Guaranteed minimum income + capital tax, the way forward?

49 comments on “Guaranteed minimum income + capital tax, the way forward? ”

• Comments are now closed

1. RedLogix 1

   2 December 2009 at 9:29 am

   Finally some traction. Long time Standardistas will recall that I’ve argued for this system for ages.. as have others most notably Keith Rankin.

   Now, which party will be courageous enough to promote it?

   Actually it is already Green Party policy. But arguably they haven’t promoted it over much.
   • outofbed 1.1

     2 December 2009 at 11:55 am

     Not Green Party Policy again?
     There is a pattern developing here
2. gitmo 2

   2 December 2009 at 9:31 am

   word to the wise….spellcheck !!

   Also suggest you change “Morgan suggests every taxpayer gets $10,000 from the government”

   to $10,000 taxfree otherwise there’ll be howling and wailing.

   Fee free to delete the comment
   • Daveo 2.1

     2 December 2009 at 9:53 am

     Um, gitmo, have you read what Morgan’s actually saying? He’s explicitly arguing for $10,000 free upfront.
   • Draco T Bastard 2.2

     2 December 2009 at 10:04 am

     It’s not tax free – it’s an actual payment from the government that everyone gets.
   • Bright Red 2.3

     2 December 2009 at 10:09 am

     the difference ‘$10,000 tax-free’ (or, rather a $40,000 tax-free bracket) and a $10,000 payment is that everyone gets the $10,000 whereas you only get the full $10,000 in a tax-free bracket if you earn over $40,000.

     Another way to concieve of it is that there is negative tax on the first $40,000 of income. So tax = 0/25*(income-40,000) – at zero income you get $10,000.
     • gitmo 2.3.1

       2 December 2009 at 11:56 am

       My mistake I see what Gareth’s on about now……..interesting concept…. the catholics will love it !
3. factchecker 3

   2 December 2009 at 9:51 am

   isn’t this basically exactly what douglas proposed back in 1987?
   • Daveo 3.1

     2 December 2009 at 9:54 am

     Negative income tax with $10,000 free to every taxpayer? Doubt it.
   • snoozer 3.2

     2 December 2009 at 10:01 am

     he did but as part of a bunch of unpalatable stuff. It was all put on hold by Lange’s ‘cup of tea’

     In fact, Douglas is still pro having a tax-free bracket. The catch is he would pay for it by scrapping public healthcare and public education, not with a tax on wealth.
4. snoozer 4

   2 December 2009 at 9:54 am

   “If you’re coming off a benefit you face a marginal tax rate of at least 82.5% that makes getting a low-paid, part-time job not worth the effort. ”

   I’ve been in that situation. It’s just not worth getting a crapy part-time job when you’re on the dole. Work 30 hours at a minimum wage job while on the dole and you end up with $130 more than if you had stayed home. The first $80 doesn’t decrease your benefit but after that you’re only getting paid $2.20 an hour net.

   Of course, you can see why they have to have a high abatement rate on the benefit and only a low threshold before it kicks in. But guaranteed minimum inomce gets around that.
5. Draco T Bastard 5

   2 December 2009 at 10:02 am

   It’s a system that I like but I think it should be paid out to everyone including newborn children. Paying out to newborns would, of course, be paid out to the parents but it does help prevent the children being in poverty. No, it doesn’t bring in breeding as a business as raising a child costs more than this will pay.

   I also think it should be set at $15k as well and inflation adjusted every quarter. Sure, the benefits average ~$10k but then you get accommodation benefits, extra for sickness etc, etc all of which requires an inefficient bureaucracy. This would boost the pay out to ~$42b/year.

   Land tax based upon market value is interesting as it would make some small towns viable again. Taxing financial capital is needed as the capitalist system inherently pools it to the few which reduces economic activity over time and so it needs a means of getting it back out where it can do the most good.

   which actually raises a far more real ‘moral hazard’ (ie. bludging) issue than the unemployment benefit does.

