Cunliffe versus truth

From David Cunliffe Speech to 2013 Labour Party Conference – Building a future for all:

One for the rich and powerful, who don’t pay their fair share of tax because they have smart accountants to ensure they avoid it.

Families who pay tax on every dollar they earn, pick up the slack for the mega-rich and the foreign corporations who don’t.

Five years ago, John Key told New Zealanders, “wave goodbye to higher taxes, not your loved ones’’.

But he only meant it for the privileged few.

He gave massive tax cuts to the rich that they did not need while he put up GST on everyone.

Cunliffe is supposed to be intelligent and financially literate – if so this means he is telling deliberate distortions and lies.

The tax cuts “to the rich” were not massive. Damien Grant writes in NZ Herald:  Poverty isn’t fault of rich

Key to the inequality fantasy is that New Zealand is a neo-liberal rich-man’s paradise but the facts do not support this.

Bill English said the top 12 per cent of households, those earning over $150,000, pay over three-quarters of all tax. To balance this, half of all households take home less than $60,000 and pay $2.7 billion in tax; yet they receive $8.1 billion in transfer payments. Half the population are net beneficiaries.

The tax increases were partly balanced by the increase in GST which costs them more as the biggest spenders.

And GST increases were balanced for lower income earners with income tax cuts, and beneficiaries had compensating benefit increases.

Cunliffe is speaking to an audience which is receptive to his dishonesty. Time will tell whether enough voters buy his bull.

“Tax The Rich!”

There’s a lot of talk about the rich getting “unfair” tax cuts, that they should be taxed more to fund deficits and anything else that the critic might want. It’s illustrated in this picture:

Could this be paraphrased?  “I want to take other people’s money to make things easier for myself”.

From the same ones who criticise people for taking money off the poor so they can get rich.

  • Tax the rich, fund education
  • Tax the rich, fund poverty
  • Tax the rich, fund multi (non-contributing) father beneficiary families
  • Tax the rich, fund education…while I’m a student
  • Tax the rich, fund education while I’m poor
  • Tax the rich, fund me?

Greens play rich versus poor

Russell Norman is promoting a Capital Gains Tax in part by playing the rich versus poor card.

Capital gains tax would hit rich, not poor  (ODT)
Rich people benefit from not having to pay a capital gains tax, Green co-leader Russel Norman says.

Class politics like rich versus poor is dirty politics, and it often ignores complexities.

I think we should have a good look at the merits and drawbacks of a Capital Gains Tax, but rationally and not emotionally.

Dr Norman said the research highlighted those on lower incomes earned money from wages which were fully taxed while the largest proportion of capital gains was earned by those at the upper end of the income spectrum and this income was untaxed.

This ignores a number of things, including:

  • People on relatively low incomes also benefit from untaxed capital gains
  • Most people on high incomes pay much more tax than those on lower incomes already
  • Capital gains are often used to finance retirement, including health care and care of the elderly, which reduces costs to the state
  • “Rich” people benefiting from capital gains often use that money for a wider circle of people who aren’t “rich”, for example for children’s education, parent’s care

It’s far from being a simple rich versus poor argument. Argue for CGT on it’s merits, not by promoting rich envy.

Ironically Green voters tend to be reasonably well off people rather than poor people.

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