Otago Daily Times

Tax changes need con­sid­er­a­tion to re­duce in­equal­ity

- Politics · Socialism · Business · Political Movements · Society · Arbeidersparty · Jacinda Ardern · Australia · United Kingdom · New Zealand · Thomas Piketty · Judith Collins · Dunedin · Taxes · Chris Trotter

IT was an in­ter­est­ing con­trast (ODT 23.10.20 ) to read Chris Trot­ter on page 19 and David McWil­liams on page 16. I usu­ally find Chris’ in­sights bal­anced and re­fresh­ing but his warn­ings of the po­lit­i­cal dan­gers of “full­throated so­cial­ism and class war”, al­though not spec­i­fied, seemed to equate with any pol­icy not in the Labour Party plat­form in the re­cent elec­tion.

Yes, change is dif­fi­cult, and be­ing in gov­ern­ment with less than per­fect poli­cies is far prefer­able to bask­ing in per­fec­tion in Op­po­si­tion. But is it re­ally sen­si­ble of Jacinda Ardern to rule out even dis­cussing poli­cies in place in coun­tries lack­ing full­throated so­cial­ism (Aus­tralia and the UK for in­stance) like a cap­i­tal gains tax while she is leader? Surely, even if it meant a few more Na­tional vot­ers cross­ing to

Act, or coali­tion with the Greens, re­tain­ing the abil­ity to con­sider the full range of op­tions to re­duce in­equal­ity in New Zealand would have been pru­dent.

Chris, do you con­sider David McWil­liams’ views that “the hous­ing mar­ket is the main in­stru­ment of in­equal­ity . . . in­come taxes will not af­fect that in any way . . . the only thing that will help are wealth taxes” to rep­re­sent the Loony Left of “hard­line so­cial­ism”? As noted by another fa­mous econ­o­mist, Thomas Piketty, in­equal­ity has been steadily grow­ing through­out the Western world since it reached its low­est point dur­ing the Sec­ond World War. As David McWil­liams points out, this is driven mainly by the abil­ity of the priv­i­leged in so­ci­ety, with whom I in­clude my­self, to de­rive largely un­fet­tered ben­e­fits from cap­i­tal gain and in­her­ited wealth.

No, Chris, “con­fis­ca­tory tax rates” are not the an­swer but some level of tax on the sources of in­come only avail­able to the more priv­i­leged is needed to achieve ob­jec­tives we all want to see, like end­ing child poverty and good qual­ity hous­ing for all. No, Ju­dith Collins’ magic pud­ding of tax cuts and eco­nomic growth lift­ing all boats won’t achieve this. Yes, changes to tax ar­range­ments have un­par­al­leled scare po­ten­tial. But to build a level of com­mu­nity un­der­stand­ing and sup­port ca­pa­ble of re­sult­ing in elec­toral suc­cess we must start with the full range of op­tions (and there are many short of full­throated so­cial­ism) on the ta­ble. Peter McIn­tyre

Dunedin [Abridged]

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