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Speaker: Why we can’t just fix secondary tax

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  • Robert Urquhart, in reply to Australopithecus,

    What is The PAS readership’s opinion on Universal Guaranteed Income plus flat tax?

    I'm a big fan of a UBI but I don't see it working with a flat tax. I actually included some thoughts about what I would do to tax in conjunction with a UBI here.

    Christchurch • Since Mar 2009 • 161 posts Report Reply

  • Australopithecus, in reply to Moz,

    I admit I haven't played with the spreadsheet, but I have played with this. My best effort is- Tax Rate: 50%, GST: 15%, Return on Capital: 6% (@50% that's 3%), UBI children: 7K, everyone else: 18k.

    Ideally I would use the living wage, estimated (pdf) at 57K for a family of 4

    can you really imagine McDonalds not trying to reduce wages by the amount of the UBI?

    One thing I find appealing of the UBI is it frees workers from the implicit threat in employment relations - take it or stave. With all your basic needs covered, your income is now cream (by this I mean you can spend it on the fun stuff). As such you could justify the high rate of tax. However, this is also stuff you could do without if employment conditions become too unfair. So if MickyD drops wages too much it might face a lack of workers.

    Te Pahu • Since Apr 2014 • 13 posts Report Reply

  • Australopithecus, in reply to Robert Urquhart,

    Excellent. When I raised UBI with my farmer in-laws, a good foil against my worst left-wing daydreams, those were the issues they raised. They did have one more - won't folks just stop working? I don't think the spirit of capitalism will die that easily :-). Some might say I have enough, by far the majority will want more than the basics.

    There is much angst about the idle poor (not the idle rich, note) getting something for nothing. On bad days I point out the alternatives: the workhouse (private prisons?), starvation, or euthanasia. In medieval times they bemoaned the Sturdy Beggar. Should we bring back the stocks?

    Te Pahu • Since Apr 2014 • 13 posts Report Reply

  • BenWilson, in reply to Danielle,

    I have dual citizenship

    You do? I thought that was all but impossible with the USA.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • BenWilson, in reply to Australopithecus,

    When I raised UBI with my farmer in-laws, a good foil against my worst left-wing daydreams, those were the issues they raised.

    Which is interesting in light of how Social Credit was mainly a rural party. I don't think farmers so much as people from small towns, though. A UBI is an old, old idea, dating back at least until the 1930s. It got outcompeted as a set of ideas by Labour parties, though, with their alternative, unemployment benefits. This played well with their core demographic (back then), workers, who had a far greater power through industrial action to demand such a benefit.

    They did have one more – won’t folks just stop working?

    I think you have to accept that under a UBI there would be less incentive to work in low wage, low pay jobs. Which would seem all good, except that we get a lot of our work done by people in low wage, low pay jobs, so a likely consequence would be prices going up for things we currently expect to be cheap. It would change the face of society quite a bit. I'd expect a corollary effect, that the price of things we expect to be expensive might become cheaper, if more people had the freedom to pursue careers in them. So lawyers and dentists might become a bit more affordable. That depends whether the respective unions would actually allow more of them to be produced.

    I personally do not think it would matter enough to worry about, and if we found wage inflation was going crazy, it wouldn't be hard to put taxes up to suppress it. The two really should be basic tools of inflationary control, along with the government's ability to print money and to pay for projects. They could also use an adjustable savings rate. Then we could ditch this whole stupid idea that we create money and control inflation by using the OCR.

    What I think would really change about work, though, is that people would work a lot more on things for their own direct benefit however they perceived that. So mums/dads would be a bit freer to look after their own kids. A lot more people would engage in projects they believe in, like charities or open source software, or writing on blogs. There would probably be a lot more goofing around. And I think a shitload more people would get tertiary education just for its own sake, and that education might become less career oriented.

    All of those things are good, IMHO.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • BenWilson, in reply to izogi,

    it seems surprisingly difficult to find one on either side of the ditch who’s qualified and interested in advising with personal tax on both sides.

    Especially since we now have the ability to bring our super funds back to NZ. I would rather outsource working out how to do that.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • Matthew Poole, in reply to BenWilson,

    lawyers and dentists might become a bit more affordable. That depends whether the respective unions would actually allow more of them to be produced.

    Pretty much any muggins with enough neural power can become a lawyer, as routinely bewailed by those who want our universities to turn out higher numbers of "useful" graduates - code for the STEM subjects - rather than a seemingly-endless procession of accountants and lawyers. Access to law school is metered by the schools, who want to maintain some illusion of prestige, and if you possess a law degree and meet the character requirements you can become a member of the bar.

