Tax - Income Inequality Of the Prison Built by David Haywood (EY) from Horizontal and Vertical Equity.
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mso-fareast-language:EN-US;}Heres
the problem we face in the West, again. The frightening thing about David
Haywoods stuffed Stuff article of this weekend, The Rising Price of
the Sin Tax, is that David is a partner at EY (for those of you not hip, thats the
old accountancy firm Ernst Young.) At least I imagine his article would
be frightening for clients of EY.David
starts out fine with that recent factoid showing how unequal is the
contribution made by the rich to New Zealand's welfare state:
Treasury estimates the top 12 per cent of households
earning more than $150,000 a year will pay just under half of total income tax.
This increases to 76 per cent when government support such as working for
families, benefit payments, the accommodation supplement and paid parental
leave are taken into account. Conversely, households earning less than $60,000 a
year (half of households) are expected to pay 11 per cent of total income tax. According to English, this group collectively will
pay no net income tax because of income support they receive. But then
we see the agenda, (or is it merely blind assumption now?), in his echoing the
bankrupt ethos sounding out of the Labour Party conference this weekend; an
ethos that demands ever more from this twelve percent, as they are forced to
bankroll the imprudent life choices incentivised by welfare. David sees this
tax fact as desirable as it contributes
toward improved income equality. Ive written before on what I think of that. Worse,
for the first time I can remember seeing in print, this ethos no longer stops
at income tax. Continues David:
While this should contribute to improved income
equality with direct income tax, the level of indirect tax on low income
earners represents a significant burden.[Sadly, by
this point in the piece, I knew what was coming – my highlights.]Vertical equity in tax policy design dictates those
more able to pay tax should contribute more. Tobacco excise, in particular, offends this
principle as smoking is most prevalent
among those of modest means. Horizontal equity in tax policy design dictates
people with similar income should pay similar tax, irrespective of how they
spend their money. Again this principle is offended by excise and gaming duty. Maintaining high (and increasing) excises places a significant tax burden on
people of limited means …The first
question has to be why is smoking more prevalent amongst those of modest means? The second how should that affect the tax I pay?Regardless,
the inference is clear: the tax system must be organised in such a way that
those taxpayers with immodest means - rich pricks, as that former Finance
Minister called them - be forced to
pay the excise of those with modest means.
Not overlooking the ironic nonsense that Mrs H and I gave up smoking eighteen
and seventeen years ago, respectively, because we could not afford to smoke
while saving for our future goals, yet are now to be forced, if David has his
way, to pay the excise for those too irresponsible to plan their own lives and
who apparently have an entitlement to, of all things, tobacco; this premise is
wrong on every level, most certainly philosophy. Its mum of eight, ninth coming, and her Sky
remote all over
again; a piece, you might remember, which started with Mrs H and I yet still
this year prudently restraining our current spending. Heres my
contribution to Davids contribution to the fair society – noting no
politician has taken up my challenge to define fair properly. Once a
taxpayer hits a certain income level what say they are forcibly micro-chipped.
New technology could then be developed to work in two ways:A
bio-scanner installed at supermarket counters could pick up the chip and that
taxpayer would then have an excise tax that would recover the current excise on
alcohol and tobacco - even if the taxpayer was buying neither of same – by
adding the tax to their – and just their - general grocery purchase. Similar
scanners at bottle stores, garages, et al.Secondly,
as we already have the technology by which you can shake your phone at another
to throw a payment across, or merely tap your credit card on an appropriate
terminal, we cant be far away from technology that would allow people of modest means to simply touch the sleeve
of a chipped person with immodest means and
directly transfer to them their ciggy money. Of course for this to work, people
of immodest means would have to be publicly identified. Perhaps they be
forced to wear a yellow symbol of a dollar sign on their suit or blazer chest
pockets? Theres a great logic in this to proponents of the envy politick: why
should such people only be exposed to the censure of IRD officers? Shouldn't
they be exposed to the great unwashed also?To some
few of us this latter scenario is the worst sort of dystopia, however,
according to the ethic that has destroyed the West, it would still be fairer than expecting people of modest
means to control their recreational expenditure. What rot this is. Cigarette
smoking is not compulsory, nor, incidentally, given Ive brought up mum of
nine, is having babies. I see on QA this Sunday morning another mum of
nine trundled out to show the need of fixing poverty and the concomitant
problem of over-crowded housing in New Zealand. I simply
suggest in passing, that in the fact house over-crowding is one of the chief
characteristics of poverty, is also, therefore, the answer. Family size. You
have the number of children you can afford to bring up; no more than that. I
have a good income, but I couldnt afford a family of eight and nine. Decisions
like this are simple, until responsibility for ones decisions is taken away by
the fog of welfare that muddies the thinking.The
patronising assumption that people of modest means are less able to control
their addiction than, say, I am, or cant rationalise a prudent family size, is
initially as ignorant as it is arrogant. The evil of this is that when you set
up a welfare state to fund such arrogant assumptions, then you create an
underclass sadly prescribed by, and subscribing to it.Thats my
Monday morning spiel, though to David Haywood, stick to tax, mate, leave the
philosophising to yours truly. You made
a complete hash of that one, building from your vertical and horizontal equity
only the bars of the prison you would have my freedom locked away to. Albeit prison
is where many of the products of our welfare system go to break their addiction
to tobacco: its banned there now. Regarding excise taxes proper: the rationale flowing from this blog has been made over and over - there should be no excise taxes, period. A tax on choice is a tax on freedom.[Footnote: Is Haywood's article some type of distorted mirror image of the wowserism of the state health lobby?]
