Right plans give away to rich at your expense

Written By: - Date published: 6:48 am, November 18th, 2008 - 69 comments
Categories: national/act government, tax - Tags:

Part of the National/ACT government’s agreement is that a top tax rate of 30% will be the target for the ‘medium term’. Such a cut would cost about $2 billion a year.

Now, I have nothing in principle against reducing tax (and nothing in principle against increasing it, for that matter). It’s a question of trade-offs, which is greater benefit: the services the tax could pay for or the tax cuts, and who gets those benefits? $2 billion a year, that’s a lot of hip operations, so it’s worth asking who would benefit from replacing Labour’s legislated tax cuts with National’s current programme and a 30% top rate added to it (ie. 30% top rate kicks in at $50,000).

Hmm, maybe it will look less like pillaging ordinary Kiwis’ social wage to give the rich a bonanza if we do it in graphical form.

Maybe not.

Now, I can already hear our righties with better ideology than maths saying ‘yeah but when you cut taxes you have to give more to the rich’. That’s not true, of course, the current tax cuts cap out at $55 a week for anyone earning $80K or more. Anyway, the Right’s tax cuts don’t just give more to the rich, they give more to the rich as a percentage of their incomes.

$2 billion a year either coming out of public services or paid for by more debt to pay for massive tax cuts to the already very well-off. It would be ordinary Kiwis who would ultimately pay for this extravagant gift to the rich. Doesn’t seem to me that Mr Moderate has the mandate for that.

69 comments on “Right plans give away to rich at your expense”

  1. Camryn 1

    Keeping their own money is not a gift. Taking it as tax is more like a gift from them (albeit compulsory).

    If you believe, as I do, in the basic goodness of human nature then you’d probably not be so worried. No doubt they’ll spend much of that extra cash in hand on charity… after all, what’s the marginal utility of an additional dollar spent on comforts versus helping out a cause you’re dedicated to after a certain point?

    Oh, I forgot, somehow the left finds private charity to be potentially demeaning for the recipient… as if being beholden to the benevolence of politicians whose spending is driven by ideology over practicality and who may have no particular passion for your need beyond how many other voters may share it is any less demeaning.

    My final typical* right wing argument for the day is that leaving more money in the economy will likely stimulate the economy so the $2B reduced take is an over-estimation since the new tax rates will apply to a larger base over time than would’ve occurred under the more punitive tax regime. There may be no reduced take at all over a medium term horizon.

    * Yeah, I admit they’re typical… just trying to move the thread along 🙂

    [“leaving more money in the economy will likely stimulate the economy” what do you think the Government does with tax? Burn it? Bury it? The money is spent in the economy too. SP]

  2. IrishBill 2

    Camryn, that didn’t work in the 80’s/90’s why would it be different this time?

  3. Camryn 3

    Didn’t it work in the 80’s/90’s? We can’t tell without a crystal ball, but it seems likely to me that we would’ve had a lot less of an economy in the last few decades without the reforms of the 1984-1993 (or so) period. It seems highly likely to me that much of the extra social spending of the last nine years was essentially paid for by those reforms. I think that the disconnect in time between pain and gain makes many people unaware of the trade-off, and feeling like we can afford the nice-to-have things (aka. Labour in government) all the time.

    All I really ask from the left is for Labour to spend wisely when it does spend, and to keep the foot on the gas in the good times a bit more so National/ACT don’t have to be so drastic whenever they’re government. Still, I think that my wish is largely and increasingly the case these days. I would’ve liked to see slightly higher proven results in health but otherwise Labour did a decent job of spreading around the benefits of the previous governments without screwing things up too bad. Maybe 6 years would’ve been enough and we could’ve started focusing on getting the engine up to higher revs before the downturn…. but, again, crystal ball. Who knew?

  4. IrishBill 4

    Six years into Labour’s term we had record unemployment and rising commodity prices. Generally you don’t put your “foot on the gas” when there is limited productive capacity in your economy. Better to pay down debt and hold surpluses for a rainy day. Labour did the latter which puts us in a strong position compared to our main trading partners. In my opinion their tax cut package dropped the surpluses into the economy too quickly but that was a political move.

    National now has a lot of space to increase debt to stimulate the economy but, as I explained in my “stimulating” post, they are going about it in the wrong way. Watch as their top end focused taxcuts disappear into debt repayment, savings and (for the very top) are exported. Very little of this will be stimulatory.

  5. Daveski 5

    As ever, SP concentrates on the emotive issue painting Labour as the good guy when there is a an overarching problem Labour has created.

    Corporate tax rate is now 30%, trusts are taxed at 33% and various savings vehicles are at rates lower than the top marginal rate.

    Any sensible rich prick able to do so will be able to significantly reduce their average tax rate. Apart from the unfairness (it’s not open to wage and salary) earners, it’s clearer inefficient and encourages tax avoidance.

    Regardless of the % of tax, those who earn more will still pay significantly more tax which you omit.

    In terms of the substantive arguments against the trickle down/lower tax argument, the following is useful:

    Lowering marginal tax rates would boost economic growth. In a recent study for the Business Roundtable covering 98 different countries (available at http://www.nzbr.org.nz), Australian National University economist Alex Robson found that, “on average, countries which significantly cut taxes on upper incomes between 1980 and 2000 enjoyed per capita growth rates of nearly three times those that did not.’

