Is tax a positive thing?

To some people it seems that tax is a positive thing – as long as it’s others who pay more of it.

Liam Hehir raises this in Panama Papers have little impact so far in New Zealand

At an even more abstract level, the question is raised whether the Panama Papers point to a more generalised problem of wealthy people exploiting loopholes to minimise tax in a way that is legal, but somehow unfair.

The Panama Papers may not themselves be directly on point here as far as New Zealand is concerned, but the argument is that they serve as a useful entrée to the subject. And it is an interesting debate.

The purpose of taxation used to be the efficient raising of the revenue required for state spending.

There now seems to be a view that, far from being a necessary evil, the levying of tax is a positive thing unto itself. Under this model, it’s greedy for those who already pay the most to not want to pay more than they are legally required and it’s somehow not greedy for the rest of us to demand that they do.

A good philosophical question. But if you want New Zealanders to treat it as food for thought, you’ll need to serve up more than the thin gruel of lame international comparisons.

Is the paying of tax a positive thing?

Or is it a necessary evil that evil rich people should be made to pay more of?

Leave a comment

84 Comments

  1. Brown

     /  20th April 2016

    Clearly revenue for govt activities is required but the issue is the scale of govt activities. A modest govt can survive very well on excise, duties and sales taxes which are effectively voluntary. NZ developed quickly and impressively for the first 70 years or so on this basis. The problems started with income tax in the early 1900’s that allowed a bigger vision for confiscation and waste than before. Income tax has also allowed the govt to pry into private lives to a degree that is appalling in a supposedly free country. The scale of govt that this theft of wages has allowed now sees us burdened with the trappings of control by those without rights beyond those they decide to take for themselves, like photo ID, that was once sneered at by the west because it was the norm in the supposedly nasty communist east.

    I don’t think that a govt should ever approach 40 – 50% of a nations economic activity.

    Reply
    • Kitty Catkin

       /  20th April 2016

      That is very naive. Most people aren’t ‘pried into’ by the government, but would you want criminals like drug dealers to be able to get away with it-or tax evaders to do so ?

      Our government-enforced photo ID is only for drivers’ licences, as far as I know, but when I lived in Belgium we had to carry photo ID cards at all times, and it’s probably the norm in most European countries. These were not driver’s licenses, they were simply ID cards. Passports need photos-do you see this as a trapping of control, or would you like to go back the days when they didn’t have them ?

      More taxes are needed now because there are more things that are needed to come out of them. QED. I prefer to pay taxes and not have to find the money for being in hospital if I need this.

      Reply
      • Kitty Catkin

         /  20th April 2016

        NZ is among the minority of countries where it is not a legal requirement to carry national ID cards.I don’t know why you think that we have them here.

        Reply
        • Kitty Catkin

           /  20th April 2016

          And as many American driver’s licences have one’s address and even weight (!) on them, ours seem fairly unobtrusive by comparison.

          Reply
          • Gezza

             /  20th April 2016

            Weight? I don’t believe you. How the hell would that work with all them American ladies forever going on diets & with their weight going up and down like a yo-yo?

            Reply
            • Kitty Catkin

               /  20th April 2016

              I swear that I’m not making this up. I saw it on something on television years ago and checked it today.What happens when people do as I did and lose a lot of weight ? I’d have thought that a photo was enough, and they have the eye colour written on them, I don’t like the idea of the address, that really is an invasion of privacy, and if someone stole a handbag, they’d know where to go with the keys.

              The UK had compulsory ID cards from 1939-1952, even for children.

            • Kitty Catkin

               /  20th April 2016

              They also have height-but height AND weight seem a bit OTT. Height, yes, but weight varies.Imagine some of those hugely obese people in the US having to say what their enormous weight was. A man I know is stocky in build, and says that he loves being in America as he’s one of the thin people 😀

              Some local fool deliberately made himself look totally different for his photo license here. I remember university friends doing this to be funny with their university ID cards, but a middle-aged man ?

