What Kiwi’s expect from our tax and welfare regime

Gareth MorganTax and Welfare

Plato -  When there is an income  tax, the just man will pay  more and the unjust less  on the same amount of  incomeLast week we were having a discussion on Facebook about what we expect from our tax and welfare regime. The overwhelming thought from respondents has been that we want an equitable society – we don’t want government’s role only as providing basic services.

This is interesting because under democracies taxation was originally conceived to achieve exactly that. New Zealand’s first taxes were property taxes that plainly targeted the rich. The rationale was an ‘ability to pay’ was a legitimate criterion for tax. So what happened to wealth taxes? Why do we now tax income instead, the annual increment to wealth rather than wealth itself? In fact it’s even weirder than that, we only tax certain forms of income and the easiest income to tax is PAYE – you’d have to be an absolute mug to be on wages under this regime.

A pathetically small increment to my wealth each year is in the form of taxable income. Just like so many other “rich pricks” I have low taxable income. Personally I ease my conscience by spending money on charitable causes, which I happen to enjoy too. I could suppose just ignore it, sit back and say “thanks very much”. So let’s begin by agreeing taxation isn’t equitable.

Now let’s look at social welfare. Beneficiaries are made to feel like lepers in NZ, lazy losers who have to jump over no end of hurdles in order to “qualify” to live. That seems a bit rough. How rich as a society do we have to be before we declare everybody has an unconditional right to dignity? Should we all be billionaires before we declare that as a value we cherish? Honestly how much money do we think we need? We could grow up a bit and acknowledge that there’s a certain level of unconditional entitlement everybody in NZ is eligible for.

If you’re a voluntary worker, or you are bringing up your kids then I’d have thought you were making a pretty meaningful contribution to society. Such a contribution surely entitles you to society’s recognition, to some level of basic income. Instead of all the targeted benefits we have out there, designed to stigmatise recipients and make them feel low, why can’t we get rid of all those and simply have a basic entitlement that everybody is deemed worthy of – no questions asked, no prying into other’s affairs necessary? We seem so worried that others aren’t pulling their weight we go to the ends of expense to force them into paid work or face no end of inquisition from welfare bureaucrats. Voluntary work does contribute you know. If we value dignity for all we should be walking the walk on that issue.

What Kiwi’s expect from our tax and welfare regime was last modified: December 15th, 2015 by Gareth Morgan
About the Author

Gareth Morgan

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Gareth Morgan is a New Zealand economist and commentator on public policy who in previous lives has been in business as an economic consultant, funds manager, and professional company director. He is also a motorcycle adventurer and philanthropist. Gareth and his wife Joanne have a charitable foundation, the Morgan Foundation, which has three main stands of philanthropic endeavour – public interest research, conservation and social investment.