Brent Edwards is a damn good journo but even he’s fallen into the trap of not seeing the ubiquitous spin on tax for what it is. Three aspects of his piece this morning were repetitions of spin:
When you cut income tax, of course those who pay the most tax get the biggest cuts
What rot. If you put in a 0% percent tax bracket (nearly) everyone would get the same cut in dollars. If you cut each bracket by the same amount, everyone would get the same percentage cut. But the Nats aren’t doing that. They’re saving the biggest cut for the top tax bracket – that can only benefit the rich. That’s not an inevitability, that’s the Nats paying off their class.
Landlords will bear the cost of higher tax on housing investment
No. They will pass as much as they can on to renters. In technical terms, the landlords may pay the tax but the incidence of tax is on the renters – mostly low income working families.
Tax cuts are expected to boost growth
Who says that? The Tax Working Group never said that tax reform would increase growth. Here the TWG has expected economic effects of its proposed changes (1B is closest to the actual changes we expect).No mention of higher growth. Higher inequality? Yes. Higher growth? No. Remember, the TWG wasn’t tasked with working out how to create a tax system that would grow the economy faster, it was tasked with working out how to pay for aligning the top tax rates at a low level.
Meanwhile, the Herald’s editorial comes from a depressingly predictable rich person’s viewpoint. The title is enough of a give away:
It may hurt but decisive Budget vital
‘It might hurt you, but it’s for your own good’. Let’s be clear. Working Kiwis, especially the renting poor, will hurt and so will property investors to some extent. But the rich are going to make off like thieves. We’re talking thousands of dollars a week for the richest New Zealanders, money that hasn’t come from higher growth or even from less spending but from increasing the tax on someone else.
The Herald then makes this ridiculous assertion:
Ideally, the top rate would be aligned with company tax at 30 per cent to remove further opportunities for avoidance.
Why should that be a priority? What good what that do? It would make taxation slightly more administratively simpler but would it do anything to make this a more prosperous, more equal society? No, it owuld make inequality rose. The money would go to the rich elite and would have to be funded by more tax on working Kiwis or cuts to the public services they use.