For a holiday.
It’s funny because these wealthy seemed perfectly content to stay in New Zealand. The stats actually show that it’s low income workers leaving for Australia for higher wages. A 1% increase in net wages from tax cuts is nothing compared to a 30% wage gap.
On that basis, National’s 2010 Budget stands as a sharp detour from the conventional wisdom that government is about playing Robin Hood. Even when the poor are undeserving. And it does represent a proper realignment of the political parties Labour has been gifted its territory back and, if it had a more human leader, would be feeling confident about 2011.
It’s true that National has passed the most rightwing budget since 1991. It’s for Labour to present an alternative.
One can make the criticism that the Nats could have, should have, been bolder. Not compensated welfare beneficiaries for the GST rise so as to create a greater incentive to take minimum-wage jobs. After all, we still have more than 300,000 adults dependent upon the tax largesse of others.
Yeah, let’s force all those sick and invalided people along with those who have lost their jobs in the recession into minimum wage jobs that don’t exist. Or are their 300,000 unfilled minimum wage jobs I missed?
But it is a step in the right direction, and in both senses of that adjective.
It is a recognition that the “wealthy” those working for an income of over $70,000 a year will pay more tax than anyone else, irrespective of whether they have their own tax bracket. That they don’t qualify for any of the lesser universalities from free healthcare to Working for Families’ subsidies. And that they often purchase their own health insurance and their own kids’ education at places like Collegiate and thus reduce the demand upon the public system.
In other words, the wealthy are more deserving than they are given credit for. And Bill English decided to acknowledge such in his Budget address.
Don’t you think that an average net worth of $650,000 and annual income over quarter of a million is already credit the wealthy deserve? Did they really need an 8% boost to their take-home earnings paid for out of other Kiwis’ pockets? What about the credit that hardworking Kiwis deserve? Oh, yeah, they deserve higher GST and cuts to the social wage.