The tax swindle, visualised

Written By: - Date published: 11:13 pm, May 25th, 2010 - 71 comments
Categories: budget 2010, class war, tax - Tags:

I just realised I haven’t done a graph of the tax impact of the tax swindle announced last week.

I can’t do the property tax/rent increase part but here’s the net weekly effect of the income tax changes and the GST hike. These numbers match up with those provided by Treasury.


The first 1.2 million taxpayers get less than a dollar a week. A full-time minimum wage worker gets $4.12 a week.

The first 3 million (of 3.4 million) taxpayers get just $4.24 a week on average. The top 100,000 taxpayers average $105 a week.

Half of the net tax cut goes to 8% of taxpayers.

I’ve cut it off at $250,000 but here’s a selection of the net tax cuts for incomes above that:

John Key (just the PM salary), $393,000:
Weekly tax cut = $242.96

Air NZ CEO Rob Fyfe (who wouldn’t give flight attendants a few more bucks an hour):
$2.5 million = $1,710.71

Telecon CEO Paul Reynolds (who has sacked 1,200 Kiwi workers and lost shareholders millions):
$7,000,000 = $4,845.44

These three men alone have incomes the same as 375 full-time minimum wage workers combined. They got tax cuts the same as 1,600 full-time minimum wage workers put together. Totally fair, eh?

71 comments on “The tax swindle, visualised”

  1. tc 1

    Scary graph but a more compeling visual I find is the smirk/grin on all these high income earners knowing they scored big time off the rest of NZ rather than actually earning or deserving it and the intelligent wordly recipients damm well know it too.

    This will almost certainly drive those kiwis we need to stay offshore like recently qualified tradespeople I speak to see no point in staying…..bravo a fanatastic repeat performance of the last 2 nat govts guys such outstanding form at the track.

    But hey look on the brightside we get to enjoy the company of the reynolds/hotchins some more and all the joy and wealth they create.

  2. lprent 2

    If it looks like a swindle, the numbers say that it is a swindle, then no number of spinsters can make it anything other than a swindle.

    • vto 2.1

      If it is a swindle to give it back then it is a swindle to take it in the first place.

      • exbrethren 2.1.1

        Totally agree. How people like Reynolds & Fyfe can rort such large pay increases is a swindle.

  3. Bunji 3

    So your graph is pre-(high) inflation, extra rent costs, extra childcare costs and other extra lost service costs… and still looks that bad.

    As lprent says: Swindle.

  4. frustrated 4

    While I can see the point you are trying to make – isn’t it also important to show how much tax those people pay ?

    If those three in your example pay less combined tax than the 375 full time minimum wage workers (ignoring and tax credits) surely that makes your point even stronger ?

    • Marty G 4.1

      how is someone’s tax bill relevant? We’re talking about a change to the status quo. The question is how that change is carried out, how the (borrowed) money will be distributed. Clearly this redistribution of wealth from the previous status quo is targeted at benefiting the most wealthy.

      • frustrated 4.1.1

        How is someone’s tax bill relevant ……… are you serious ?

      • vto 4.1.2

        “how is someone’s tax bill relevant? We’re talking about a change to the status quo.”

        You’re being highly selective in how you frame your own argument their mr marty. It is slightly staggering to question the relevance of someone’s tax bill when it comes to a readjustment of their tax bill.

        And as for status quo – is that status quo from last month? Or the status quo since income tax was first introduced? Or the status quo since the 1999 envy tax increase? Or the status quo since …. Bit useless. I mean, how is your own particular status quo relevant? It is only a previous labour govt status quo – whoopdedoo. The bigger picture is the relevant one, not some comparison with the Clark Cullen envy parameters.

        But if you want to frame your own opinion around your own set of parameters rather than something more objective then go to it. Just weakens the cred.

    • Bill 4.2

      To try and put it smply and succinctly.

