by frog
Gordon Campbell’s continuing series of interviews with party leaders continued yesterday with a fascinating analysis of “the Ken Barlow of New Zealand politics? Peter Dunne. The bit I found most interesting was his discussion on taxes.
Note that Dunne is offering himself forward as “reality check? on an incoming National government to prevent it “har[ing] off down the path that the Richardson administration went in the early 90s.? Yet, when it comes to income distribution – one of the biggest failings of the 1990s National Government – Dunne’s policy is actually highly inequitable:
Campbell: In your tax cut package by my calculations, a third of your tax cuts will go to the 5% of people earning over a 100k, less than a third to those earning below 38k, and only about 16% to those earning between 38-60k that you claim to represent.
Dunne: I think it was [Stephen] Colbert who said about plucking the goose, in order to get then most out of it, for the most benefit…. and I see it very much in those terms.
Campbell: But is it fair to your middle class constituency, let alone to the poor, that the vast bulk of your tax cuts should go to those already relatively affluent?
Dunne: You want a system that’s simple, that removes a lot of the dis-incentives, or incentives for people to avoid it. And that’s what we’ve tried to deliver. In that sense, the alignment of the top personal, trust and company is quite significant. Because that will deal to the huge, burgeoning increase in family trust and other arrangements in recent years for tax avoidance purposes.
Campbell: So you’ve shaped a package to relieve the pain in the upper income brackets?
Dunne: …..Well, its true that the major share of the benefits will be delivered to those earning over $45,000.
Campbell: I was being ironic.
Dunne: I know you were. I wasn’t.
If people are worried about moderating a potential National Government that is so far being very reticent in saying what its true governing intentions are they might want to look a bit further than United Future whose proposed tax cuts actually take proposed tax cuts away from New Zealand’s poorer citizens to fund large tax cuts for the wealthy.
Published in Campaign | Economy, Work, & Welfare by frog on Tue, June 17th, 2008
Tags: Gordon Campbell, income distribution, peter dunne, tax cuts
on the trolls and those who are unable to keep on topic
National are a moderate centrist party. Why should anyone be “worried”? The sensible center is Dunnes professed natural home, isn’t it?
I guess even Anderton looks right-wing to the Greens, huh.
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frog, it would be great if you could explain statements like “income distribution – one of the biggest failings of the 1990s National Government ” for those of us who don’t take all such statements (perhaps also ‘failed policies of the 80s’) as a given like you do…
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Is it really a step to the right? Hasn’t Dunne pushed tax rates of around this level for quite a while?
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StephenR: Brian Easton has a quick summary of income distribution during the 1980s and 1990s. Prof S. Chatterjee at Massey University did similar studies that showed a significant shift of wealth during the 1990s from the poor to the wealthy. In other words they show that 20% of NZers got wealthier in real terms during the 1990s but 60% (those on low and middle incomes) got poorer.
Edge: The point I was making is that Dunne professes to the electorate to be positioning himself to the centre whereas he is in fact positioning himself economically to the right (especially on issues of income distribution). His income splitting proposal is another example of this. That means he can’t be the moderating influence on National that people might be looking for.
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Thanks for the effort frog.
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“UF close to pulling support for real estate Bill
UnitedFuture leader Peter Dunne says the party will withdraw its support for the Real Estate Agents Bill, currently before a select committee, unless there are major changes to the legislation and the sponsoring Minister, Clayton Cosgrove, adopts a more consultative attitude. [give in]
“It was clear from today’s Morning Report interview that Mr Cosgrove is maintaining a belligerent, bully boy attitude towards the [nice] Real Estate Institute, and his claims to be consulting with the Institute are undermined by his inability even to get the name of the Institute’s President right,? he said [tut, tut, tut ....Cleland, Crookland... Dirtbag].
“There is no doubt that the real estate industry needs better processes to clear out the sharks and the dodgy operators, but that won’t be achieved by bellowing at everyone and listening to no-one.
“UnitedFuture wants to see workable legislation that is signed up to by all the major players and will achieve real gains for the New Zealand public,? said Mr Dunne.
http://www.scoop.co.nz/stories/PA0803/S00248.htm
I recall Dunne speaking out on behalf of the tobacco lobby
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Don’t get confused between wealth and income. A lot of people on high incomes (most?!) have no wealth and live with very little fat in the system. Their spending is just as high as their income, or higher, and they are really just a cog in the wheel.
I remember living near a posh street in the US where everyone had two brand new cars, new house, gardener, big TV etc. etc. But when one household’s fridge broke they had to ditch the cleaner to pay the monthly HP on a new fridge.
If you want to soak the risk, you need to look beyond income. A good wealth tax would be best for that.
Also the reason why tax cuts favour those on higher incomes (not ‘the rich’) is that they are paying more tax. Tax increases penalise those on higher incomes more for the same reason.
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I have to agree with the Optimist here; the fact of the matter is that the top 25% of income earners pay nearly 80% of all income tax in New Zealand, so they are always going to disproportionally benefit from tax cuts; unless you are looking at a zero tax bracket, and even after you introduce it, you are going to have that same problem.
Personally, I am of the view that we should have a zero bracket to $20k; a 21% bracket to $45k; a 33% bracket to $80k and the 39% bracket above it. It may cost a fortune, but it will benefit a lot of people and bring our taxes more in line with Australia.
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“I think it was [Stephen] Colbert who said about plucking the goose, in order to get then most out of it, for the most benefit”
No, dear Frog, not [Steven] Colbert. It’s much older than him.
The quote is:
“The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least possible amount of hissing”
Jean-Baptiste Colbert, French Finance Minister for 1665-1683.
He wasn’t just talking about people complain about taxes. He was talking about the way that France’s hundreds of different tax laws had distorted the economy – a point Adam Smith also made comparing France and England at the time. Taxes reduce economic output by reducing incentives: but choosing what to tax and how you can reduce the damage done to the economy, in particular by going for simpler taxes. Which is Dunne’s point.
I agree with Colbert, but I think Dunne’s wrong. Colbert’s ideas, of course, suggest that really you should tax things you want to discourage (like pollution) instead of things you want to encourage (like earnings).
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Icehawk: I was quoting Campbell, who was quoting Dunne, who was quoting Colbert. While all that was happening the half bald goose escaped.
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