In case you missed the announcement one of the big issues this news cycle is a Wealth Tax.
Much like other important topics that have dominated elections or political discussions, Cannabis legalisation, the introduction of a Capital Gains Tax, etc. no doubt our media will be seeking to assist the public so a reasoned and informed discourse can take place, and our democracy is well served.
Hurrah.
To be clear a Wealth Tax is not currently government policy, there is no new tax on the table. At this stage this is about the government gathering data to see whether those who are wealthy are paying a comparable rate of tax to those who earn money through income.
If all are to contribute fairly to paying for public services why should the government continue gathering tax from those working for income, but not from those who don’t need to, those who for example inherited wealth, or make their money from capital gains?
Will we hear what Labour have decided? No because they haven’t made any decisions yet, and in all likelihood won’t. I suspect their enthusiasm for taking a new tax, even one a convincing case could be made for, to the electorate next year will be pretty low.
Will we hear what ACT and National think about what Labour have decided (even though they haven’t made a decision)? Oh heck yes, it’ll be wall-to-wall negative coverage with focus on hypothetical edge cases of something that doesn’t exist.
Will we see newspaper headlines like “Government looks at ways to make taxation more fair”? Wouldn’t hold your breath.
How about calamitous headlines proclaiming the end of the world as if Mike Hosking had written them all when he was having a really bad day? Oh heck yes!
Thomas Piketty wrote the bestseller “Capital in the Twenty-First Century”. Will the public be offered a considered discussion on the merits of his ideas on wealth and income inequality?
Or will the media more likely interview some guy who has 25 properties and makes over a million dollars a year in unrealised capital gains who is outraged a little kiwi battler might be expected to pay his fair share of tax?
Many of the articles we see on such issues are by ex government ministers, or from former press secretaries of one party or another. These people didn’t just discover a great interest in the truth or informing the public, they are producing spin for their side paid for by goodness knows whom.
So what will the government do about a possible Wealth Tax? Well, hopefully more than was hinted at during a Finance and Expenditure Committee last year:
“Green MP Chlöe Swarbrick pushed on the other obvious point: what if Inland Revenue’s research discovers that the wealthiest aren’t paying their “fair share”? What would Parker do if he discovered the tax system wasn’t fair?
“Perhaps nothing,” Parker said. “
Surely they could make it palatable by accompanying it with a drop in income taxes, as if we have a wealth tax those paying income tax won’t have to bare as much of the burden.
“If the bloke down the road, you know Bob with the big truck he only uses to tow his jet skis, pays his share you can pay less than you do now - it’s about what is fair.”
But they won’t, when it comes to a wealth tax it’ll be like the Cannabis referendum or the discussion on a Capital Gains Tax. Disinformation from National given unquestioning coverage by the media, and a “what do the polls say, do we dare?” approach from Labour.
It may not be a discussion National want to campaign on either. If Christopher Luxon defending a tax cut of $18,000 per year for himself, while many get just $2 per week, was a hard sell imagine having to explain why the extremely wealthy don't pay any tax at all!
So a problem with consideration of a Wealth Tax is it may be a conversation the large parties don’t want to have. Labour don’t really want to have the media shrieking that they are going to pull the rug out from under the kiwi dream, and National surely don’t want to spend their time defending the rich not paying their share.
For the Greens and ACT though this is the sort of issue that can really differentiate them. The Greens will of course support a fairer tax system where the rich should pay their share - and then some. ACT on the other hand believe taxes should be flat, should be small, and if possible should be avoided - you’d be crazy not to.
Look at an issue like Three Waters - how much does the public really understand? Not a great deal, but they’re certainly taking their positions on it. What odds we’ll have a sensible discussion on the likes of Three Waters? Let alone one on a more progressive tax system, which is something far more important than healthy drinking water.
How do we understand issues based on facts and not as seen through the prism of whichever party has aligned themselves to a certain position on the topic?
It is this politicizing that makes referenda a bad idea. Once a political party makes it an ‘Us versus Them’ issue a large proportion of the population close their minds to rational arguments and just vote on party lines.
We saw it with the cannabis referendum at the last election and with the flag referendum in the last government.
There were sound reasons for changing the flag but as soon as it became a referendum on John Key a whole bunch of us said – “yeah nah, stuff that guy!” The selection of Weetbix box clip art as the alternative was the final nail in the coffin of something that not politicised probably would have passed.
How can the public be better informed so that people have a good basis for making non-politically driven choices?
Well just for starters there are excellent local economic commentators out there - Shamubeel Waqub, Bernard Hickey, and Rod Oram. You don’t need to put your brain in a jar and drink the Kool-Aid from the likes of Brad Olsen - that stuff isn’t good for you.
There are well-considered viewpoints based upon research and data out there – find those voices rather than listening to lobbyists.
You know where not to look.
don't we mostly "bear" a burden, rather than "bare" it? Although I guess we could bear it bare.
Sorry. I'm a pedant.