   There will be some, there’s always going to be some but I think you’ll find that it’s less than 1% of the population. 99%+ actually want to work. Basically, the bludgers aren’t really an issue as the amount that they would cost would be fairly minimal.
   • RedLogix 5.1

     2 December 2009 at 10:14 am

     The ‘bludging issue’ is mostly a nonsense. We actually got total unemployed down to about 17,500 a few years ago, and the long term unemployed (over a year or so) a small fraction of that. There will always be a small number of people who are more or less unemployable and frankly I’m happy to see a tiny fraction of my taxes to support them.

     The real problem with benefits is of course the massive marginal tax rate. At 80% plus, it really makes little sense to go out and find some crappy no-future minimum wage job. By the time you take into account clothing, transport, childcare and other lost opportunity costs (like the time to grow your own food, cut firewood, fix things etc)…you are probably actually worse off that you were on the benefit.

     Given that it is such an economically irrational choice, the wonder is that so many people actually do choose to work in that circumstance.
6. felix 6

   2 December 2009 at 10:33 am

   A person working full time on the minimum wage would see their net income go from $20,500 a year to $28,400.

   Assuming the minimum wage is retained at more or less the current level and the whole exercise isn’t just used as an excuse for employers to pay everyone $10,000 less.
   • matthew 6.1

     2 December 2009 at 11:51 am

     A person working full time on the minimum wage would see their net income go from $20,500 a year to $28,400.

     @felix That’s what I would worry about to. You’d need some sort of employee protection / guarantee along the lines of the Kiwisaver legislation as it currently stands where the benefits to the employee are not subtracted from their income.
   • Bright Red 6.2

     2 December 2009 at 12:26 pm

     As long as you kept the minimum wage at its current level and didn’t allow bosses to unilaterally break employment contracts, that wouldn’t be a problem.
7. Jake Quinn 7

   2 December 2009 at 11:40 am

   it was great to hear gareth morgan suggest something other than the usual nonsense of ‘cut taxes and government spending and walla, everything fixed’ hopefully some pressure builds for some real consideration of ‘fundamental change’ to the tax system that ISNT more regressive than the current state of affairs, ie, tax cuts funded by GST increases.
8. Quoth the Raven 8

   2 December 2009 at 12:14 pm

   A great man Thomas Paine and Henry George too – both often cited by libertarians and anarchists. Here’s a quote from Paine appropriate at this time.

   “Almost everything, appertaining to the circumstances of a nation, is absorbed and confounded under the general and mysterious word government. Though it avoids taking to its account the errors it commits and the mischiefs it occasions, it fails not to arrogate to itself whatever has the appearance of prosperity. It robs industry of its honors by pedantically making itself the cause of its effects; and purloins from the general character of man the merits that appertain to him as a social being.’
   “There is a natural aptness in man, and more so in society, because it embraces a greater variety of abilities and resource, to accommodate itself to whatever situation it is in. The instant formal government is abolished, society begins to act; a general association takes place, and common interest produces common security.
   “So far is it from being true, as has been pretended, that the abolition of any formal government is the dissolution of society, that it acts as a contrary impulse, and brings the latter the closer together. . . . Formal government makes but a small part of civilized life; and when even the best that human wisdom can devise is established, it is a thing more in name and idea than in fact. It is to the great and fundamental principles of society and civilization—to the common usage universally consented to, and mutually and reciprocally maintained—to the unceasing circulation of interest, which, passing through its million channels, invigorates the whole mass of civilized man—it is to these things, infinitely more than to anything which even the best instituted government can perform, that the safety and prosperity of the individual and of the whole depends.’
   • Draco T Bastard 8.1

     2 December 2009 at 2:16 pm

     Couple of points:
     1.) WTF does this have to do with the thread?
     2.) He managed to use quite a few words to say SFA (Governments are bad but he didn’t get around to pointing out the costs involved with not having one)