    Dentistry is expensive because the education is expensive and the equipment is expensive. A dentistry student finishes up with a minimum $61k loan (2014 course prices for an NZ student), and is then staring at $50k-plus just for a chair for their patients to lie on! The pricing reflects the cost of entry to the profession, and there won't be a sudden decrease in those costs. Hell, if more people wanted to become dentists Otago might just as likely increase their costs; supply and demand, after all. As it stands, there are only 54 places for second-year dentistry enrolments each year, so even if people were inclined to apply and encouraged to do so through the UBI they would just be competing with others for a very limited number of educational vacancies. Maintaining high-quality educational outputs doesn't just happen. Medical education in NZ will never be open-entry for all comers.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Brent Jackson, in reply to Australopithecus,

    They did have one more – won’t folks just stop working? I don’t think the spirit of capitalism will die that easily :-). Some might say I have enough, by far the majority will want more than the basics.

    I think this might actually be a good thing. People who do not really want to work, and can live frugally, could spend their time idly, or raising children, or producing music/art/writing etc. This would make more jobs available for those who want to work for the extra money. Employers would probably need to be more flexible (eg part time workers) in order to get their roles filled.

    Ideallistic possibly, but it needn't be perfect. only better than what we've currently got.

    Auckland • Since Nov 2006 • 614 posts Report Reply

  • BenWilson, in reply to Matthew Poole,

    Maintaining high-quality educational outputs doesn’t just happen. Medical education in NZ will never be open-entry for all comers.

    No, I'd expect them to maintain standards. But they might get more people who meet standards, if the pool of people who could afford the time increased dramatically. If they then simply put standards up so as to keep the numbers down, I would not be surprised. That would confirm something I've thought about medicine for a long time. But we could be pleasantly surprised. It wouldn't take a huge influx of graduates to have an impact on prices.

    I chose lawyers and dentists as mere examples of what might happen with a more generally educated and time-rich population. Pretty much anything that requires education and training will receive downwards pressure on prices from more people being available who have those skills. I think this is happening already. Lots of high-training professional careers are nowhere near the meal-tickets that they used to be. 100 years ago, just being able to read and write was a meal ticket. Now, you come out of 10-12 years of school and face unemployment, and prospects are only a little better after non-technical tertiary training.

    Our social challenge is how we deal with that. We've achieved a wonder of the world in bringing to the entire population something that was the sole privilege of the very wealthy only a comparatively short time ago. If only we could see it as the social good-in-itself that it really is, without continually tying it back to economic output, in a world where human effort is rapidly devaluing. I think this is actually happening, though. However much rhetoric there is to get people into career oriented education, people still choose the education that mostly interests them, and then just make do when it comes to workplaces. And since most jobs actually aren't rocket science at all, this is pretty sensible.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • Australopithecus, in reply to BenWilson,

    Did Socred support a UBI? They were just a bit before my time. UBI seems such a good idea, with such admirable social outcomes that I have to wonder - why doesn't any current party in NZ promote it? So it did a bit of digging.

    The Green Party "supports a full and wide-ranging public debate" on UBI.

    Mana will "Work towards implementing a Universal Tax Credit/Universal Basic Income where everyone in Aotearoa aged 18 and over would receive a minimum, liveable, tax free income after which progressive tax would kick in".

    Labour have explored the idea.

    I could find nothing from National's plan on the subject - pretty light on social policy as a whole actually :-).

    From the tenor of NZ First's social development policy I suspect they are opposed.

    Nothing from the Maori Party on UBI specifically but it might gather some support there.

    United Future supports income sharing

    I thought it might get a mention by ACT - but no just: "outsourcing rehabilitation to private providers, putting lifetime limits on Sole Parent Support, cracking down on benefit fraud, and scrapping the minimum wage. " :-(

    Maybe the Internet Party when they release their manifesto if they plan to "nominate candidates who are experts in important areas of social policy and reducing social inequalities."

    Te Pahu • Since Apr 2014 • 13 posts Report Reply

  • BenWilson, in reply to Australopithecus,

    why doesn’t any current party in NZ promote it?

    As you say, Mana seems to be pretty clear on it.

    I think it's not got big support because it's quite a radical idea. It would cost a hell of a lot of money, so the details of where that money would come from need to be clearly fleshed out, and none of the big 4 (Labour, National, Greens, NZF) dare to go there. We're talking about something that could possibly be the biggest chunk of all government expenditure.

    Did Socred support a UBI?

    I think they supported something like it, although their means to finance it was considered outrageous by the two main parties. They're pretty much ancient history, but I do find it very interesting how popular they once were in rural NZ, considering the very radical nature of their economic policy. I think farmers might have been the first people in NZ to really feel the crushing weight of debt on every part of their community.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

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