Tackling inequality proves taxing

There is nothing wrong with wanting all New Zealanders to live with dignity, free from poverty and enriched by opportunity. It is part of what makes us New Zealanders — we aspire to have a country in which we are all equal.

Many of the young colony’s first European settlers arrived wanting to make a new life in a land where hard work and character underscored social mobility at least as much as the vagaries of being born with the right privileges.

Over time, such egalitarian ideals became a part of policy. The welfare state sought to give people a hand-up from poverty, and free education and free healthcare sought to level the playing field and ensure everyone could be ‘‘equal’’.

But seeking is not the same as achieving and the disparities between people, classes, genders and ethnicities remained, and worsened. Even so, what historians call the ‘‘egalitarian myth’’ continued to influence what we thought of ourselves.

It has been this way for years and no matter the political rhetoric, it remains something we have failed to adequately tackle. As much as we might want everyone to have the same advantages, we remain a country of winners and losers.

Among the winners are people with the sort of jobs and incomes that help them pay their bills, who own property, and who can gather the savings and resources to give their children a leg-up when they leave home.

People who have few or none of these advantages, earned or otherwise, start their race a few steps behind the pack. Many of them, held back by disadvantage, will struggle to ever get a win.

The Green Party points to myriad investigations and reports — including those underpinning the Labour Party’s pre-election promise to tackle child poverty — when it warns the poverty gap is widening.

Co-leader Marama Davidson says New Zealand has ‘‘enough for people to live with dignity’’ but that the system is rigged so ‘‘a few have more than they will ever need, while far too many will struggle’’.

The tax system, she says, has allowed most of the country’s wealth to accumulate with a small number of people and those with ‘‘large amounts of wealth are not asked to contribute to help everyone else’’.

This description came as her party unveiled a Poverty Action Plan that would introduce wealth taxes and new high-income tax brackets to pay for a guaranteed minimum income of at least $325 a week.

A wealth tax of 1% would apply to net assets worth over $1 million and 2% for net assets over $2 million. These would apply to the value above those thresholds, would be divided among the owners and would discount the value of the accompanying mortgage.

The package also proposes a 37% tax rate for earnings over $100,000 a year, and 42% for earnings over $150,000. The top tax rate is currently 33% and applies to income over $70,000 a year.

The Greens almost certainly know the Covid-19 crisis makes this both the right and the wrong time to propose a suite of new taxes to fund a new kind of social security scheme.

The Government’s tax revenue is taking a hammering even as it tries, furiously, to get as much money as possible back into as many pockets as possible to ride out the worst of the recession. At the same time, a growing group of the recently unemployed will have a newly acquired interest in how a Greens-influenced Government might manage the social welfare safety net.

‘‘Might’’ influence is key: the Greens might want a ‘‘conversation’’ about tax, and about the need for some sort of guaranteed minimum income, but they do so knowing they will struggle to make it work in coalition.

The Labour Party ditched a capital gains tax when it became clear how hard it would be to sell a tax that hits at the core of middle-class aspiration, and the Greens’ pitch is not much different.

Labour will be reluctant to take the spectre of new (non-transport) taxes to the election, especially while so many people are worried about the Covid-19 slump hurting their finances and livelihoods.

NZ First leader Winston Peters beat the National Party to the punch when he called it an ‘‘envy tax’’, and reminded us Winston Churchill once said ‘‘for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle’’.

There is little doubt the handle on our ‘‘egalitarian society’’ needs lifting, but new taxes will be hard to sell as long as all New Zealanders face an uncertain future.

 

Comments

How about reversing the self righteous, virtue signalling, envy base, authoritarian thinking and make the first $52,000 tax free.
Dump all family tax credits, which is simply giving back what was taken away.
Drop the abatement rates from benefits up to the 50k, then active them.
Allow couples to work, plan and save together as an economic unit instead of seperate taxable identities.
In other words, create systems that reduces the daily meddling by government in our lives because let’s face a very stark fact, the current meddling hasn’t helped so more will most likely make it worse.
I know many like to see themselves as egalitarian and it’s a caring ideal to live by but when a government’s primary objective is to force egalitarianism onto a society, it’s a smoke screen to hide the judgmental, utopian vision of totalitarian narcissists.
You might think that is harsh but history has proven, at the cost of millions of lives, on many separate occasions, that this is always the outcome of forced egalitarianism.
It MUST remain a personal virtue.

 

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