      Wages (incomes) were and remain a have that simply allowed the ‘plantation owner’ to not supply food, shelter, health etc, but to throw workers to the mercies of the market with inadequate resources to negotiate it in any meaningful way…a situation the canny plantation owner profited from all over again by the selling of necessary provisions back to the workers for a healthy profit often under monopolised conditions.

      Moving forward through time.

      From all that theft and inequity flowed an attempted corrective measure (progressive tax) meaning that those who appropriated most from the incidental side effects of capitalisms greatest achievement….the generation of widespread abject poverty…were required to pay progressively greater %ages of tax…which went back into paying for the construction, development and maintenance of infrastructures the rich pricks didn’t want to front for but which they (surprise!) profited handsomely from.

      And then came social provisions ’cause us workers were getting way too pissed off and were threatening to overthrow the whole shebang.

      It’s not that hard to understand, is it?

      • frustrated 4.2.1

        …..ho hum still waiting for some type of rational answer to a simple question ..”isn’t it also important to show how much tax those people pay.”

        “If those three in your example pay less combined tax than the 375 full time minimum wage workers (ignoring and tax credits) surely that makes your point even stronger ? “

  5. Lazy Susan 5

    Great work Marty G. No matter how hard NAct try to spin, it’s very clear the budget benefits the rich big time at the expense of low and middle income earners.

    The cracks in the spin sre showing though. Michelle Boag tried the old fear tactics on the RNZ panel yesterday spinning the myth that we needed the cuts at the top to keep the rich here. Faced with the fact that Australia and UK have higher top tax rates than NZ and asked which countries the rich might be fleeing to she simply ran out of road:

    They’re going to go to all these other economies where they can have tax free havens

    she said.

    Softening us up for the next budget Michelle – NZ the Monte Carlo of the South Pacific – must keep her awake at night just thinking about!

  6. joe bloggs 6

    That chart reminds me of Michael Mann’s hockey stick plot on climate change.

    Even after the changes Paul Reynolds will still be paying $47,000 a week in tax.

    Name me a low paid worker who contributes that much financial support, week in, week out, to the health and welfare of other New Zealanders.

    • felix 6.1

      Name me another who takes such enormous amounts of money out of the economy, out of society, week in week out, to the disadvantage of other New Zealanders.

    • Marty G 6.2

      even if we accept your premise, joe bloggs. That’s what Paul Reynold’s pay is for. Why does he need a giant tax cut on top when most get next to nothing?

      • joe bloggs 6.2.1

        so where do you draw the line? At what point do you not hand out a tax cut?

        How do the situations of the workers who earn one dollar more than where that line is drawn differ from those who earn one dollar less than where that cut-off point is.

        This debate is a crude illustration of the politics of envy – and of rewriting history.

        Have you forgotten that Labour put GST up by 25% back in 1989 – not long after Labour dropped the top tax rate from 48% to 33% in 1988.

        Pot – meet kettle.

        • Bright Red 6.2.1.1

          Um. No-one’s talking about the rich getting nothing. Just about them not a getting a huge and disproportionate share of tax cuts.

          Introduce a zero percent bracket. Then everyone gets the same amount.

          • The Baron 6.2.1.1.1

            Disproportionate to what? It isn’t disproportionate to the massive amount of tax that they are still paying. These three people alone are propping up the provision of services to hundreds of people still.

            What i think is the problem here is that Marty doesn’t like the fact that someone is paid so much. Lets be honest about that and move on – this isn’t about tax, this is about a deeper point of the relevant worth of different people’s effort.

            Otherwise, what is the point in tarring everyone who earns over $70k with the same brush as reynolds et al? if you hate the fact that he earns so much, then isn’t the best solution to introduce a higher tax bracket that kicks in at say $500k?

            • Lanthanide 6.2.1.1.1.1

              “if you hate the fact that he earns so much, then isn’t the best solution to introduce a higher tax bracket that kicks in at say $500k?”

              Presumably if Marty were in government, he would certainly consider such a thing. He isn’t, though, so you don’t really have a point, do you?