    Source

  6. Tigger 6

    How they will be able to afford this sort of tax reduction is a mystery. The tax take will be down since unemployment is up. I notice that Key is already readying NZ for a bunch of cuts to services:
    “But the prime minister-in-waiting has also thrown a dose of cold water over the victory celebrations ahead of his first Cabinet meeting tomorrow, telling his team there is less money to spread around and that they must find savings.”

    What he’s leaving out is that they need to make cuts so they can afford this sort of tax cut later on.

    Camryn, your whole trickle-down, the rich will support the poor through charity won’t work here. We don’t have a sufficient base of very wealthy people in this country to make a real difference.

    Take arts patronage for example, in the US there is a lot of arts patronage from the wealthy to create an arts scene that doesn’t rely on direct government funding, here there aren’t the numbers of arts minded wealthy to function like that so the goverment is forced to support the arts (or alternatively see it disappear). But can I guarantee Key will be telling us in six months that we can’t afford to fund the arts anymore and that the arts should seek charity funding.

  7. Camryn 7

    IB – Good points re: labour market capacity and the tendency of the rich to save.

    Still, there is always room to boost the economy by getting out of the way. The top of the cycle would’ve been a good time to look at the benefits of cutting red tape and increasing labour market flexibility, but those aren’t Labour-style things.

    Also, regarding that saved money… I think our overall saving rate could’ve done with a boost. Consumer spending might not be taking such a hit now if the wealthier members of our society had been able to put a little more aside.

  8. Lampie 8

    Yes we can afford it, just you have to pay for everything.

    Daveski, question for your source which they have left out. What services do you pay for in those countries that Roger Kerr mentioned?

    By the way, old Roger may have improved in learning about economics as back in the 90s, he was highly criticised by economists 🙂

  9. Ag 9

    “If you believe, as I do, in the basic goodness of human nature then you’d probably not be so worried.”

    I don’t see why. Taxation is compulsory precisely because private charity is subject to market failure, whatever the intentions of those who would like to be charitable. Private charity is an appallingly inefficient means of helping people satisfy their preferences for helping others. You could have a population that is twice as nice as the current one and private charity would still be inefficient. That’s why no sane society relies on it in place of taxation funded social welfare.

    Taxation is just the portion of our income we spend collectively rather than individually in order to avoid market failures. Anyone who wants the tax take to be reduced so that they can spend more on charity needs their head examined.

  10. Janet 10

    Very good post by Tim Watkin on http://www.pundit.co.nz on some tough questions that need to be asked about the coalition deal.

  11. Bill 11

    I wish your graphs would reflect the reality that under both Nat and Lab beneficiaries got no tax relief at all. I also wish someone could explain why.

    And before anyone tries to argue that benefits are not taxed? Yes they are.

    Of course, under Nat I suppose that since the tax cut to the JK’s of this world are roughly x2 the weekly benefit that they will be sponsoring two beneficiaries each, writing it off as a charitable donation in their end of year tax return, abolishing WINZ into the bargain, and I wont have to puzzle any longer as to why tax cuts from both parties appear to apply to workers only rather than tax payers.

  12. tsmithfield 12

    I suspect taxation in NZ would equate to at least 50% of average income. Consider:

    Taxation on income
    GST
    Tax on fuel
    Tax on alcohol
    etc etc etc

    Then we have rates (a local body tax), dividends paid to the government from SOE’s etc etc.

    We are actually coming very close to pure communism in this country. I believe we are grossly overtaxed creating tremendous wastage due to inefficiencies caused through wasteful government expenditure. So, taxation in NZ is simply far too high.

    Furthermore, taxation structures in NZ are a major impediment to NZ moving forward as a nation. Taxation rates need to be set so they provide incentives for people to move ahead and improve their lot in life. Current tax structures simply reward mediocrity. What is the point of trying to improve your lot in life if progressively more is stolen by the government as income increases?

    I believe we have created a society based on envy in this country. I heard someone make the comment recently about the difference between America and Australia (as a proxy for NZ) with respect to wealth. The comment was that in America, someone would walk past a mansion and think “one day I will be living in a house like that”. In Australia (and I suspect NZ) someone walking past a similar mansion would think “I want to get that rich prick”.

  13. Tane 13

    Travellerev – please stop ruining every bloody thread with your boring and longwinded obsessions. You have your own blog, use it.

    Any more of this off-topic crap and you’re banned, I’m honestly sick to death of it.

    I’m going to go through now and delete every off-topic comment. Apologies to anyone caught in the crossfire.

  14. Tane,

    So your OK with people throwing tantrums and not OK with supported arguments. Very enlightening.

    [Tane: I’ve deleted every comment relating to your off-topic comments, including other’s people’s. I’ve nothing against you Ev, but you’re destroying our comments section.]

  15. Mr Magoo 15

    I find these arguments amusing. National and Act are for cutting tax for the rich. This is simply because that is who they are, who funds them and who provides them advice.
    Evidence?
    1) They are rich.
    2) They are backed by large anon donations to trusts.
    3) BRT, Crosby/Textor and soon armies of high paid consultants advise them.