  2. Tax was originally a tribute paid for protection. These days it’s a protection racket.

    Reply
    • Gezza

       /  20th April 2016

      That’s quite pithy Uggers. I like that. 😎

      Reply
    • Kitty Catkin

       /  20th April 2016

      It may sound all right, but it’s meaningless weasel words.

      If providing schools, roads, police, universities, defence forces,jobs and hospitals is a racket in Ugger’s eyes, there’s no point in trying to tell him otherwise.

      Reply
      • Gezza

         /  20th April 2016

        I just like pithy sayings Kitty. Please stand down the firing squad. ^^’

        Reply
      • Gezza

         /  20th April 2016

        Plus, there is quite a wealth of meaning in those few words: they are a sentiment rabid righties would endorse. Originally the plebs would’ve paid a few pfennigs per year for the local lord to provide armed men to prevent outside marauders from pillaging the farms & villages. These days taxes cover a lot more than policing, and if you don’t pay up everything they demand the IRD can come after you with the legal equivalent of a Merkava tank.

        Reply
    • UT – I normal skip your contributions. But that is short and on the money.

      Reply
  3. David

     /  20th April 2016

    Who decides what is fair?

    Reply
  4. Alan Wilkinson

     /  20th April 2016

    It is good that you earn enough to support yourself and help others. It is bad that you don’t have the choice of how and who and how much you help others. It is shameful that half the working age population don’t even support themselves. It is more shameful that the Left are shameless about this.

    Reply
    • Gezza

       /  20th April 2016

      Are the jobs there for them? Jobs that they can do, and that actually pay enough to enable them to support themselves and their families? That’s what I don’t know.

      Reply
      • Alan Wilkinson

         /  20th April 2016

        A job is doing something someone wants and can afford to pay for. It’s up to you find it and up to the government to leave enough income untaxed to create jobs.

        Reply
        • Gezza

           /  20th April 2016

          Not everyone is born gifted by good circumstances and with your confidence, intellect, and overall abilities Alan. Some people will probably never be up to more than doing a basic job. I want that job to be able to pay well and for the employer to be able to do well & thus afford to pay well.

          Reply
          • Alan Wilkinson

             /  20th April 2016

            On average a job can only pay the value that is produced. If we want to raise that average we have to attract and support clever people who can make changes. Instead we employ armies of bureaucrats dedicated to making change impossible or at best very difficult and encourage most of the population to believe clever people should donate their time, skill and effort to the state for nothing.

            Reply
            • Kitty Catkin

               /  20th April 2016

              Half the working-age population ? There isn’t 50% unemployment. no country could support that.

            • Alan Wilkinson

               /  20th April 2016

              The point is that 60% of households are net subsidised by other people.

            • Gezza

               /  20th April 2016

              Doesn’t that raise the question of why their earnings are low enough that that should be necessary?

            • Alan Wilkinson

               /  20th April 2016

              Absolutely. A competent analysis would be illuminating I’m sure. Obviously it should include examining whether the value portion provided by the Government is wanted, needed or efficient as well as looking at the causes of low productivity.

            • Kitty Catkin

               /  20th April 2016

              That surely includes all forms of subsidy, and such things as Super.

            • Indeed Alan. WFF has create state dependents out a number of cohorts of people who don’t really need the money but could make it on their own, albeit in a constrained manner. The advertising for WFF is quite revealing – one add I recall showed a WFF family living in a nice renovated villa, with flash new appliances and a deck etc… the picture of middle class comfort.. just a rort in a number of cases…

      • Why does a job have to pay? That reads like someone needs to create a job for me to earn… I maybe misreading you though Gezza, but why can’t someone create their own job? Why can’t someone work part time and grow fruit and vege at home to minimise the need to have a soul crushing 9 to 5 or more likely 8 to 6 job?

        Reply
        • Gezza

           /  21st April 2016

          Some people do do that dave. But it’s an exceedingly precarious way to live if you don’t earn very much and you want to buy or rent a house (hard to garden if you live in a council apartment or block of flats with no suitable patch of land) pay a mortgage & rates, or keep up with rent increases, pay for life insurance for yourself and the spouse and for any kids, contents insurance, house insurance (pretty much forget medical insurance) power, phone, tv, furnishings, food – plus try to accumulate some savings to avoid getting everything on credit, and then occasionally also have to find (probably every year) an extra few hundred or even a few thousand dollars for expensive dental work or for any other major unexpected need.

