A truly progressive tax policy which includes capital gain is the only way to tackle both poverty and inequality in New Zealand, so let’s start talking about it, Peter Malcolm, spokesman for the income equality project “Closing the Gap”, said today.
The clear message from community groups trying to cope with growing problems of poverty, suicide, homelessness, imprisonment, and health and education disparities is that the kind of patchwork fixes announced in the May budget won’t work. What’s more, they steer debate away from the sort of structural changes we need to be discussing.
A comprehensive all encompassing capital gains tax and a steeply progressive income tax would be a good starting point. No tax on income up to $20,000, slight reductions on taxes for those earning up to say $120,000, and a tax rate that rises sharply for income over the $120,000 threshold up to say 50% on income over $200,000 would help. A similar scale for capital gain would be a good move he said.
Many wealthy people would like to see a more humane and equal society and are prepared to pay for it. Better social outcomes than tax cuts is an often heard comment. They go on to say that we need a better tax structure that would help this happen.
On the income side, progressive taxes need to be coupled with a higher minimum wage and living-wage benefits. All should be able to thrive and not just survive and that is not happening at the moment.
Mr. Malcolm said that economic modelling by Thomas Piketty and others shows top tax rates in countries like New Zealand could be anywhere from 57 percent to 80 percent before losses from tax avoidance outweigh the gains.
We need a much steeper progressive tax regime both to reduce inequality and increase government revenue so we can properly fund health, education, and social housing to solve New Zealand’s ongoing and escalating housing crisis, he said.
