Damien Grant is an Auckland business owner, member of the Taxpayers Union and regular opinion contributor for Stuff, writing from a libertarian perspective.
OPINION: Taxation is back. It’s not a sexy back, but it’s back.
David Parker wants to pass a tax principles law and Chloe Swarbrick wants to tax the equity in Grandma’s house.
David Seymour wants a flat tax rate and Chris Luxon wants journalists to stop asking him how much he will personally benefit from the 39c tax rate being scrapped.
It’s $18,000, in case anyone missed that memo; although the same reporters who ask this nonsensical question don’t consider that if Luxon was driven by greed, you should be wondering why he would leave a seven-figure salary to answer silly questions from overeducated and underpaid reporters who don’t wouldn’t know a marginal tax rate from the price of a block of cheddar.
*Here are six ways our current tax system may not be fair
* What are the new tax principles of the Minister of Revenue, David Parker, really?
* Revenue Minister has ‘virtually no idea of the tax rate paid by the very wealthy’
* A beginner’s guide to paying less tax (if you’re super rich)
None of this matters. The amount of tax we pay will not change, because it is determined by the political calculus of public choice theory. Let me take you on a depressing journey.
In his speech last month that sparked all this nonsense, Attorney General David Parker accidentally opened a window into his soul.
“Those with a lot of wealth obviously want to protect what they have from the enormous loss they may suffer if society becomes so unequal and unjust that those left behind rise up and refuse to recognize their property rights. .”
Parker has a somewhat gloomy view of his constituents. If they don’t get the required supply of bread and circuses, in the spirit of this MP list, they will start looting the homes of the wealthy.
He sees taxation as, in part, a Mafia-style affair, where the working class admires the opulent homes of Herne Bay and says, “Nice patio you have there. Too bad if something happened to him.
Parker glimpsed the true nature of how the tax system interacts with democracy, but he failed to place himself properly in the equation.
He is not the only soldier on the hill defending property rights. He is an essential piece of an incredibly efficient and systematic plundering apparatus from the productive to the unproductive.
Let’s take the lens back a long way. The state spends, more or less, some $140 billion a year, or about a third of our GDP. This equates to approximately $35,000 per adult. To pay this amount of tax, you need to earn about $120,000 per year.
Few people do. According to data provided by the IRD, only 184,000 Kiwis earn more than 120,000 dollars per year, out of a total workforce of 2.6 million.
There are 184,000 residents who pay more in taxes than the average adult receives in benefits. These individuals are elevated. They are productivity cows that the rest of the community milks through the tax system to ensure that we don’t need to cover the costs of our own health care, children’s education, or save enough for our retirement.
A small minority is forced to pay for the goods and services of the large majority; and if they refuse to hand over the value of their work, they will be caged.
If they manage to accumulate enough assets to allow them to stop working to pay for other people’s health care, Swarbrick wants to come in and start stripping their assets by 2% per year until they are back to the same crab bucket as those who spent their lives in splendid idleness.
Swarbrick says the money from his wealth tax will cure poverty. What she means is that it will cure the poverty of those who live in New Zealand. If we are raising funds to fight poverty, what about those who live in the Solomon Islands?
We know the answer. They cannot vote. There is no return for people in the Solomon Islands, even though $1,000 to a family there would go a long way toward alleviating their poverty.
Hopefully they can snatch a fortune from the Chinese, because we clearly don’t care if they live or die.
The problem with high marginal tax rates is that eventually people stop working. If the tax rate was 70%, what was the point of aiming for a well-paid career? This provides a cap on how much you can tax the income before tax receipts cap or even drop.
This is why a wealth tax is so attractive. You can hit the rich at home, taking their property while they sleep.
It is possible to avoid an oppressive marginal tax on labor by choosing to work less or a job that is less stressful; but there is little you can do about the tax commissioner assessing your property and using a letter of credence to confiscate your property.
When you design a system where the majority can vote to determine how much of someone else’s income they can take for themselves, the balance is going to be, “as much as we can take before they break and stop working, and when they stop working, tax the equity in their property”.
This is where we are. Fairness has nothing to do with it.