          That can put you into debt you can struggle to get out of if you are only working part time in a low paying job.

          If you can find a good employer who’s running a successful business and has jobs available that pay decent wages and this will ensure a reasonably stable, predictable, level of income, that’s still probably the best and most desired option for people who want to work and don’t have easily portable and highly-valued skills and abilities.

          Reply
          • Gezza

             /  21st April 2016

            Plus, there are only so many lawnmowing jobs around when it comes to making your own job. We don’t all come out of our adolescence with the ability to spot a great self-employed business opportunity and exploit it successfully.

            Reply
          • So your point is some people are leaders, risk takers and innovators – and a lot of others are followers reliant on others to create opportunity for them…… interesting.

            Reply
            • jamie

               /  21st April 2016

              Actually both the types you describe are reliant on the other.

            • Gezza

               /  21st April 2016

              Well, in nutshell dave, yes. I’m very risk averse. Numbers don’t dance for me and my domestic circumstances forbade my taking financial risks. But I have been fortunate enough to have found work that was satisfying and productive and genuinely contributed I believe to the economic development of this country. Some others may make a lesser contribution in that respect, but they do contribute to their communities and to the production or service delivery and thus financial success of their employer. I am not at all averse to those who are innovators, leaders and risk takers who generate wealth and jobs. I admire them.

    • Blazer

       /  20th April 2016

      can you back this statement up?

      Reply
      • Kitty Catkin

         /  20th April 2016

        I’d have thought that it was stating the obvious at the beginning. A building firm won’t pay the builders more than x% of the price of the houses. Nobody’s that generous.No firm could continue like that-that doesn’t need to be backed up.

        I’m not sure about the rest of it, though

        Reply
      • Alan Wilkinson

         /  20th April 2016

        “cash benefits aren’t the only thing you get from the government, and more detailed modelling of where taxes are actually paid and the value of education and health benefits estimates that the lower 60% of households (adjusted for household size) get more in direct benefits and social services than they pay in direct and indirect taxes”
        http://www.statschat.org.nz/2014/12/10/not-net-tax/

        Reply
        • jamie

           /  20th April 2016

          Everyone gets the benefit of things like the education and health systems. Employers for example get an educated and healthy workforce.

          Reply
          • Alan Wilkinson

             /  20th April 2016

            Arguably for many years we have exported many of our best healthy and educated to other countries.

            Reply
          • Alan Wilkinson

             /  20th April 2016

            Employers pay for their benefit directly in wages. If they don’t pay enough (in full) the employee emigrates.

            Reply
          • Gezza

             /  20th April 2016

            I remember chatting to a specialist nurse at Wellington hospital who told me she was doing a year there then heading to Dubai because the pay there was so much more it would be the fastest way to pay off her student debt.

            Reply
            • Alan Wilkinson

               /  20th April 2016

              Yep, plenty in Oz too.

            • Kitty Catkin

               /  20th April 2016

              I know a girl who spent time in Dubai. The pay was good, but it was terribly hot.

              My guess is that in most countries the wages reflect the cost of living-employers are not so generous that they want to pay more than they have to, as a rule. But, of course, if there’s a good exchange rate it works out well when people come back.

  5. I saw a news item a couple of minutes ago which stated that the Rich in the USA pay 80% of the tax collected. You have to be a closet Marxist to say that is fair. Anyway its not what you have so much as what you do with it. Helping others where you can is a very human instinct for all except the greedy buggers.

    Reply
    • Blazer

       /  20th April 2016

      thats a very vague statement…what defines ‘rich’,and what ‘tax’ specifically.I ALSO ‘HEARD’ 100% OF THOSE WHO UTILISE TAX HAVENS,ARE …RICH!

      Reply
      • Kitty Catkin

         /  20th April 2016

        I seem to remember that my late inlaws had money invested in Jersey-and while they were comfortably off (he was a successful architect and painter) they weren’t super-rich by any means. Or even rich, really. Well-off would describe it best. Like others, they were caught in the Lloyds thing.