     Have you ever considered just how much a many to many administration as a social function would cost? There’s no way any society could actually support it. Hell, it cost $9 million just to ask people if they were stupid (of which 87% said they were). So we have an administration that’s a minor subset of society that does what’s needed for society to function at our direction. We call it representative democracy. We have it that way for a number of reasons:

     1.) It tends to remove mob rule
     2.) It costs less
     3.) Is actually manageable
     • Quoth the Raven 8.1.1

       2 December 2009 at 3:02 pm

       1. Because the article mentions George and Paine as proponents of a land tax and I think it is useful to know what such men thought.
       2. What does it matter how he wishes to use language to express his ideas?
       The rest is strawman nonsense and bald assertion. I don’t want mob rule. It’s about governing less so it would cost less – you know government which governs least. What has the cost of a referenda got to do with anything? This is not about rule by referenda. There’s no point arguing with you because you really haven’t looked into any alternatives enough and I don’t have time to explicate whole schools of thought. You’ve got the internet use it. I’ll start you off – Proudhon Criticizes Representative Democracy
       • Draco T Bastard 8.1.1.1

         2 December 2009 at 4:47 pm

         What has the cost of a referenda got to do with anything?

         How else are you going to determine what others in the society want if you’re not doing it any other way? Don’t tell me that you’re going to leave it to the market because that doesn’t work as it needs everybody to have perfect knowledge. Without perfect knowledge the market fails.

         you really haven’t looked into any alternatives

         Yes, I have and, more importantly I’ve thought critically about them, and, quite simply, most of them don’t work.

         Proudhon Criticizes Representative Democracy

         Yeah, I’ve criticised it as well. Tell you something, just because someone wrote something 200 years ago doesn’t make it the be all, end all of wisdom. Usually it makes it wrong.
         • Quoth the Raven 8.1.1.1.1

           2 December 2009 at 7:00 pm

           How else are you going to determine what others in the society want if you’re not doing it any other way?
           This is not about the market. Referenda are used to get the electorates view within a centralised government in a nation state. It’s an absurdity to have rule by referenda within such a system. I’m talking (and you know this) decentralization and participatory democracy. It’s not just about voting it’s about participating in the decision making process and preferably coming to a concensus. I don’t say it’s perfect or appropriate in all circumstances just that it’s better. You know fairness and equality…
           This perfect knowledge argument is just another strawman – free market economists don’t assume this and it simply doesn’t follow that without perfect knowledge the market fails – you could equally say that because the state doesn’t have perfect knowledge all state interferences in the market are doomed to failure. The market is constantly in a state of disequilibrium and people come to discover new information through the market. You should look at the economic calculation problem.
           It was written a long time ago so it must be wrong what a knock-down argument 🙄
           • Draco T Bastard 8.1.1.1.1.1

             2 December 2009 at 9:00 pm

             It’s an absurdity to have rule by referenda within such a system. I’m talking (and you know this) decentralization and participatory democracy. It’s not just about voting it’s about participating in the decision making process and preferably coming to a concensus.

             referenda are an example of how this can be achieved which leads back to:
             Have you ever considered just how much a many to many administration as a social function would cost?

             Then, to participate in a participatory government you’d have to have an understanding of everything (perfect knowledge) else any input you have into the system is going to break the system. I’m not adverse to it, I would like such a democracy but I just can’t see how society can actually afford it. The educational system alone would take up most of the societies GDP.

             So, we’re back to representative democracy where the representatives make the decisions and we give them some general idea as to what we want as it’s the only form of democracy that can be afforded.

             This perfect knowledge argument is just another strawman free market economists don’t assume this and it simply doesn’t follow that without perfect knowledge the market fails

             No, they assume that there are specialists that people listen to such as scientists and I can really see how well that’s worked out over the last few decades. Contrary to popular opinion, the government probably does make better decisions than us on quite a large range of things. Unless they’re National, ACT, Peter Dunne parties and any other political right animal as they happen to think that having infinite choice without knowledge is what everyone needs (repeal of lightbulb standards, emission standards for cars etc, etc).

             economic calculation problem.

