Monday, 6 October 2008

Pinching policies? Be our guest.

I like it when other parties pinch Libz policies. That's what good policies are for. Amidst the baloney about entrenching the Maori seats and a Waitangi gravy train that goes on for ever, here's what the Maori Party has "pinched" for their "social policies":
Social policies are aimed at eliminating child poverty by 2020 - including no tax on the first $25,000, removing GST on food and increasing the minimum wage to $15 an hour. It also wants business tax lowered to 25 per cent for small businesses to help small Maori enterprises grow.
No tax on the first $25,000; removing GST on food; business tax lowered ... drop the other garbage and the economically illiterate minimum-wage proposal (just watch how the present minimum-wage law increases unemployment over the next few years, let alone a higher one) and they're nearly halfway there.


  1. Since when do libertarians like spotty tax reductions - no GST on food and targeted tax reductions for small business - that produce direct efficiency losses and indirectly raise costs by producing a dedicated lobby arguing their industry is special and also deserving of an exemption?

    I believe the economics is quite clear that these policy changes will lower total welfare, so the value of these is what exactly?

    Lower tax is highly desirable, by the way, but spotty tax reductions is all about pork barrel.

  2. Matt - Libertarianz prefer not to have spotty tax reductions and are campaigning to have accross the board tax cuts. That said, in an MMP environment Libertarianz would support anyone who proposes less tax, or more freedom without any new coercion. So while Libz would vote for the Maori Party's tax cuts (but would push for across the board tax cuts for the reasons you have outlined correctly), libz wouldn't vote for it if it incluced an increase in minimum wage laws.

    Libz strategy would be to support bills that move towards freedom with no new coercion on a bill by bill basis.

  3. Actually, Matt, our policy is to abolish GST altogether, and retain only income tax, for no more than five years and only for income over $50,000. Not particularly spotty.

    As for individual proposals, as Craig says we would support any increase in freedom. "Total welfare" doesn't really come into it.


  4. Actually, Matt, our policy is to abolish GST altogether, and retain only income tax, for no more than five years and only for income over $50,000. Not particularly spotty.

    Not a good way to go. Much better to keep as much GST as required, and switch to a truly flat tax for the rest: say $10,000 per person should do it.

  5. $10,000 per person?!?! ...ummmmm...that would mean an income tax INCREASE for everybody earning less than $48,000 per year.

    No, much better to abolish indirect taxes and cut income taxes to 10%.

  6. I did mean 'libertarians' rather than 'Libertarianz'. I believe I am myself a libertarian, and so is hard to accept a change in tax policy which lowers welfare.

    I am in total sympathy with the view that less coercion is desirable - so (as always) there's a trade-off, in this case between what economics says about aggregate welfare and a desire for less coercion.

    However I think the relationship between these two objectives comes into alignment in the longer term. Granting tax exemptions rewards investment in lobbying, which is largely (not entirely) wasteful, and it favours those connected with lawmakers at the expense of others, so it is contrary to the rule of law. Allocating resources in any proportion to the degree of connection with lawmakers is, I think, corrupt and inconsistent with liberty and freedom from coercion, even if it is brought about by an apparently desirable first step of a popular tax reduction on selected things.

  7. Matt has got a point with flat tax expressed in dollars rather than percent.

    After all, why should a high income earner pay more for the same basic government services than a low income earner?

    I can not think of a good reason.

  8. Dinther: I would say that those with more assets would benifit more from secure property rights than those with less. What's more, I can't quite understand why you think a Libertarian state would require so much revenue.

    The best possible outcome would be a voluntarily funded state. However since I've never heard a way to do this which doesn't involve the State going:
    a) Broke.
    b) Corrupt.

    Elijah's proposal is probably the best so far, but I would remain open to a proposal involving a few, constitutionaly capped, indirect taxes. In a very small, non agrian state, a single land tax would be the best way to go.

  9. "Since when do libertarians like spotty tax reductions...?"

    When they're the only ones that are on the table.

    You know, we had this argument before: instead of getting hung up on your own favourite way of reforming the tax system [snore] the point is to use whatever political agitation exists to effect whatever lowering of tax you can.

    As I said in that previous discussion:

    When you see a clear and present groundswell against a tax -- any tax -- all of which any decent person should agree should go -- the so called practical men wring their hands and saying, "No, I'd rather we tinker with this tax instead," or "I'd rather tinker with that tax."

    Fact is, you so called practical men can't see an opportunity when it strikes you right in the face.

    When a groundswell to get rid of a tax, a groundswell you might never see again -- don't spurn it; embrace it.