    Why the argument about why they are doing this? There is NO EVIDENCE that the trickle down works even slightly as well as opther methods. In fact, quite the contrary.
    Evidence? (see the image at the bottom of the page)
    http://www.ourfuture.org/blog-entry/2008104427/tax-cuts-ineffcient-stimulus

    Now this IS a US example, but then it would be hard to argue that things are so different here the trends would be completely reversed?!

    Talk of charity is just ridiculous. There is no evidence that charity from the rich is even a partial solution to anything. What argument are you making that makes this even slightly acceptable?
    Even arguing this point as if it was slightly sensible would ignore that fact that your average NZer does NOT WANT TO TAKE CHARITY FROM RICH PEOPLE LIKE A PAUPER IN MEDIEVIL ENGLAND!! I would suggest that if key were to suggest this as a way forward it would be time for a bloody revolution of some sort.

    hrm…excuse me. I have an allergic reaction to obscene ideas.

  16. Lampie 16

    I believe we have created a society based on envy in this country. I heard someone make the comment recently about the difference between America and Australia (as a proxy for NZ) with respect to wealth. The comment was that in America, someone would walk past a mansion and think “one day I will be living in a house like that’. In Australia (and I suspect NZ) someone walking past a similar mansion would think “I want to get that rich prick’.

    That is more individual attitude same as some ‘rich prick’ are greedy and not greedy.

    Think you will find there are many countries with the same sort of tax system to ours and regardless of what rate, they would complain it is too much!!!

    Define the right level of tax if too high, is there too low??? I will repeat myself, ask the IRD as they have several different kinds of tax models and their consequences which people forget about rather quickly.

  17. Jum 17

    tsmithfield
    November 18, 2008 at 9:37 am
    No, what I would be thinking as I walked past is ‘nice place’, but then I’d be expected to play the silly one-upmanship games those people do, and have cheap labour to clean my mansion and feel really embarrassed every time I made a speculative run on my own country’s $1. I’d also wonder how many people I’d shafted to get where I was.

    Nah, I’ll stick with the owned 3 acres, couple of beasties, 2 neat young adults still nesting, and an other half who while not agreeing to every opinion I hold doesn’t try to prevent me from having them.

    Thanks Tane. How long did it take for you to move to the fascist right?

    I have always looked to your blog for the other view as expressed by the media and expound that to all who want to listen. Now it appears that I might not be getting all the sides of the argument. I posted on your thread to provide information which I found damning on the National incoming Government. That gets wiped away too. Whose side are you on?

    PS I have filed a copy of my other post, should you wish to behave like an equal opportunity blog owner and re-instate it.

    [Tane: Jum, I’m sorry if you got caught in the crossfire, but I have to a blog to maintain. I put a lot of voluntary time and effort into running this thing and the last thing I want is to have it destroyed by travellerev’s obsessions. I’ve had countless complaints through the email from people turned off commenting by her. She’s posting off-topic, for pages on end, and hijacking nearly every thread we put up. I’m not stopping anyone from discussing the issues, I’m simply trying to make this a place for constructive discussion that doesn’t revolve around one person’s obsession. Hurling abuse at me and calling me a fascist doesn’t help the situation, or your credibility.]

  18. gingercrush 18

    I love the idea of tax cuts. But for anyone to think rich people are charitable should forget it now. The same goes for the likes of Geldof, Bono etc etc.

    Clearly because I swing to the right I don’t have a problem with these tax cuts. National wanted bigger tax cuts for the rich but due to the economic problems couldn’t justify it thus why big tax cuts for high income earners was removed. A sensible move. The agreement between Act-National is sensible too in that Act does have a clear taxation policy in favour of flatter taxs and as such it should have been expected that they would try and achieve this.

    However, the agreement does say “medium term”. Hopefully, that means a Tax cut to 30% will take place only when the economy is recovered, deficits are tracking downwards and other policies National promised are delivered. At the very least, these tax cuts should only take place when the economy is recovering.

  19. randal 19

    gingacruch
    looks like you are apologising for future natoinal policy
    are you using this blog as a beltway leakjob to soften the blow when the diehard act jobs start whingeing about unrealistic lunatic taxation rates

  20. gingercrush 20

    No randal, I’m working with the few conservatives inside the Labour Party to ensure that Labour falls on the wayside in their left ways and actually becomes a right wing party.

  21. Lampie 21

    ” Yeah, I admit they’re typical just trying to move the thread along
    [“leaving more money in the economy will likely stimulate the economy” what do you think the Government does with tax? Burn it? Bury it? The money is spent in the economy too. SP]”

    It seems that some haven’t done the first level of economics at teritary level and seen the national economy model 🙁

  22. Carol 22

    tsmithfield

    I believe we have created a society based on envy in this country. I heard someone make the comment recently about the difference between America and Australia (as a proxy for NZ) with respect to wealth. The comment was that in America, someone would walk past a mansion and think “one day I will be living in a house like that’. In Australia (and I suspect NZ) someone walking past a similar mansion would think “I want to get that rich prick’.

    IMO, the person in the above quote who is envious, is the one who wants to live in a the mansion they walked past. Wasn’t that Key’s response to seeing richer people’s houses that he rode his bike past as a boy?

    My response is that I’ve never had any desire to live in a rich house, or own loads of stuff. And there seems to me to be something wrong with a world where some people have loads more money & stuff than they need to live a satisfying and successful life, while very large numbers of people are struggling just to get enough to survive,

    So it seems to me, when people on the right accuse us lefties of the politics of envy, they are actually applying their own values to us, and failing to understand that, in fact, our values are very different to theirs.