        • Draco T Bastard 6.2.1.2

          No, we haven’t forgotten. It was complained about then to and is one of the reasons National got voted in in 1990.

    • pollywog 6.3

      but isnt the point that he is now paying less tax than before, to which the shortfall needs to be made up by increasing the tax on everyone else by raising GST ? the ethos being, if he and a whole bunch of other ‘rich pricks’ hadnt got a tax cut they would have bailed…

      …and even if he is paying 47k a week in tax, what does that leave him as a take home pay each week ?

      so what ?…am i supposed to feel sorry for him for having to pay so much tax or be grateful that he is making so much that he can afford to pay so much and that he deems us worthy of his atlas like status to slum it in lil ol noo zilland for a few years or should i be inspired to aspire to be like him and make as much as he does ?

      whats the bet he takes his savings and investments and everything else and heads back to some tax haven to reside but keep the flash holiday home here in NZ whens he’s seen out his contract ?

      • felix 6.3.1

        Nah, don’t think I’ll be taking that bet thanks p.

        • pollywog 6.3.1.1

          hmmmm…

          ‘So Paul, when you finish your contract and given your massive taxcut will you be sticking around and investing in the local economy, perhaps start a business and contribute to NZers well being’

          ‘oh fuck off laddie, i’ll be gone by lunchtime and taking the kitchen sink with me….hahahaha

          captcha : false

    • RT 6.4

      Name a country in a first world economy where Reynolds would pay less tax for the same amount of earnings. Wouldn’t his package be adjusted so he gets more take home pay. For instance a car, house, shares, trips away etc. What these guys want they get so I wouldn’t think they would be too worried about paying tax, let the shareholders pay for it, they’re the ones paying his salary.

  7. Olwyn 7

    Thanks Marty. You do a great job of breaking down the figures behind the spin. And they look grim: more hardship for ordinary people, and a continuing slide into the “imaginary economy,” as someone called Mike put it over at Bowalley Road, at the expense of the real economy.

  8. Olwyn 8

    @ Joe Bloggs: I am sick to death of that line of argument, because it fails to take into account the fact that if people were paid more, they would also contribute more.

    • joe bloggs 8.1

      no failure on my part Olwyn. That’s exactly the position Paul reynolds is in – he earns more and gets paid more.

      You follow the line of reasoning that the gummint should decide what individuals get paid.

      The logical end to that argument is that the gummint is no longer the servant of the people but the master of the people.

      • Draco T Bastard 8.1.1

        That sounds remarkably like the normal false dichotomy that comes out of RWNJ. It contains no logic whatsoever.

      • Olwyn 8.1.2

        This is not the line of reasoning I was following, which is a whole other kettle of fish. I said that if people were paid more they would also contribute more. Your claim was, and I quote;

        “Even after the changes Paul Reynolds will still be paying $47,000 a week in tax.

        Name me a low paid worker who contributes that much financial support, week in, week out, to the health and welfare of other New Zealanders.”

        73% of NZ workers don’t actually get $47,000 a week, so are hardly in the position to pay that much. An attendant bleat is “10% of the work force pay 70% of the tax,” often with percentages from other countries put forward as a comparison. And the answer to that is much the same; “if you paid your workers more, you would pay a smaller percentage of the tax.” What I am speaking to is the idea that the rich man should win on both fronts: he should pay workers as little as possible, and pay as little tax as possible also. An exaggeration of this would be that if there was one rich man, and he paid his workers nil, and tax was required, he alone would be in the position to pay it.

  9. tc 9

    Methinks joe bloggs watches episodes of ‘upstairs downstairs’ are yearns for those golden olden times with that argument.

  10. SPC 10

    There is no income or wealth disparity that a CGT does not address.

    The problem with a standard comprehensive CGT is that it does not necessarily raise money in the short term and nor is the revenue flow easy to forecast.

    There are ways to make the income flow both immediate and more predictable.

    My preference is to place a 1% annual land tax on rental property and farmland in lieu of a CGT liability.

