Monday, May 12, 2008

A lousy tax cut idea

Idiot Savant at No Right Turn talks of speculation in the Sunday Star Times that Cullen's tax cut might be a "social dividend" flat payout of $1000 per "low income earner" (otherwise known as the Labour core).

He describes this as "a good idea, and certainly far better than anything offered by the "tax cuts for the rich" brigade. It targets support at the needy rather than the greedy,"

Now I'm not one to look a tax cut in the mouth, but he's seriously wrong. He isn't advocating a tax cut after all. A tax cut, you see, means your net income increases as the government takes less of what you earn. You get a steady amount each fortnight or month, can afford to save it, spend it, or do as you wish. It is permanent, sustainable and reduces the size of the state (which I acknowledge isn't important to him, as he sees it as the best way to deliver health, education and social insurance monopolies).

What will happen if people on low incomes get $1000 one off? Well, there will be a lot more big TVs being sold, some fashion trips, a few more new car stereos, some trips to Australia and the rest. In other words, it will be used to buy consumer goods. Now that, in itself, isn't a bad thing, except that this dividend wouldn't be paid to everyone, especially the majority who pay 90% of income tax. Don't forget those on the top tax rates pay the vast majority of income tax, but to argue they don't deserve a dividend is grossly unfair.
No, Idiot Savant wants you to keep working 2 days a week for the beloved Nanny State and be grateful that with every extra dollar you earn, you only get to keep 61c of it, even before you give up a 12.5% surcharge of what you buy to the state, be damned grateful we let you keep that you rich thieving bastard (the undertone being "you don't fucking deserve what you earn, just wish the revolution would come one day and you'll get yours you bourgeoisie scum").
Far more generous is the Libertarianz policy announced in the weekend of immediately creating a tax free threshold of $10,000 for everyone, which would mean those lowest earners (and students, children and others earning a bit here and there) would be free of income tax, but would also be a boost to all other income earners.

You see cutting taxes does not "disproportionately" benefit the rich, given it was their money in the first place. That is the fundamental difference between statists and libertarians. Statists think taxes are "society's money" or "government money" and getting a tax cut is "taking it from society". Libertarians believe it is your money that the government has taken, and a tax cut is giving you back your own money. No pure tax cut can be disproportionate by definition.

Of course he goes on to advocate a universal basic income, a concept some libertarians advocate as a transitional step to replacing the welfare state, using Milton Friedman's negative income tax concept with a flat tax. That idea, as a transitional measure, has some merit for debate. However he sees it as basically freeing people from work "It would substantially improve the actual, substantive freedom of people to lead their lives how they wish". Well for people who want to not work. You know those useful productive dynamic people who want to live off of the back of everyone else until they decide not to, while we all pay for them. Of course it would reduce the freedom of people for the rest of us having to pay for everyone else.

So there you have it - the left want people to get an income for doing absolutely nothing - their birthright to have everyone else pay for them to live, and not just survive but to be not uncomfortable. They want everyone else to pay for it, because - well they believe once you get above average you owe it to pay for those below - and not only that, if you ask for a tax cut when you are "rich" (above average income) you're selfish and evil.

It's quite despicable.

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