  23. [Tane: Ev, now you’re involving me in your conspiracy theories. You have your own blog, put your thoughts there. Where it’s on topic, feel free to mention them here. Just stop jacking our comments section with your own personal obsessions. That’s all I ask.]

  24. Mark M 24

    Irish Bill refers uses the oft heard statement about Labour , in the 9 years they were in power ” Putting away money for a rainy day”

    Its been drizzling a bit lately with the real rain still to come and we have run out of money big time.
    The latest financial update showing it to be worse than the previous scary number.

    On another point I think a fair way of looking at tax cuts would be to show actual dollars in tax paid as opposed to the dollar amount saved .
    This will show how much different individuals contribute to running the country

  25. Mark M. We paid down debt, now we are in a position where we can afford to borrow some more while the economy is going through a rough patch.

    Think of paying down debt like putting money in a savings account – you get yourself in a good position while you can afford it. When things get tough you draw down your savings (increase debt).

  26. QoT 26

    But come ON, guys, tax cuts to the rich did SO WELL to stimulate the US economy over the last 8 years. Honest they did. And That Nice Mr Key totally promised to donate some of his salary to charity! I’m totally forecasting an end to child poverty once all his mates figure out that giving to charity is the new adopt-a-Third-World-orphan.

  27. randal 27

    some people really need a lesson on what a conservative is
    i.e. someone who resists all change because they believe it is liable to decrease their economic and psyhcological well being rather than increase it.
    simple really and they justify their whole weltanschaung on keeping that carrot rammed up tight.
    and gingacrunch I dont believe you for a minute that you are involved with the Labour Party
    If you were a worker then you would be looking to increase the benefits to the poeple that ensure the smooth running of our society and produce the goods.
    Not sucking up to the owners, money market sharpers and young fogeys who want to bleed everybody for anything so they can run back to europe and buy a house in the south of france to escape their duties to the community that fostered them in the first place

  28. Lampie 28

    “Mark M. We paid down debt, now we are in a position where we can afford to borrow some more while the economy is going through a rough patch. ”

    Something that us as individuals should have done as well

    “I’m totally forecasting an end to child poverty once all his mates figure out that giving to charity is the new adopt-a-Third-World-orphan.”

    He can adopt me, Mr Key my account number is ……..

  29. Milo 29

    The rich have worked really hard for their money. They have displayed the skills necessary for our economy to thrive; enterprise, hard work, determination and innovation. They deserve a reward for such attributes.

  30. Sarah 30

    I have to agree with SP on this.

  31. Carol 31

    Many of the rich work hard to make money for themselves. There are many others who opt for a lower financial return in order to work hard for the betterment of society and to help others eg nurses – or those who do a relatively low paying day job, and work hard for no money for the betterment of society and other people in their spare time.

    Some people get high paying jobs because they had the luck to be born into the right family with the right connections, and don’t necessarily work much harder than anyone else.

    I often see people who work really hard for an average wage, and wonder how much harder any person could possibly work – it doesn’t seem possible they anyone could work that much harder to justify the exhorbitant salaries some people earn.

  32. Lew 32

    Milo: I don’t think anyone is arguing they don’t deserve a reward. I think the relative size and shape of the reward is what’s at issue.

    L

  33. randal 33

    tane
    I have been reading this blog for quite some time now and I have never been offended by ev nor do I consider her posts to be long or offensive
    are you sure you are notjust giving in to the right wing things who want the world to run their way
    for the last three weeks this blog has been overun by righties posting long meandering blobs of material that say nothing
    furthermore it is typical rightwing tactics from hooten and his mob to gang up on people and make mass complaints
    sometimes I read the moderators comments here and they are definitely not up with the play on who is spamming and who is talking gibberish

  34. Lampie 34

    The rich have worked really hard for their money. They have displayed the skills necessary for our economy to thrive; enterprise, hard work, determination and innovation. They deserve a reward for such attributes.

    Ummmm back the truck up here a bit, there is old money and new money, be more old money than new money. So would disagree with your generalisation

    Define rich!!!

  35. Chess Player 35

    Clearly, Lampie, ‘rich’ is anyone earning over $60k, or is that $48k?

    No seriously, ‘rich’ is in the wallet of the beholder.

  36. Tim Ellis 36

    randal, ev is a tedious bore who tries to ruin every thread with what is basically spam. Instead of blaming the Right for your troubles, it might help if you didn’t think that all the world is trying to gang up on you.

  37. Tane 37

    Randal. I read more comments than you care to imagine. I also have to make judgements over what to allow and what not to allow in order to ensure the blog is a constructive place for people to visit and participate in. Ev has been warned, and warned, and warned, and then warned some more. Today’s jacking attempt, and the flame war that ensured, was the final straw.

    This blog is for everyone who wants to participate in good faith. It is not a sounding board for Ev’s personal obsessions. She has her own blog, she can write to her heart’s content there. When she’s here she can stay on topic and respect that not every thread is about her.

    As for your other point – no, I’m not giving in to the Right. I’ve faced down more than my fair share of them, don’t you worry brother.

  38. r0b 38

    randal, ev is a tedious bore who tries to ruin every thread with what is basically spam.