    For example property and land would be valued at the year in which the CGT began for liability on the capital gain – but losses would only occur if the property was sold for less than the original cost (adjusted for inflation IF the same was done for interest income). If there was no CGT liability the land tax paid would stand. If there was a CGT liability, then prior land tax payments would be deducted before the balance was payable (if the land tax was paid was greater than the total CGT liability, then the land tax paid would stand). This is slightly one-sided (in the interests of the government) but is fair when one considers the untaxed CG that most asset holders have already made and which would be exempt from any CGT.

    The same system would not apply to shares – as there is on-going tax on dividends each year. The presumption is that a lower income tax on those who can afford to save is good for the economy because this results in productive investment rather than consumption.

    • clandestino 10.1

      Yes a land value tax is the most efficient way of lowering prices and levying unproductive property speculation. The only problem is assessing value, but apparently modern techniques do it pretty well. The thing I like about it is land that is currently wasted and overpriced to an entrepreneur would be forced into genuinely productive use.

  11. Lanthanide 11

    I know Marty’s done a few graphs like this before, but for some reason I’ve only noticed it now. I’ve seen similar income distribution graphs in newspapers, pointing out the tax rorts that people have been getting away with by hiding their income in trusts.

    You can see this is still going on in the graph Marty’s got here: notice the two spikes around $38,000 and $60,000, the two main tax brackets from the previous Labour tax structure. Obviously the brackets have moved, yet these bumps still exist in the latest data – there’s not really much motivation to re-adjust your affairs to fit into the new schedule, especially because this would make your tax rorting even more obvious (“how come your income magically increased by $12,000 at the same time that the 3rd tax bracket increased by $12,000?”). In other words, why bother fixing what isn’t broken?

    What this shows is that National’s supposed crackdown on tax loopholes isn’t really going to do anything, because people will continue to use the trusts and funds they’ve already set up. Sure, a few people may not bother to go through the hassle to start them up now, but I’d suggest that the 17.5% to 30% gap is big enough (and the threshold high enough at $48k) to continue to make that a worthwhile rort to pull.

    • Lanthanide 11.1

      Truly the only solution to this tax evasion, if you’re going to allow trusts and companies to exist and pay different rates (and there seems to be no workable solution to this problem) is for there to be flat taxes. Flat taxes have other problems, which is why Gareth Morgan’s solution of universal income really is the most honest and sensible approach.

      • Bright Red 11.1.1

        I’m not sure the income data would be post the Budget. Doesn’t marty use IRD numbers? But, you are right. There’s no reason for someone who is already altering their finances to be just under a threshold to stop doing so because of the tax changes – it’s still advantageous to them.

        Frankly, I see the size of those bumps and think ‘so what’.

        • Lanthanide 11.1.1.1

          Yes, I agree. I saw a graph done in the Press where it compared income distribution for 3 different years: 1999, 2004 and 2008 showing the growth of the bumps over the time period.

          Really it is actually pretty small in the grand scheme of things, although undoubtedly for each person who is artificially part of that bump, there would be at least another person who has structured their finances to gain tax advantages but don’t appear in that bump – eg income of 55k instead of 59k, or maybe they reduced it to 80k instead, so as still to seem plausible, while avoiding having to pay the top rate on the other 200k they are hiding, etc.

          • Bright Red 11.1.1.1.1

            There are obviously people who hide their income altogether too. And even flat tax wouldn’t get them.

  12. Bill 12

    Why don’t we simply get rid of wages and salaries which will satisfy the right because that necessarily results in getting rid of taxes?

    Then develop effective and empowering systems that mediate between consumptive need/want and productive capacity that are based on actual resources ( material, human…the will and time, technological etc) rather than abstractions such as market laws and money supplies?

    Think of what that would do for the quality of production.
    And think what that would do for the quality of services.

