Tax changes need consideration to reduce inequality

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]