    Tim, ev has asked questions that you can’t answer, and your personal attacks on her (“Ev is a liar, a fruitcake, and is mentally disturbed, in need of psychiatric therapy”) tell us far more about you than about her.

  39. Mr Magoo 39

    “the rich” make their money out of businesses that ultimately, one way or another, rely on the working class to generate their wealth. Yes, that includes investment bankers also. So looking after them is good for everyone AND the economy.
    They also rely on those people to provide other things to enable them to exist: police, nurses, tradesmen, farmers, cleaners, etc. Without these people their rather “artificial and detached” existences would not be possible.

    So the thought that somehow “Cherry the CEO” fully deserves a $250,000 a year income AND a fat tax cut, while “joe the plumber” fully deserves to struggle to pay the power and higher tax with 50,000 is not a good enough argument. In fact it is downright wrong headed.
    That assumes that Cherry even pays as much tax as Joe in the first place, as we all know about tax dodging enabled among the wealthy. Also that all that wealth and asset they are able to accumulate actually earns them even MORE wealth on top of it. The security, opportunity and control that a wealthy person has in their life is huge. e.g. should Cherry be out of work for 6 mths, for instance, her quality of life will be impacted by a very small amount – especially given the golden handshake she will get. Inflation barely touches her cost of living.

    A tax cut of 300/week means little to Cherry at 6.24% of her already heavily surplused income.

    Meanwhile, Joe is struggling to save for a deposit on a house because property investors own 5+ each and have priced him out of the market. He is forced to be exposed to the market and falling on hard times and/or losing his job could mean the dole queue and eviction from his current rental house. Inflation makes a big impact on his food bill and eats directly into his savings in significant % points.

    A tax cut of 40/week means a whole lot more to Joe at 4% of his income, because it would increase his disposable/savable income for 15-50%+ in many cases.

    But hey, maybe we CAN make this work. How about we introduce an asset/wealth tax then? (ref: http://en.wikipedia.org/wiki/Wealth_tax ) How about capatal gains tax across the board in all cases?

    Disclaimer: I am one of those “rich pricks” in the middle of my career and stand to make massive gains from “rich prick cuts”. But I also grew up in a beneficiary family in a backwater area and know what the difference in opportunity an auckland well-to-do kid has vs. someone of my ilk and how much HARDER I had to work than them to put myself through university without any assistence at all. I also know how much more disadvantaged I am because of it.
    I believe in a fair and just society and screwing the middle class with your wealth, power and connections to increase your profits so you can pay yourself large bonuses and golden handshakes is just not good enough. There has to be a pressure valve here and differential tax rates is it.

  40. Ag 40

    “The rich have worked really hard for their money. They have displayed the skills necessary for our economy to thrive; enterprise, hard work, determination and innovation. They deserve a reward for such attributes.”

    Argh…. this has nothing to do with it. Everyone benefits from the welfare system, even the rich. Most people do not like the idea of people living on the street or the elderly having to eat pet food. Most people who might end up living on the street don’t want to and all of the elderly do not like the idea of eating pet food. The welfare system satisfies both sets of preferences in the most efficient manner. Private charity is not an option because it is subject to market failure. I repeat: it is not an option because it is subject to market failure. Think of the tax you pay as what you pay to make society worth living in and to insure yourself against crime, because that is what it is.

    The free market can produce many goods more efficiently than any other institution, but there are a lot of things it does badly. The welfare state picks up the slack and ensures a liveable society. Asking for the market to do it is to completely misunderstand how our economy works. Them’s the facts and there is no avoiding them.

    The idea that we should cut taxes on the rich is insane. It means that we either have to cut spending, which will create problems for everyone, or we have to increase tax on lower income earners, which will create problems for everyone. There’s a reason we pay progressive taxes and it has nothing to do with fairness – it is because taxing the rich more provides the best result, even for the rich.

    As it is in New Zealand the wealthy do not pay enough tax. The Nordic economies shame all others when it comes to producing a high overall standard of living, and they are high tax economies. Any clown who argues for the benefit of low taxes has those inconvenient facts to deal with.

    The political right are basically a bunch of idiots who don’t understand the basics of how our society works. It’s like they didn’t pay attention during economics 101. I sometimes wonder if they are being dumb on purpose.

  41. Mr Magoo 41

    Ag:
    As per my first post – they are being “intentionally stupid” because it serves themselves and those they represent.

    Occam’s razor.

  42. gingercrush 42

    The example of Nordic economies makes a return.

    Everyone in those countries are pretty much protestant and lets face it white. They have strict immigration policies and thus don’t have problems other countries have.

    New Zealand, Great Britain, Australia, USA, Canada and most of Europe are completely different. We have ethnic and religious mixes and these will always cause conflicts and will always add complexities. That is something Nordic countries don’t really experience.

    Though I was informed at Kiwiblog that Sweden now days have a large number of Arabs and Africans now days.

    I’m not saying that one can’t use examples from Nordic/Scandanavian countries just that they’re so different politically, historically, ethnically even religeously to New Zealand, other english speaking countries and most of Europe. Not to mention trade relationships with the European Unions.

  43. Ianmac 43

    How do the hardworking people like Mr Magoo feel about the Rich who have never actually produced anything but gained their wealth by wheeling and dealing in money markets?
    And no doubt that their wealth is tied up in Trusts so that they pay little or no tax at all. Is that how it is for Mr Magoo?