    All those resources that presently go into producing bullshit for the sake of profit going into producing quality, desirable products and services. All that time currently spent by far too many of us at stupid unrewarding jobs for the sake of a wage or salary just so we can get by, being freed up to engage in meaningful and rewarding ways to the development of our societies and communities…which, as pointed out in robs post from yesterday will make us all far happier as long as the expected input on an individual level is equitable and the outputs are distributed in an equitable fashion.

    • frustrated 12.1

      Who’s going to run/organise this Nirvana ?

      • Draco T Bastard 12.1.1

        The people. It’s what democracy is all about. This is different to your preferred dictatorship so you probably don’t understand it.

        • frustrated 12.1.1.1

          What people ?

          This question has two words in it each consisting of more than three letters so you probably don’t understand it.

          • felix 12.1.1.1.1

            Amusingly ironic, given that you apparently didn’t understand the answer “The people”.

            Can we get some proper trolls in here? These new ones are fucking useless. Farrar? Hooten? where are your sockpuppets?

            • frustrated 12.1.1.1.1.1

              Instead of giddily fisting your self up the arse, perhaps you could explain how the ‘people’ are going to run/organise this system differently from how they are at the moment – i.e. via elected representatives.

              Fuck it must be boring for wankers like yourself, being tame trolls tasked with pissing on anyone who dares to view things differently than those who write the posts.

            • Graham 12.1.1.1.1.2

              frustrated makes a good point actually.

              You say “the people” will run this system. Okay, so who will actually develop the “effective and empowering systems that mediate between consumptive need/want and productive capacity that are based …” blah blah blah … sorry, nodded off there …

              So anyway, who will develop the “effective and empowering systems” etc.? It won’t be “the people” because not everybody is capable of doing this. So you need people who are capable of developing and implementing said systems, in a way that works effectively; then can communicate and organise effectively; who can persuade those people who have doubts – in other words you need people who have the qualities that, ironically, have probably made them highly successful people in our current system. Those people that you constantly rail against.

              And what is their motivation?

              • Bill

                I missed all this to-ing and fro-ing, but now it has my attention I can categorically state that you ( Graham) will probably not have much input into developing or honing said systems because you choose to snooze.

                As for ‘frustrated’…well, perhaps we are simply talking of those individuals who have a legitimate stake or interest in what is going on insofar as they are or will be directly affected and who, unlike Graham, would rather not simply snort and snore from the sidelines.

                You are asking these questions quite seriously?

                Then try “this facility which very succinctly investigates, assesses, and especially compares the attributes of capitalism and participatory economics.” and get involved.

              • Graham

                For some reason I can’t reply to you Bill – there is no reply button on your comment (that’s not very participatory … 🙂 )

                Anyway, thanks for the link. There’s a lot of information there and I may have some time later to do more than skim over it. However, I do have to say, from a (admittedly very quick skim-read), some of the reasoning does seem over-simplified and flawed.

                And your statement that I “will probably not have much input into developing or honing said systems because you choose to snooze” is wrong. I don’t “snort and snore” from the sidelines, because I understand this:

                Whatever system you may LIKE to have in place, that you feel SHOULD be in place, you still have to work within the system that IS CURRENTLY in place. So if I, for example, did truly believe that participatory economics was the only system that truly makes sense, then sure I’d be expounding it’s virtues and trying to get more people interested – but at the same time, I would work hard to become a success (whatever your definition of “success” may be) in the existing system.

        • The Baron 12.1.1.2

          Oh yes, command economies have worked every other time they were tried, haven’t they.

          Chairman Draco’s going to take us all on a great leap forward! HUZZAH.

          Retard.

          • TightyRighty 12.1.1.2.1

            if you took away all the wealth of everybody, and distributed it evenly back to everyone, within a year, the same whiners like DTB, Marty and BR et al would be moaning that some people have more than others. it’s just the way life is.

  13. randal 13

    its only words and words are all I need to take your cash away.
    oh and dont forget the emts. more words means more money.
    like yours and mine dude.

