Monday, March 07, 2022

The selfishness of tax cuts

National leader Chris "I used to run an airline" Luxon gave a state of the nation address on Sunday, in which he proposed National's bold new policy to solve New Zealand's problems: tax cuts for the rich!

[Luxon] also promised National would repeal every extra tax hike or added levy the Labour Government had imposed, since 2017.

That would see the removal of Auckland’s fuel tax.

It would also see the removal of the 10-year extension to the “bright line test”, which imposes what is effectively a capital gains tax on people selling investment properties within 10 years of buying them.

He said it was unfair for the Government to have removed interest deductibility on rental properties.

(He also promised indexing tax thresholds to inflation, which is a bit meh. Adjustment is something the government needs to do every so often, and whether it is periodic or automatic is a question of how much you like automatic stabilisers...)

Labour's main income tax change has been a new top tax rate for high earners. Reversing it would benefit those high earners. Ditto reversing the extension of the bright line test, and restoring interest deductibility - effectively a subsidy to landleeches. So Luxon is nakedly promising to redistribute income upwards to benefit people like himself, at the expense of everyone else.

And it will be at the expense of everyone else, because taxes pay for things: schools. Hospitals. Public transport. Pensions. Cutting taxes on the rich means the money will be ripped right out of those things, hurting people like you and me, so a bunch of rich pricks like Luxon can compare the size of their pile and buy themselves another yacht.

Taxes also discourage things we don't want, like fossil fuels and utes and house hoarding. Cutting those taxes will mean we have more of those bad things, so that old rich people can keep destroying the planet and sucking us dry through parasitic landlordism.

The biggest effect though would be to starve the government of resources right when we are facing multiple crises. We have covid, a housing crisis and climate change, and fixing or mitigating all of these needs money: money to fund our health response, money to build state houses to protect people from landlords, money to decarbonise our economy and reduce emissions, money to rebuild and relocate infrastructure (and entire towns) because anything less than 2 metres above sea level is at risk and needs to moved or protected. The clear implication of Luxon's demand to cut taxes is that he doesn't want us to solve these problems. Or rather, he thinks rich people getting another BMW is more important than us not dying of covid, than us having secure and affordable housing, than us not burning down or flooding (or both) due to the methane spewed into the atmosphere by his farmer friends. Its a completely selfish worldview. But isn't that what National ultimately stands for?