        Reply
    • Kitty Catkin

       /  20th April 2016

      I would imagine that BJM has seen something based upon a definition or cut-off point whereby someone’s defined as rich. There has to be a set figure that is agreed upon for this-so I believe what he says.

      If anyone earning $100 a week is rich, it doesn’t mean that anyone earning $99 is poor, but one can become hung-up on this.

      Reply
    • jamie

       /  20th April 2016

      “I saw a news item a couple of minutes ago which stated that the Rich in the USA pay 80% of the tax collected.”

      What percentage of the income do these “rich” receive? What percentage of the wealth do these “rich” control?

      Depending where you set the level for “rich” (which you didn’t specify) 80% might be far too much, far too little, or about right.

      Reply
      • Kitty Catkin

         /  20th April 2016

        They still have death duties there, I believe. Now, those are stinkers.

        Don’t die without making a will in the Duchy of Cornwall. The Royal Family will cop the lot. I saw a news item some years ago where an older man had married after his first wife died, and didn’t realise that his will was now invalid. He died and the family house and everything was lost to the family-hard cheese, mates.

        Reply
      • @ Jamie – In the USA in 2008, the top 1% share was 18% of total income, up from 8% in 1970. In NZ the rise was from 6% in 1970, peaking at 10% in 2004 and dropping back to 9% in 2005, after which the graph I have stops. (Fig 4.2 pg 89 ‘The Fire Economy’) It’s not hard to find statistics and representations of wealth and income inequality on the internet.

        These sorts of figures are hardly thorough indicators of the situation though. Individual and sectarian accumulations of wealth may be gravely disparate, even obscenely so, such as for those who sold off state assets during the nation’s unnecessary silverware sale. Their tax minimisation probably even negated the irony of NZ taxpayers’ having to inevitably buy back the assets once they were stripped and depreciated. They earned shitloads on the sales and paid bugger all on the buybacks and bailouts.

        Broadly speaking, the same inadequacy applies to generalised ideals like productivity, efficiency, production value et al – strictly economic measurements – applied to all industry, employment and social exchange across-the-board. It just doesn’t work like that in real life, only on Friedmanesque paper. Example: Public spaces have rubbish bins. Rubbish bins need emptying. Someone gets employed to empty public rubbish bins; paid by the public purse via a levy or tax. No ‘productivity’ involved, right? There’s no ‘product’ to sell or export. Nothing ‘earned’ upon which to base the person’s wage rate. The rubbish bin emptier is effectively a [minimum wage] trougher? They produce no economic benefit, right?

        Public rubbish cannot be measured adequately in these terms alone. It fulfils a public health function, along with a very basic ‘beautification’ role which may enhance community appreciation and hence well-being, and have positive outcomes for tourism especially, like good reports word-of-mouth, social media, industry websites etc. Also, the employee’s wages circulate through the economy.

        These are the intangibles and immeasurables of ‘community’ life which a strictly economic view can never fully ‘account’ for. We’ve lost sight of them, which is why we’ve lost sight of the many positive aspects of taxation; which is the price we pay for living in communities …

        Reply
  6. Ratty

     /  20th April 2016

    I’m a Tax Accountant..

    I want more tax.. lotsa tax… heaps and heaps and heaps more Tax..

    Just my opinion

    Reply
    • Gezza

       /  20th April 2016

      Carpet layers probably used to say the same thing.

      Reply
      • Kitty Catkin

         /  20th April 2016

        What about thumb tax ? (falls to floor laughing at these witticisms)

        Reply
    • Brown

       /  20th April 2016

      Yes Ratty, the local accountant down the shops always has a newish (and flash model) Audi parked outside. Being tied to the govt’s strings and helping them fleece people pays well. Its like lawyers – govt bollocks that no one understands has made a lot of hangers on rich. Neither they nor politicians are your friends – their real loyalties lies elsewhere.