  14. Fisiani 14

    25/5/10

    Hon BILL ENGLISH: The cost of lowering personal tax rates is estimated at just over $4 billion per year by 2014. About two-thirds of this cost was used to reduce tax rates in the lowest two tax brackets—that is, people earning up to $14,000 on the lowest tax rate, and people earning up to $48,000 on the next lowest tax rate. This distribution demonstrates the Government’s commitment to making tax cuts across the board. The reason for that is we believe that the incentives matter for people who are on the minimum wage as much as they do for people who are above the average wage.

    Thanks for pointing out the obvious. Those who pay no tax get no tax cut. Those who pay a little tac get a little cut and pay little tax and those who pay the biggest amount of tax get the biggest cut and still pay the biggest amount. Does it really need a graph to show that?

    The Standard The glass is half empty – National bad….
    New Zealand The glass is half full – National good

    • Bright Red 14.1

      fizzy. see how the graph line gets steeper? that means the tax cut is proportionately bigger for the rich.

  15. Fisiani 15

    Who proportionately pay more tax. Duh.

    • Draco T Bastard 15.1

      Except the minor technicality that that they don’t. Everyone in NZ pays around 30% of their income.

    • Bright Red 15.2

      it doesn’t mean they had to get a proportionately bigger tax cut

      • clandestino 15.2.1

        Isn’t the argument really that some are outraged over the disproportionate compensation the very top get and other’s see it as a right they worked hard for? We can go on about tax cuts but really the elephant in the room is the inequality so persistent in the corporate structure. Are directors, CEOs, CFOs, and lawyers (!) really worth 10x plus the average employees wage? I don’t think they are, and if they pay themselves that then should be taxed to compensate society for their excesses. I predict the usual ‘politics of envy’ response, but I wonder; how is it envy when you ask ‘5 million is a bit much – how about 4?’ Doesn’t make a difference to them, but a huge impact on many others.

  16. roger nome 16

    clandistino – exactly. People are tired of the lottery approach to economics where a few people take home the majority of the booty. This is real life with real consequences. People working very hard are receving very little, and people working a moderate amount are reciving many times more. It goes against all our notions of justice – i.e. if two people do the same crime, one should not go to jail 50 times longer than the other, and some mimimum wage worker working just as hard as a CEO should not be paid one 50th of the CEO’s salary.

    • The Baron 16.1

      Its not a lottery approach. This is a real life that has real consequences. Surprise surprise, if you don’t go to school and don’t learn valuable skills, then don’t be surprised if noone wants to pay you much.

      It has always been that simple. As for all this crap that every system needs cleaners, may I point out that GDP per capita suggest cleaners are paid a hell of a lot more in Luxembourg than they are here.

      A system that “protects” people from situations of their own making will always end in expensive tears.

      • clandestino 16.1.1

        Sorry but you seem to be extrapolating an awful lot. It’s not about ‘protecting’ failures – that’s what the benefit is there for anyway. It’s about the justification of pay rates that far outstrip possible productive value. I completely agree with the premise skills equal pay. But the difference between an A and B in a law degree is a fine one, but the consequent pay can be tens of thousands apart. If you think this is fair then fine, I see it as an incredible waste of capital accumulation that could be in the hands of more people.

      • pollywog 16.1.2

        Surprise surprise, if you don’t go to school and don’t learn valuable skills, then don’t be surprised if noone wants to pay you much.

        It has always been that simple

        sorry to have to pull the cultural card out and flick your nose with it again but…

        for some of us, it was never that simple . its only within the last generation that we can possibly think, if we put in equal work and educational attainment that we might attain the levels of success, within the traditional and institutionally racist old boy network that runs the employment game, without compromising our cultural values.

        or to put it in street terms…fuck selling out to the man, fight the power !!!