  44. Billy 44

    And no doubt that their wealth is tied up in Trusts so that they pay little or no tax at all.

    Look, this is just a wild guess, but Ianmac, you know nothing about our tax system, do you?

    On the off chance that you do and I have missed something big, explain how “tying wealth” up in trusts enables one to pay “little or not tax at all”.

    No pressure but I am prepared to be fascinated.

  45. Quoth the Raven 45

    Gingercrush – The numbers of christians agnostics athesits in the scandinavian nations aren’t really different from that here (look at the stats I just did). What does the fact that we’re more ethnically diverse or that there are more white people in scandinavia have to do with our tax system and social spending – please explain clearly.

  46. Pascal's bookie 46

    QtR- Goodness knows what he meant.

    It sounds like he thinks white people won’t stand for their tax dollars supporting not white people, and that all the ‘principled’ arguments we hear from the right against progressive taxation and redistribution are just hot air. It’s really all just about religious tribalism and race, and that if we didn’t have so many of them stinking up the joint, they’d be all gung-ho for democratic socialism.

    Who would’ve thought? Must be reading him wrong. Hopefully he’ll explain.

  47. Ianmac 47

    Billy: I know Farmers who have paid virtually no tax for years, since the Farm is a Family Trust which by the time all the farm expenses are paid , new car, new house, power then the identifiable income is almost nil.
    Slightly different but in principle the same, I know of a specific family who sold their farm for $11million, to become a vineyard, built the new house (huge) and the Family Trust formed meant that the daughter could go to varsity and obtain a Living allowance of $150 because on paper her parents were well below the thresh-hold.
    You are right. I know little about tax but I do know that clever accountants minmise the tax otherwise due.

  48. Sarah 48

    A good ol’ rich bashing. My favourite.

    [lprent: Probable troll – see the Policy. Lift your standard – where is the point in your last few comments]

  49. Ag 49

    “Everyone in those countries are pretty much protestant and lets face it white.”

    Where have you been for the past 40 years? I guess the difference with the Nordic countries is that they don’t have right wing nutbars constantly race baiting all the time.

    If you don’t like the Nordic countries, then try Canada, which is probably the most ethnically diverse country on the planet.

    What will the next desperate denial be?

  50. Pascal's bookie 50

    “What will the next desperate denial be?”

    ‘The dirty Scandi countries are getting a free lunch from all that Nartzi gold they’ve been hiding, but they’ve reached Peak Nartzi Gold and it’s all downhill here from here for them. They’ll all be living off lanolin and soylent green within months’

  51. gingercrush 51

    It was in response to this: “As it is in New Zealand the wealthy do not pay enough tax. The Nordic economies shame all others when it comes to producing a high overall standard of living, and they are high tax economies. Any clown who argues for the benefit of low taxes has those inconvenient facts to deal with.”

    That has no relevance when you’re talking about a history of similarity and largely a lack of other groupings. I do see that the number of refugees and immigrants over the last 10 years or so has seen some real changes. And from what I read at in links provided via Kiwiblog there is a certain tension towards people with Islamic beliefs. My guess its likely just misunderstandings.

    To clarify I had no intention to be racist but I do think race and religion has a background here and needs to be thought carefully as to why those Nordic countries seem so much more successful in most areas than other countries. There are certain traditions, shared history and the like meaning the nordic grouping of countries have a similarity

    The movement from old orthodox Catholicism to Protestant was much easier than for instance the shift to Protestantism in Great Britain. There wars and years of history have caused long resentment, the use of class to deny low income earners.

    Europe for years has been reshaped constantly where ethnic groupings share the same country but think very differently.

    In the United States you saw the near eradication of native Indians and the slavery of Black people under colonial rule.

    Australia you saw the misuse of Aboriginals.

    In New Zealand lets face it while we were able to sign the Treaty of Waitangi there has been long running tensions between Maori and Pakeha. This has allowed Maori to fall below level

    In the nordic countries they have not had such tensions because of their similarity and this has allowed them to make concensus agreements. Their successes in having high tax, large welfare economies does have to with them largely being the same and not having the huge differences other countries have.

    I’m sure I’m not making sense and I’m sure someone will attack it as being racist or whatever.

    —-

    Also how you can compare the Nordic economies to New Zealand’s economy is strange. New Zealand earns its money via agriculture, dairying, horticulture, seafood, forestry and tourism. That is what earns us dollars.

    Sweden and Finland is technology and engineering. Norway is shipping and oil. Denmark has a business tax of 25% and has a number of huge corporations such as Lego. And all receive more tourist numbers than we do.

    There is a clear difference in how we make our money. Those Nordic countries also tend to export inside the European Union while we have to look for several markets for our imports and we have difficulties in regards to the EU on Agriculture and Dairying.

    Our economy can’t have a supersize government, huge intake of taxes etc because we’re so vastly different.

    None of that makes sense does it.

  52. Quoth the Raven 52

    Our economy can’t have a supersize government, huge intake of taxes etc because we’re so vastly different.

    I’m sorry, but you really do not explain adequately why that is at all and another thing there needn’t be any racial tensions whatsoever. A lot of people need an attitude change there.

  53. Pascal's bookie 53

    I think I can see where you are coming from ginger. But I may well be wrong.