      Reply
      • Ratty

         /  20th April 2016

        You have it the wrong way round, the greater return of tax saving against the fees charged…

        Like I give a toss about you Marxists who hate success

        Reply
        • Blazer

           /  20th April 2016

          and whats your definition of ‘success’ …rodent?

          Reply
          • Ratty

             /  20th April 2016

            Same as Browns..

            Driving a newish (and flash model) Audi

            Reply
            • Alan Wilkinson

               /  20th April 2016

              Oi! Leave my old S4 out of this. The dogs like it and it can still pass the wombles.

            • Gezza

               /  20th April 2016

              I don’t mind anybody owning an Audi. I remember reading an AA reliability and performance comparison some years back which showed the popular makes of Japanese cars beat the hell out of European models on pretty much everything and especially price.

            • Gezza

               /  20th April 2016

              Lol. “the wombles” ?

            • Alan Wilkinson

               /  20th April 2016

              Yep, my name for the lost and lonely parked up in the middle of the road wondering what they are doing and why. We’ve had some god-awful drivers up here this summer along with the usual camper vans and trucks trundling along. Lovely to plant the foot and whisk past them.

            • Gezza

               /  20th April 2016

              Ah yes. Oh for minimum two lane highways everywhere. It’s also disconcerting to be barrelling along happily at 103 kmh and then run up behind Mr or Mrs elderly retiree just popping down the road from one small town to the next slightly bigger one at 80 kmh, trying not to go too fast, in the middle of the lane, oblivious to whatever is behind them, with no passing lane for ages.

            • Alan Wilkinson

               /  20th April 2016

              Try crawling up a hill at 35 km/h behind a truck on our goat-track apology for SH1. Or the tourist who brakes at every bend on a road that has a bend every 100m. I could go on … and on … but I will resist.

            • Gezza

               /  20th April 2016

              lol. Ok, You win. You are so competitive Alan.

            • Alan Wilkinson

               /  20th April 2016

              Lol. My driving or posting? As I tell my wife, “It’s lucky I’m patient??!!”

            • Gezza

               /  20th April 2016

              Both. But in this case it was the way you posted what amounts to: “you think it’s bad on your roads, I can beat that … we’ve got a goat track up here … and a bend every 100 metres, and there’s more …” XD

            • Alan Wilkinson

               /  20th April 2016

              Well, yes, the back road I drive every day used to be banned for tourists by rental companies before it was sealed because they used to crash out on the first bend. I would think that route along the Waikare inlet of the old Russell road is one of the windiest in the country though the main road Kawakawa to Opua to Russell is not much better.

              I have to say this Government has been doing a lot to improve SH1 north of Auckland but there is a long way to go and I wish they would lift their sights to four lane divided rather than just three lane passing segments. It seems to be a huge waste of money to move vast hillsides and just finish up with another passing bay when for a small fraction more you could have built a proper road. They spent ten million on Bulls Gorge south of Kerikeri and didn’t even make a passing lane. Weird priorities.

            • Kitty Catkin

               /  20th April 2016

              (sigh) Audis are lovely to be in. If I win Lotto, I’m going to have a Jag. It’ll have several horns-one will snarl like a jaguar and cry ‘Out of my way, cheap Jap import. !’

              I know a man who spent his inheritance on a red Morgan sports car-money well spent.

            • jamie

               /  20th April 2016

              Alan I was thinking exactly the same thing on a recent trip north.

              The first shocker was going from two lanes down to one to get through the tunnel at Puhoi, that had traffic at a crawl for a couple of kms.

              Seriously, all the cost and effort to build a tunnel and they turn it into a choke point??

            • Alan Wilkinson

               /  20th April 2016

              The tunnel is actually built for two lane but artificially configured single lane because of the road on the northern side of it. When the motorway is extended past Puhoi it will be configured to two lane. The southbound tunnel is already two lane.

              The Warkworth traffic lights are another traffic engineering disaster. Why on earth the Matakana intersection wasn’t made into a proper big roundabout beggars imagination. Likewise the other two lights are totally gratuitous and a simple roundabout on each would be far more efficient and allow the whole transit of the town to be two lanes each way. Ridiculous pandering to incompetent drivers who need traffic lights to tell them what to do so all other traffic has to stop for them.