        Eurocentrists tend to not want to exercise pay parity to those outside their culture…no surprises there. i mean, why is it euro ethnic origin employment stats aren’t as bad as pasifikans ?

        much as we’d like to think we can all aspire to be the paul reynolds and graeme harts i doubt that they would be where they are if they were, tame tuhoe and pita pohara.

        captcha : chosen

  17. roger nome 17

    TB:

    It is a lottery approach. How much you earn reflects your ability to participate in and enjoy society. Having said that, incentives should be provided to up-skill for the purposes of productivity and justice, but this needs to be ballanced against justice in regard to what i’ve said above. National has lost sight of this ballance, and has gone far beond providing productive incentives (they were already there) and has just dolloped a whole heap of money in the laps of those already materially well off, whilst further impoverishing the worst-off.

    National’s budjet has failed the justice test.

    • TightyRighty 17.1

      “How much you earn reflects your ability to participate in and enjoy society.”

      Ergo, unless you have a specific reason, like a disability, you have no excuse. anybody of able body or mind can fully participate and enjoy society.

      • Anita 17.1.1

        What do you think “ergo” means?

        You appear to have just said x therefore not x

        • TightyRighty 17.1.1.1

          therefore. what do you think it means?

          http://dictionary.reverso.net/english-definition/ergo

          I’m trying to get the collins one too.

          without memory of how to conjugate this properly, i think you want, ergo haud.

          ergo, if you spoke latin, you would be able to correct me. You don’t, ergo haud.

          • Anita 17.1.1.1.1

            Ok, so we agree on the meaning of “ergo”, let’s play this through;

            roger nome wrote,

            How much you earn reflects your ability to participate in and enjoy society.

            and you replied,

            Ergo, unless you have a specific reason, like a disability, you have no excuse. anybody of able body or mind can fully participate and enjoy society.

            Haven’t you just said x therefore not x?

            • TightyRighty 17.1.1.1.1.1

              No i haven’t.

              If you read it very carefully, it says “Ergo, unless you have a specific reason, like a disability, you have no excuse.”

              No without assuming any further that you are stupid, which I know you really aren’t, the full meaning is this.

              Therefore, if you aren’t mentally deficient or physically incapable, then you have no excuse for not earning a decent salary. the problem lies with you as you are fully able to participate in, and enjoy, society.

  18. burt 18

    OMG – people who pay the most tax benefit the most when tax rates are reduced, just like they get whacked the most when tax rates are increased. OMG the progressive model that is really cool when it whacks the rich pricks is just so uncool when it gives back to them… Oh dear, progressive taxation is only good when it works in accordance with our ideology that communism is the only way and that the economy is broken when we don’t all earn the same.

  19. AB 19

    The problem is that the amount of tax handed back is skewed by the pre-existing income inequality – and what the Nats have done is a retreat from the principle of progressive taxation.

    Why is progressive taxation a good thing in the first place?

    Well the answer is really that markets are more or less perverse in how they distribute income. There seems to be little correlation between someone’s income and how hard they work, the degree of difficulty of what they do, and the social value of their outputs.
    The correlation on hard work is probably very weak, the correlation on degree of difficulty maybe a little stronger but not overwhelming, and the correlation on social value non-existent.

    So what do you do when faced with a complex mess like this? Well the worst thing you could do is a Stalinist centralised setting of wages. The second worst is to shrug and say whatever outcome a market produces must be right because a market produced it.

    No civilised society does either of these things. Instead they use a blunt instrument like progressive taxation and the social wage (public services available to all irrespective of the ability to pay) to knock the more feral edges off what markets naturally do.

    Its about humanity and balance, and the Nats know nothing about either.

    • burt 19.1

      Its about humanity and balance, and the Nats know nothing about either.

      Are you going to tell us it was more balanced when people who owned multiple properties could write off paper loses and claim WFF ?

      • RedLogix 19.1.1

        Not at all burt. Including all those farmers/forestors/small businesses who have been doing exactly the same thing. They should all be ashamed of themselves.

        And the sight of a farmer who owns a multi-million dollar operation, presenting a Community Services card at the local medical clinic haas to be one of the more spit-worthy things around.

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