             There’s a major problem with that – it assumes that price signals only occur in monetary terms. In other words, it actually was, and is, wrong.

             This doesn’t mean that I’m after a planned economy either. I tend to lean toward a heavily regulated market rather than a “free” market. The regulations are there so that people are working with the knowledge that the specialists provide without having to go to the extra cost of talking to the specialists themselves. I also think there are some things such as telecommunications that are better off being done by the state.
           • Herodotus 8.1.1.1.1.2

             2 December 2009 at 9:38 pm

             “This doesn’t mean that I’m after a planned economy either. I tend to lean toward a heavily regulated market rather than a “free’ market”. What worries me about your statement who decides what form the regulation takes, what the macro goals are. As I am sure to ask this to some contributors here and another view from Act/Nats we would get wildly differing views. In summary I do not trust the right or the left, both sides are the same it is all about control. One wants to control the populist the other to control money, but both want power. So how do we have enough tension within the system to balance this out similar to the senate,tribunes and societial conventons were in roman society. The only society that I know did not have these problems were Sparta, but I donot think they are the template to follow. UnlessDTB you can advise of such to follow up on?
           • Quoth the Raven 8.1.1.1.1.3

             2 December 2009 at 10:21 pm

             DTB – You seem to forget that there is so much less administering and you don’t involve yourself in decisions that don’t affect you. We’re talking about a free society. Remeber this is about less and less control, less governence, less authority.
             Politicians don’t have perfect knowledge, their advisers don’t have perfect knowledge, the technocrats and beauracrats don’t have perfect knowledge. Do you think the cream rises to the top and all these people are hyper-intelligent ubermenschen?
             So, we’re back to representative democracy where the representatives make the decisions and we give them some general idea as to what we want as it’s the only form of democracy that can be afforded.
             Who’s got a better idea of want you want than you? You have the best knowledge of yourself of your desires, your plans, what you value (this applies to the knowledge argument in the market as well).
             Contrary to popular opinion, the government probably does make better decisions than us on quite a large range of things. Unless they’re National, ACT, Peter Dunne parties and any other political right animal as they happen to think that having infinite choice without knowledge is what everyone needs (repeal of lightbulb standards, emission standards for cars etc, etc). Classic 🙂 What is this the system only works if the ‘right people’ are in power?
             There’s a major problem with that it assumes that price signals only occur in monetary terms. In other words, it actually was, and is, wrong.
             It’s not a take down argument, but you need to be arguing how a planned economy (you don’t really because you don’t support a planned economy) can work out price signals monetary or not. I don’t think they can. The argument on this thread is interesting.
             You seem to have a real hang-up about a medium of exchagne i.e., money do you have any alternatives?
           • RedLogix 8.1.1.1.1.4

             2 December 2009 at 10:58 pm

             The need to moderate and direct individual choice is an innate aspects of all human society. The most cursory glance at the world, or any part of history reveals that those unfortunate enough to be ungoverned are invariably subject to the tyranny of pillage, rape and ruin. They are slaves, helpless to the whim of every warlord and passing adventurer; they have no freedom.

             The absence of effective government is such a curse that people have fought, struggled and wrestled with the problem of perfecting it’s aims and methods for millenia.

             Of course there is no such thing a perfect knowledge, or rational behaviour. We never know the future or the full consequences of our actions, but that is scarcely a useful excuse for abdicating the urge to progress, to improve and aim for better. The correct response to inadequate government, is better government… not it’s elimination.
           • Quoth the Raven 8.1.1.1.1.5

             2 December 2009 at 11:31 pm

             The need to moderate and direct individual choice is an innate aspects of all human society.
             Do I need to direct and moderate your choices or is it just that everybody apart from you is bad and untrustworthy?

