Monday, May 24, 2010

Tax cuts and inequality

Bill English thinks that his massive tax cuts for the rich will have no effect on inequality and will leave the gap between rich and poor "about the same". Yeah right. We've seen what happens when you cut taxes for the rich and dump the cost on the poor, because Labour did it in the Douglas era. And the result was a rise in inequality and a wider gap between rich and poor. Don't believe me? Take it from Statistics New Zealand, the OECD [PDF], or the Ministry of Social Development [DOC], or the Social Report. Or you could look at the graph below, which compares the Gini coefficient - the basic measure of income inequality - with the top tax rate:


(Source: Top tax rate data from Te Ara. Before housing costs Gini coefficient data from Ministry of Social Development, Household Incomes in New Zealand: Trends in Indicators of Inequality and Hardship 1982 to 2008, p. 61).

So, given this evidence of the effects of tax cuts for the rich in the past, the obvious question for Bill English is "why does he think it'll be different this time"? And the answer is, he doesn't - he's just bullshitting while he (and his mates) laugh all the way to the bank.