    When a groundswell arises to get rid of a tax -- any tax -- you want to ignore it and argue about tax codes instead: jump on the bandwagon and start whipping along the horses.

    When a groundswell arises to get rid of a tax, and you're disgruntled because it's not your favourite way to start getting rid of taxes, then change you favourite method!

    When a red hot opportunity exists to beat the bastards back, to join in with others who on this at least want the same thing, don't carp, don't bitch, don't mutter to yourself about how 'tax bands' should be changed or some such -- grab the bloody chance and run with it, and take it as far as you can go!

    The Maori party have seen popular opposition to GST on food and they've taken that ball and run with it.

    Good for them.

    Now, how about those of you who know better praise them for it, and invite them to take it further.

    Use the power of popular opposition to GST on food and explain why compliance costs necessitate that GST be lowered across all goods classes.

    Or use the power of popular opposition to GST on food and explain why GST should be removed completely!

    In any case, use the power of popular opposition to GST on food to do some damn thing along the lines you claim to support.

    When you know your principles and you identify that popular opinion on some particular issue is heading in the direction of those principles, then the practical man should grab on to that issue and ride it for all he's worth.

    That, incidentally, is the point of transitional policies designed to shrink government one popular move at a time -- which in these dark days is possibly the only way such moves are likely to be effected.

  10. I have a lot of sympathy with your point, PC, but I am skeptical this tax cut on food is a way to beat the bastards back - which I absolutely, unquestionably think is essential if NZers are going to stop going backwards in the world very quickly.

    You could be right - tax cuts on food lead to tax cuts elsewhere. if so, great.

    But I doubt it will happen that way. The Maori Party idea for tax cuts is targeted at their constituency. The Maori Party is not arguing this, I suspect, from the principle that freedom matters or an understanding of the tremendous costs of government.

    They are saying what appeals to their constituency.

    I suspect the Maori Party position will be that the very substantial effect of lowering tax on food will have to be paid for with increases elsewhere.

    Second, this idea about the cost of spotty taxes is not some pie in the sky. Its costs are large, they are almost pure deadweight, and by taking resources away from productive activities they lower standards of living.

    Wherever the line is drawn on what does and does not qualify for tax exemption, lawyers will be in court for years arguing what qualifies. Companies will change their their product mixes to sneak into qualification. The tax department will be checking their ingredients for compliance. Ultimately useless and arbitrary arguments will be had on the relationship between legal definitions and chemical compounds.

    And every industry in the country will find it valuable to hire more lawyers to write reports which show how great their industry and why it is deserving not only of the tax break enjoyed by food and small business, but heck, throw in some industry regulation which protects incumbents while you're at it. The winners in this process will be the wealthy, the connected, and the incumbents. The losers will be everybody else who is, one way or another, funding these costly and entirely wasteful exercises in pursuit of compliance with quite arbitrary rules that say this product does attract GST, while this product does not.

    All of this, I submit, is contrary to the libertarian ideal.

  11. "All of this .. contrary to libertarian ideal".

    And you would be right, MB. Key word 'ideal'.

    But we won't ever be going from A-Z in one fell swoop. Thus, any measure to reduce tax is a start & should, in my opinion, be supported.

    More, the very valid points you make could just as easily be used in argument for *further* reduction in order to avoid the very mess you describe.

    Best to start the ball rolling than the alternative of staying put & going nowhere. Besides, it's easier to convince people of the merits of tax reduction once you've started the dismantling process, than from a stagnant position, yes?

  12. Well its obvious people are not voting based on policy then, isn't it. If they did the Libertarians vote would increase. Unike what John Armstrong said in this mornings herald and Ive said today.

  13. This applies as well to abolition of taxes as to abolition of slavery:
    "To what the abolitionist must be against is theoretical gradualism, not practical gradualism. Where it is not possible to take giant leaps it is not condemnable but preferable to take small ones. In a context where it is not feasible to end slavery, the abolitionist must not do anything other than demand that the greatest numbers of slaves be freed even if that means saving only a few. He does not advocate the continuation of slavery, for if it were his bidding, he would end it. He has not surrendered at all for he has not been able to achieve that which is simply out of his power."

  14. Quote:
    Best to start the ball rolling than the alternative of staying put & going nowhere. Besides, it's easier to convince people of the merits of tax reduction once you've started the dismantling process, than from a stagnant position, yes?

    Hallelujah Sus. Now, we're starting to see some sensible argument for the Libz. That is why voters should give their vote for National & ACT. At least you can start somewhere, just anywhere that is different from the current mob in Parliament. But according to LGM and PC, just don't vote for National, since they are no different. Remember, you have to start somewhere to get the ball rolling. The ball can't roll on its own, it needs some causes/impetuses to give it momentum and this is what I believe that Sus is saying indirectly with or without her knowing.