             The most cursory glance at the world, or any part of history reveals that those unfortunate enough to be ungoverned are invariably subject to the tyranny of pillage, rape and ruin. They are slaves, helpless to the whim of every warlord and passing adventurer; they have no freedom.
             Çayönü? Slaves to whom? Anarchy means no rulers. What I think you’re tyring to argue is that a free society would be vulnerable to the power hungry and devolve into a state. That old argument is covered in lots of places – try here (its from an ansoc perspective).

             Of course there is no such thing a perfect knowledge, or rational behaviour. We never know the future or the full consequences of our actions, but that is scarcely a useful excuse for abdicating the urge to progress, to improve and aim for better.
             Didn’t say it was – strawman. It’s a poor, but sadly oft heard argument either way – that was my point.

             The correct response to inadequate government, is better government not it’s elimination.
             Thoreau –

             I HEARTILY ACCEPT the motto, — “That government is best which governs least”; and I should like to see it acted up to more rapidly and systematically. Carried out, it finally amounts to this, which also I believe, — “That government is best which governs not at all”; and when men are prepared for it, that will be the kind of government which they will have.
             …
             I ask for, not at once no government, but at once a better government. Let every man make known what kind of government would command his respect, and that will be one step toward obtaining it.
           • Draco T Bastard 8.1.1.1.1.6

             3 December 2009 at 9:22 am

             What worries me about your statement who decides what form the regulation takes, what the macro goals are.

             The regulation should take the form of standards so that there’s compatibility and a minimum quality and everyone drives on the same side of the road. Macro goals should be set by the people via some sort of voting

             You seem to forget that there is so much less administering and you don’t involve yourself in decisions that don’t affect you.

             No, you think there is less administering than there is. When you live in a society all decisions by all people affect everyone. AGW is a classic example of this. Living in a society is a compromise and you can’t live outside of one.

             Who’s got a better idea of want you want than you?

             But who’s got the better idea of how to do it, You or the specialist?

             …but you need to be arguing how a planned economy… can work out price signals monetary or not.

             They could do it the old fashioned way by measuring how much real resources it’s going to take compared to how much they have available with a demographic break down (How many have one, How many needs one, what level of repairs and replacement).

             What is this the system only works if the ‘right people’ are in power?

             No, the system only works if the right knowledge is used. Anybody can have that knowledge but some theories, such as the neo-liberal economic theories, should be ignored because they’re obviously wrong.

             “That government is best which governs least’

             Tell me something, what, in your opinion, does this mean? Because it’s what I’ve been describing.
           • Quoth the Raven 8.1.1.1.1.7

             3 December 2009 at 5:13 pm

             No, you think there is less administering than there is. When you live in a society all decisions by all people affect everyone. AGW is a classic example of this. Living in a society is a compromise and you can’t live outside of one.
             Have you heard of the concept of harm? Maybe the harm principle? Principle of non-aggression? Law of equal liberty?

             But who’s got the better idea of how to do it, You or the specialist?
             To do what? What do you want a technocracy? Lets have more and more technocrats we’ll ask Soviet Russia how that worked out.

             They could do it the old fashioned way by measuring how much real resources it’s going to take compared to how much they have available with a demographic break down (How many have one, How many needs one, what level of repairs and replacement).
             You seem to completely ignore value – you know that subjective thing. You should read that thread I linked to above and follow the arguments.

             No, the system only works if the right knowledge is used. Anybody can have that knowledge but some theories, such as the neo-liberal economic theories, should be ignored because they’re obviously wrong.
             Have you ever heard of bias, interpretation, ideology?

             Tell me something, what, in your opinion, does this mean? Because it’s what I’ve been describing.
             I should think it pretty obvious. Govern: To make and administer the public policy and affairs of; to exercise sovereign authority in. To control the actions or behavior of; to keep under control; to restrain etc, etc Less: to smaller extent In lower degree
             It’s certainly not what you’ve been describing. You want more control, more regulation, less liberty, less freedom.
9. uroskin 9

   2 December 2009 at 1:21 pm

   The Government savings I suspect would be larger due to the abolition of the administrations for welfare, super, dole and DPB. All citizens should get it (younger people a fraction based on their age). $10,000 is $200 a week which is more than the current single super, dole or student allowance.
   Wonder how it would affect employees, as mentioned the danger of employers simply cutting $10k off the salary bill. It may spur people to become contractors – with that $10k cushion and the attendant tax breaks on providing the contracting work.
   No mention of GST rises? CGT? Tobin tax?
   • Bright Red 9.1

     2 December 2009 at 1:51 pm

     the post is already pretty long uro. you can’t expect them to cover everything in a single post.