    Are you saying that in societies where there is a variety of cultural groups, and a history of exploitation and grievance between those groups, there will less inclination towards social unity? That those historical and ongoing differences will play out with each group seeing politics through the lens of that history and making political judgments based around zero sum calculations about who benefits? And that this will mean that there will be reluctance for social and economic policy that the dominant group perceives as being beneficial to other groups at their expense? That sort of thing?

    If so, then the problem is surely bigotry of one form or another, and gets us nowhere in terms finding out whether or not low taxes are necessary for growth, or whether progressive taxes and redistribution promote higher aggregate standards of living. It may well be that the Scandinavian way really is better for everyone, but bigotry stops other countries from following their lead. In which case it is the bigotry that is the problem, rather than the Scandinavian systems.

    Certainly Scandinavia benefits from EU membership etc, but that doesn’t explain why they have better living standards than other EU countries.

  54. gingercrush 54

    Homogeneous societies tend to provide more public goods than heterogeneous
    societies, as public services can be more easily tailored for the needs of the “median
    voter”. The Nordic countries are homogeneous, and it is thus be no surprise
    that the public sector is large in all of them.
    – Nordic Model – A Success Story? Ms. Sinnika Salo. European Policy Centre

    http://neweconomist.blogs.com/new_economist/2005/12/almost_everythi.html – May also be of interest and has the pdf file in regards to Nordic Model – A Success Story.

    “The Nordic countries have more in common than their geographical proximity; at least three features are salient for our concerns. In terms of legal tradition they are historical strongholds of Scandinavian Legal Realism. Politically they are egalitarian social democratic welfare state regimes. Culturally, their citizens have regarded themselves as highly homogeneous, religiously, culturally and ethnically.”
    – Rawls in the Nordic Countries, Andreas Føllesdal

    http://www.taipeitimes.com/News/editorials/archives/2006/04/27/2003304851 – A balanced approach that shows how it could work in less homogeneous countries.

    http://www.planetd.org/2008/04/29/a-dynamic-welfare-state/ – Interesting article

    http://www.entrepreneur.com/tradejournals/article/177028390_2.html – Article talks about how Sweden may need to change.

    —-

    This is what I was trying to say albeit unsuccessfully.

  55. Felix 55

    The Nordic countries also have a very high proportion of very good looking citizens which tends to make people fitter happier and more productive.

    30 years ago Australia successfully negotiated reciprocal sexual attraction deals with several Scandinavian countries (most notably Sweden) whereby each country’s citizens are required to find the other’s sexually appealing.

    If NZ hopes to compete with Australia in the world market we need to get to work stitching up similar arrangements.

  56. Tim Ellis 56

    That is an excellent suggestion Felix. On top of Sweden, I think we could advocate similar arrangements with the Czech Republic, Hungary, Ukraine, Georgia and Russia.

  57. Ag 57

    “I’m sure I’m not making sense”

    You’re not. 40 years ago New Zealand had a similar commitment to the welfare state and at that time one of the world’s highest standards of living. That’s the same New Zealand with a large indigenous population. Similarly, Canada has a much more diverse immigrant population than New Zealand does, and it has indigenous peoples as well. Yet, the welfare state has proven remarkably resilient in Canada.

    The idea that it has to do with race or culture just does not pass muster.

    “Homogeneous societies tend to provide more public goods than heterogeneous societies, as public services can be more easily tailored for the needs of the “median
    voter’. ”

    This is obviously false. Developed societies are considerably less homogenous than most underdeveloped societies, and yet deliver more public goods. Just make a list of 100 countries and rank them in this way and you will see I am right.

    Save the partisan links. The right have been predicting the downfall of the Nordic model for three decades. It has been long enough to declare them full of it.

    “Also how you can compare the Nordic economies to New Zealand’s economy is strange. New Zealand earns its money via agriculture, dairying, horticulture, seafood, forestry and tourism. That is what earns us dollars.”

    Irrelevant. The main reason for these countries doing well is not that they are rich. Norway has a much higher GDP per capita than the others, but they don’t differ much in standard of living. The US is much richer than Canada, but Canada provides a better standard of living. The reason is that the Nordics and Canada are efficient societies. They are extremely good at converting national wealth into standard of living. The US is extremely poor at this by comparison, even though it is a very wealthy country. New Zealand needs to be an efficient society. That means getting rid of the right wing plonkers who are preventing this from happening. They have no case.. no case at all.

    Our economy can have now and has in the past had a much higher tax take than we do at present. It would simply be the expression of a preference for more collectively funded goods and less individually funded goods. The idea that this would be a drain on the economy is simply wrong. It would be a drain on the private sector, but would be more than made up for by the gains in overall quality of life, which is the whole point of having an economy.

    The Nordics have demonstrated how a modern society ought to be run. If we don’t run our society that way, it is because we’re stupid.

    We’re stupid. 🙁

  58. Tigger 58

    Ag – superb post.

  59. Jum 59

    Tane
    I accept your apology for removing the first post I have put on your blog for a little while. Please accept mine for lowering my standards in calling you names.

    I don’t know the history with you and Travellrev – I should have checked. Maybe one thread on your blog for Travellrev to vent her off topic spleen on and we can reply to that and keep your other threads sacrosanct??

    I did find her post interesting and that’s why I replied to it. I haven’t changed my thinking on your blog as being a leveller of the media – it will be even more valuable now.

