Labour leader Phil Goff gave his State of the Nation speech this week.
One of the foci of Phil’s speech was on removing distortions in the New Zealand tax system that cause low and middle-income earners to effectively subsidise the very rich. A change to the top-tax rate was mooted, but only at a very high level. The overall focus was on making sure the system becomes fairer.
Interestingly, there’s a useful piece in the current edition of The Economist on tackling inequality that takes a similar line.
The thrust of the article is that to tackle inequalities, policy-makers should focus on removing distortions in the economy and on raising the incomes of low and middle earners. Social mobility is top priority.
As The Economist’s author notes, the benefits of greater equality to the health and well-being of populations has been well documented by the authors of The Spirit Level.
The Economist article is inconsistent in parts. It points to the unjustifiable wealth gains associated with the financial markets but argues without nuance against ‘taxing the rich’. It contains some bald generalisations including (ironically) about ‘sloppy thinking’.
But, overall it is a thoughtful piece.
Back to Goff’s speech. The interesting thing is that Phil’s common-sense approach to creating a fairer society is resonating widely. Taking GST of fresh fruit and vegetables makes sense to those who understand economic incentives, and have seen studies on the long-term impacts of poor food choices. It also makes sense to a mother struggling to pay her family grocery bill.
Focusing on social mobility and the opportunity for low and middle-income earners to get ahead – is likely to resonate with the authors of The Economist magazine. Closing tax loop-holes for the hyper wealthy makes sense.
All of these policies have clear thinking behind them. They are also resonating with Joe and Joanna public.