     You would save a few tens of millions, hundred million at best, on MSD administration.
10. roger nome 10

    2 December 2009 at 1:46 pm

    Too right uro. We could get rid of all those Margaret Thacher lookalike WINZ case managers. Oh happy day 🙂
11. Nick C 11

    2 December 2009 at 2:37 pm

    Good economic analysis Marty. And I thought leftists didnt understand the concept of a dead weight loss!

    My only critisism would be that theres no reason that the two proposals need to be considered togeather (you can have a capital tax without a GMI and vise versa). By argueing them as a package you confuse the debate and perhaps put off people who would support one but not the other. E.G. i would support a capital gains tax but am yet to be convinced on a GMI.
12. Ryan 12

    2 December 2009 at 4:49 pm

    Would moving the tax on companies from profit to capital cause changes in which industries are more profitable?

    For example, would industries with lower machinary and land requirements (like software development) become more profitable relative to manufacturing, farming, etc?

    If so, would that be a good thing or a bad thing for the economy?
13. Herodotus 13

    2 December 2009 at 7:41 pm

    This ideas ounds to me a cross between The Doomsday Book & Revelations. First a stocktake on all our possessions, then a way of controlling our money. Big brother really does want to know all about us and with this suggestion all for $10k p.a. which we pay for.
    Who is there no discussion that I can see what Govt is for what should they control and how should the countrys’ social conscience in assist those less unfortunate and need assistance.
    • Marty G 13.1

      4 December 2009 at 8:42 am

      they already have all that information, this isn’t big brother stuff.

      I can’t understand the secod sentence.

      It’s interesting that this is the only comment that objects to the idea, from left and right.
14. Clint Heine 14

    4 December 2009 at 12:05 am

    I remember an MP floating this idea many years ago, he went overseas and got stabbed in the back, leading to the end of the 4th Labour Government. 🙂
    • felix 14.1

      4 December 2009 at 12:45 am

      Yeah, except Morgan’s idea is to pay for it by taxing the rich on their assets, whereas your hero’s idea was to pay for it by eliminating virtually every social service in the country.

      Spot the difference Clint you ignorant prick? 🙂
      • querulous 14.1.1

        4 December 2009 at 5:44 am

        Felix you are an angry ignorant lippy little cunt.
        • Marty G 14.1.1.1

          4 December 2009 at 8:32 am

          now. now. language
    • lprent 14.2

      4 December 2009 at 3:37 am

      Sounds like a PM….

      Nah – that was National party and from someone not known for many ideas
15. Angela 15

    20 December 2009 at 12:12 am

    very good point, I hope they reach a decision soon. In the mean time, I think that everyone should exert effort to own money. I started a small business couple of years ago and I had Small Capital to help me with the management and funding issues. it is a great service and every small business should give it a try.
    • BLiP 15.1

      20 December 2009 at 12:15 am

      w t f !!
    • Draco T Bastard 15.2

      20 December 2009 at 1:24 am

      Obviously spam.

Links to post

1. Vincent Leleux: posted on 2 December 2009 at 5:07 am
2. Get off my lawn « The Dim-Post: posted on 2 December 2009 at 11:32 am
3. TVI Pay It Forward: posted on 2 December 2009 at 5:06 pm
4. Christine Brandt: posted on 2 December 2009 at 5:17 pm
5. Personal Development: posted on 2 December 2009 at 5:18 pm

• Comments are now closed

• Log in
• Donate
• Contribute post

• Articles RSS