    [lprent: Thanks – I think so which is why I and the others support it (and it does take a lot of time). The thing with tev was likely to happen for a while. We tolerate quite a lot of off-thread in a thread, but this was starting to jump threads. It was also getting bloody tedious to read. It was interesting (as much to see what info could be extracted from the net) but just too much and too often.]

  60. Mr Magoo 60

    Ianmac
    How do the hardworking people like Mr Magoo feel about the Rich who have never actually produced anything but gained their wealth by wheeling and dealing in money markets?

    I could not work out if you were being sarcastic, in agreement, or just completely misread what I wrote?? You do realise that I was agreeing with you, right?

    I AM one of those rich pricks. So I feel quite happy with myself. As for my other rich peers I am not. (some of which shown drunkenly swinging their pot bellies and swilling red wine at National’s victory party )

    And yes, I also agree that trusts and such allow people to bury wealth and assets which are earning them effectively an income and pay little to no tax. (no cap gains for example on a house that is having tax expense CLAIMED ON IT!?!?!?)

  61. Jum 61

    Ag
    You ‘hit the nail on the head’. Why do people continue to equate lots of money with an enriched lifestyle.

    This 3 year cycle of right-wing Government will not improve matters.

    Maybe we should ask the perennial question as people seem to have forgotten; who will be gathered around your bed on the day you die and will you want them there? (That’s two questions)!

  62. Jum 62

    Randal

    “it is typical rightwing tactics from hooten and his mob to gang up on people and make mass complaints”

    This is happening on Colin Espiner’s blog. I first encountered it on the toxic Kiwiblog. It was a nasty experience for me to realise that people like that existed. I’ve learnt a lot since I lost my political ‘innocence’ on Kiwiblog.

    It makes me laugh that over nine years of personal attacks on Helen Clark and Labour was quite ok, but 2 weeks of questions about Key’s personality and National’s ability to keep to the policies it has agreed to and they’re bleating about being picked on.

    (This is my third post. I’ll stop for awhile!)

  63. the sprout 63

    yes disingenuous allegations of dirty tricks seems to be National’s primary dirty trick at the moment, which is really just another permutation of their very successful Jewish Lightning campaign.

    they must have got tired of the “make baseless allegations to authorities in order to reject subsequent dismissals of allegations by said authorities as politically motivated” technique.

    they have many such tools in their toy box.

  64. Ianmac 64

    gingercrush and Ag: As a spectator your dialog is fascinating as you both explore the debate. Thanks.
    Mr Magoo: Yes I did misread your post. OOps. The people that have made their own wealth by their own efforts, impress me. Perhaps I even envy them a little from the point of view as a salary earner. Yet I regard myself as a very lucky chap; family, friends with the sparrows and growing stuff for fun. I suspect that some of my rich friends have a different value system.
    Felix: Wot a great plan to have a reciprocal sexual attraction arrangement. Perhaps NZ could set up a Ministry of Sexual Collaboration MOSC (or Musk for short.) Appoint as Minister …..um.

  65. Mr Magoo 65

    I have no problem with rich pricks being rich pricks. Swilling wine, looking down noses, counting money, smoking cigars and all the other cliches. They like criminals are here to stay – short of a truly successful communist revolution.
    The problem I have is when their money, power and influence is used to skew society’s balance so that they can tip the wealth balance even more in their favour than it already is. When the majore news outlets and media start running biased stories about how terrible “Helengrad” is and then promptly calling her “one of NZ’s best prime ministers” 5 minutes after they manage to throw her out. When any action taken to protect and/or help people/the environment/society is taken as “nanny state”.
    When the man in the street is so f’ing confused I see a paint-covered handyman taking a pamphlet from a young nat in a suit, snarling and sneering about how “they” are going to show helen. (true story)

    That is when there is a problem. Something needs to be done.

    Phase one is complete. National, Act and (unfortunately) the Maori party have been given the reins at the worst possible time. It has become quite clear to those paying attention that they ARE going to try and get through a right wing agenda whereever they can.

    Phase two will be to call them out on this shite at every available opportunity. Make sure they don’t get away with ANYTHING.

    Phase three will begin in 2011.

  66. Billy 66

    Iamac said: I know Farmers who have paid virtually no tax for years, since the Farm is a Family Trust which by the time all the farm expenses are paid , new car, new house, power then the identifiable income is almost nil.

    The trust makes no difference to this. Deducting expenses incurred in procuring assessable income is something all taxpayers are able to do, whether they are trusts, companies or individuals.

  67. Sarah 67

    lprent, I just find this constant ridiculding of anyone remotely wealthy to be rude and quite petty. They deserve tax cuts just as much as anyone else. Yet some people commenting on this site seem to treat them like second class citizens.

  68. Chris G 68

    Felix:

    “The Nordic countries also have a very high proportion of very good looking citizens which tends to make people fitter happier and more productive”

    My mate went to Sweden last year and he said it was absolutely ridiculous how good looking everyone was (He, naturally, tended to mention the women)

    Very off topic I know, but apparently its like a must see thing. haha

  69. Phil 69

    unrelated to the content of the post…

    I don’t know if anyone else noticed the change in Steve’s Graphics… What do you think of Excel 07, Steve?
    It’s a culture shock compared to 03, that’s for sure…

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