            • jamie

               /  20th April 2016

              Ah that makes more sense. I thought it looked wide enough for two.

              Also Wellsford is squeeze point that could probably be bulldozed.

      • Kitty Catkin

         /  20th April 2016

        My lawyer gave me free advice that saved me thousands when my husband died.

        Accountants don’t fleece people-who’d go to them if they did ? People go to accountants for many reasons,mostly for advice on making money, not how to have it taken off them. Professionals charge for their services, it’s crazy to expect them not to.

        Reply
        • Gezza

           /  20th April 2016

          Stll, when my doctor gets what it I need wrong I’d really like my money back. My local store has to do that.

          Reply
  7. Ratty

     /  20th April 2016

    Stay off the road Alan… you are an effing menace

    Reply
    • Alan Wilkinson

       /  20th April 2016

      I’ve been driving a lot of decades, cars, trucks and motorbikes without taking anyone out, Ratty. Chalked up 250k km in the old S4 and done a couple of thousand round trips between Auckland and Bay of Islands. I’ll put myself up against an accountant behind the wheel any day.

      Reply
      • Kitty Catkin

         /  20th April 2016

        (faints) 250kph…can I come with you next time ?

        Reply
        • Gezza

           /  20th April 2016

          I skimmed it first time round. I thought he said he’d got up to 250 kmh and I was pretty impressed with that. 😎

          Reply
        • Alan Wilkinson

           /  20th April 2016

          No, no! My car’s done 250,000km, not 250 km/h! But it could if we had the autobahn. It’s a travesty that we have the technology to go fast but not the vision.

          Reply
        • Gezza

           /  20th April 2016

          Yeah, but you ,i>coul,/i>d just be saying that now in case I’m a traffic cop and I know your name.

          Reply
          • Gezza

             /  20th April 2016

            (Sorry bout the html fail.)

            Reply
          • Alan Wilkinson

             /  20th April 2016

            I never say how fast I go, just that it is safe for the conditions. The only accidents I’ve ever had have been when driving slowly.

            Reply
            • Gezza

               /  20th April 2016

              I never say how fast I was going either. I just argue there’s something wrong with their camera.

  8. Tax is neither good or bad in and of itself. Its what the government uses it for that is the actual issue to discuss. Smaller government spending less need for tax, more money in individuals hands to use for whatever purpose the choose – so low compulsion, more self reliance and more onus for outcomes on those who spend the own dosh with less government there to bail you out…..

    Low flat income tax at 15 or 20% of income after the first 25k pa for all entities, fixed GST at no more than 15% and go through excise taxes and levies and all those other little wallet lighting fiddles and minimise those…. then government can spend inside its means instead of endless new imposts, bracket creep via inflation lining their pockets etc etc.

    All that extra cash in the system could have interesting impacts – more spending stimulating more business opportunities leading to a large more profitable economy.. Would be interesting to see it all modelled

    And what would I cut form spending – firstly any and all corporate welfare, grants, etc. Secondly welfare spending: higher age for super, WFF booted. Then have a good look at at all the other non core benefits….

    It will never happen because politicians listen – and people losing “free” stuff whine like hell

    Reply
    • jamie

       /  20th April 2016

      “go through excise taxes and levies and all those other little wallet lighting fiddles and minimise those”

      Yes indeed. I wonder what our true rates of tax are with all the uncounted and ever increasing fees and levies added in.

      Reply
    • Brown

       /  21st April 2016

      Dave is back to my first point – size matters and govts are too big. A huge wack of money goes on debt servicing so that tax money doesn’t even do anything locally. Ronald Reagan is said to have once said that the US income tax goes on debt servicing – it goes to private banks like the Federal Reserve.

      Reply
      • Blazer

         /  21st April 2016

        Private Central bankers create debt bearing interest,a compounding ponzi scheme…that is the backbone of Capitalism.It is irresistable,and very bad for your health should you try.

        Reply
      • The Federal Reserve IS NOT a private bank…..

        Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s