  15. Sus, thanks for your thoughts. What is a "small step"?

    To me, the small step is removing the 39% step in tax or reducing the 19.5% tax down a couple of points.

    The big step, in my opinion, is moving away from the current across-the-board GST and introducing the first exemption to it. It is a big change in principle and as discussed it is likely to have large downstream costs.

    To me, a flattening of the tax structure is far more modest a step than the introduction of the first exemption on GST. Other things being equal, a broad tax will better preserve liberty than one that gives special treatment to a favoured few.

  16. I'm not sure the slavery example is appropriate. On the question of GST exemptions, a little bit less tax comes bundled with a lot more pork barrel and compliance. I don't believe the trade off is worth it, or that broader (though shallower) reductions in tax are out of reach.

  17. Matt, I'll take any step, either income or GST-related. Both would be nice! GST has a particularly harsh impact upon low-income earners, and is a blatantly artifical price-increaser (eg paying $11.25 for $10 worth of food) which is why I detest it so. I don't want to get into splitting hairs; it's reduction, per se, that's the material point for me. I'll take *any* step in a tax-reduction direction.

    Nat Supporter: The Libz have always maintained that we support any measure - large or small - in favour of freedom & oppose those to the contrary. No change there, then.

    But that does not necessarily go hand-in-hand with voting National, because the Nats are no friend to reducing the size of govt, let alone small govt. I give you Nick Smith (cough). That is not to say that we would not praise John Key should he say something sensible. Unfortunately, any such comments have, to date, been few & far between. ;)

    ACT is certainly talking more sense than the others, but that wouldn't be hard. And *that* is a start, AFAIC.

    However, my frustration with ACT is that it's got a beaut slogan this time - 'the guts to do what's right' - but stops short of actually doing it!

    I firmly believe the Nats will win this election - have done for months - but not because of what they're saying; but because of the dissatisfaction, if not downright loathing, of Clark & co.

    And that's the real pity.

  18. Nat Supporter...I bet you $50 million the "Ball will never start rolling" from the National party due to their intrinsic left wing socialism.

    If you want to accept the bet...please do so, but let me know the libertarian, or even "right wing" ..(tax cuts, spending cuts, reduction in the size of the State, reducing red tape, reducing regulation)..policies which will happen, and give me a timeframe for them to be implemented.

    For instance, by, say, April 1st 2009 I doubt taxes will have been cut, the State will have reduced in size, 'red tape' will be abolished.

    So yes, I bet you $50 million your chaps will do nothing of the sort...and, indeed, will increase the tax take, increase red tape, increase the size of Government ...and all the while claiming they are doing the opposite!

    So Nat Supporter...between 1 Jan 2009 and 1 Jan 2010...give me the list of "starting the ball rolling" policies from the National party...(and do not be so pathetic as to claim a tenner per week as a tax cut is some sort of libertarian revolution)

    I also bet you that if I am right, and you are wrong, on January 2nd 2010 you will commit suicide on the steps of Parliament....(really putting your money where your mouth is)

    If you really believe in any of this you will have your heart broken...and in weeks, rather than months...which is why libertarianz look at you and wonder how anyone could be so gullible or lacking in dignity or self respect...

  19. Any of you National socialist acolytes notice how your messiah has announced a change of National Party policy regarding tax cuts? It seems they are irresponsible after all and so the promised tax relief won't be as "generous" as originally promised... The Nat scoialists changed direction within 24 hours of announcing their promised tax relief was good for the economy to supporting the notion that it wouldn't be good for the economy. Flip-flop. Flip-flop. How can any sane person seriously believe in them?

    Different from Labour? You'd have to be the total imbecile to believe.

    Stated again. There has been a Labour-National coalition in govt for decades. The present situation in New Zealand took generations to achieve. You, who voted for the coalition, time and time again, are about to reap your just reward. It really will be, "New Zealand the way you want it." You are responsible for that.

    Wake up and start thinking in a principled manner, just for once. Have some integrity.


  20. BTW the "ball" will not start rolling with the Nats. They are fundamentally a collectivist political entity. Their ideology is socialist. Some of you believers are going to be seriously disappointed. The rest will continue with self-delusional fibbing.


  21. LGM, in case you hadn't noticed National gets about as hard a time on this blog as Labour does.

  22. As it should, Matt, given that there's not a great deal of difference, more's the pity.

    That's kind of the point!

  23. Matt B

    What is your point?



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