REDUCING INEQUALITY [email protected]9/5/14.VATICAN CITY (AP) - Pope Francis called Friday for governments to redistribute wealth to the poor in a new spirit of generosity to help curb the "economy of exclusion" that is taking hold today. 9/12/14.The Guardian quoted Angel Gurría, the OECD’s secretary general, who said: “This compelling evidence proves that addressing high and growing inequality is critical to promote strong and sustained growth and needs to be at the centre of the policy debate. Countries that promote equal opportunity for all from an early age are those that will grow and prosper.”
9/5/14.VATICAN CITY (AP) - Pope Francis called Friday for governments to redistribute wealth to
the poor in a new spirit of generosity to help curb the "economy of exclusion" that is taking hold
today.
9/12/14.The Guardian quoted Angel Gurría, the OECD’s secretary general, who said: “This
compelling evidence proves that addressing high and growing inequality is critical to promote strong and sustained growth and needs to be at the centre of the policy debate. Countries that promote equal opportunity for all from an early age are those that
will grow and prosper.”
The Inequality of Wealth
How do we reduce inequality?
Free education, health care, libraries, transport, swimming pools, parks,
child care etc are part of it.
Benefits are part of it.
Superannuation is a Universal Basic Income(UBI) which Depends on Age. Not on wealth.
Or other income. Super is a great idea for a benefit.
How can we extend this idea and pay for it?
A Matter of BalanceLocal Bodies tax property.Government taxes Income
INCOME TAX ASSET TAX UBI
Above $70,000/yr Income tax is 33%Tax on the first $70,000 is only $14020.
If all the $70,000 was taxed at 33% the tax would be $23,100 ($9080 more).
Effectively, everyone above $70,000 pays 33% tax on all income but gets paid
$9080.This is what I suggest as a UBI.
Why dont we do this for Everyone?What would happen if we did???
A Concept of Fairness
Notice that the $9080 is a tax-free gift for
those earning more than $70,000 per year. It does not change with assets or higher
incomes. Just as I suggest for UBI!
Consider a Uniform Income Tax of 33%. And a Tax-free UBI $9080 for 18 to 64 year-olds.
Let me show you how they would be affected.
And then what would happen if we did the same thing for Superannuitants
Some Advantages of a UBI.
Stop “Beneficiary bashing” & surveillance
Reduce inequality & child poverty with UBIs for them
Save most administration costs of benefits
Assist with ACC problems & Student loans
Remove the “poverty trap”-UNEMPLOYMENT IS NOT WORKING
CREATE AN INNOVATION CLIMATE
What will a UBI cost/save?
Depends on the level and what benefits can be abandoned.
Child and youth UBI can replace WFF and will then cover the children of the
unemployed
Hardship topups will still be needed
Many decisions to make
Some Principles
The UBI itself will be tax free. Paid only to people. The tax rate will be the same for all
people,companies and trusts
The level of the UBI will depend only on age
The level of the UBI will be different for children, youths and adults.
Many benefits can be removed - saving administration costs and relieving stress for
the beneficiaries.
Single 18-19 at home $7304 away from home $9175
Single 20-24 $9175 Single 25 + $10956
Married, civil union,or defacto (with children or not) $9175 All after tax. Any level of assets.
Current Job Seeker Benefits/Yr
Funding with a tax on assetsWEALTH MUST WORK
Local Bodies set rates on property values
Government should do the same– Asset Tax
Catches overseas owners, encourages efficient capital use & reduces inequality.
Paid by those who can afford it
Hard to avoid
A Simple UBI and Asset Tax.Just for illustration
Give 4.5 million people $1,000/year each.Dont change any benefits or other taxes.
Cost is 4500 million dollars.
Spread over $1,211 BILLION rateable value we need $3.72 Asset Tax per $1000 of property
So all those with less than $269,000 of property will have change from the $1000 but at $5million of property they will lose $17,750.
Consider a couple with 2 children getting a UBI of $1,000 per year each or $4,000 in total.
Asset Tax Exemptions for Family Homes are Unfair
•Home values vary enormously
•Nearly 40% of people rent their home
•Any tax on property will raise rents
•Renters are disadvantaged versus home owners
Compensate for some Asset Tax
Provide Tax Relief by, say, the Asset Tax on $200,000
•Then 2 people cover a $400,000 home
•Pay Tax Relief to all over 17 years old – added to UBI whether home owner or not
•As with GST we get a very simple tax collection system.
Taxes and Benefits must be taken together
The Child Poverty Action Group have documented that if a working father leaves the family and the mother is not working:-
Work and Income peer into the bedrooms of the poor to see if the sole parent is co-habiting and therefore not entitled to a benefit. On the other hand the IRD, even less qualified in social matters, peers into the bedrooms of the poor to see if she is not co-habiting so that she can be denied the IWTC (In Work Tax Credit) for her children.
Balancing the UBI against Universal Income Tax (UIT) and Asset Tax.
I will give two examples. Each with age 0 to 12 UBI of $3000 and 13 to 17 UBI of $5000.
For 18 to 64 year-olds with 35% UIT, UBI of $9080 and Tax Relief of 1770.
For Superannuitants with the same UIT & Tax Relief
WE CAN CHOOSE HOW FAR WE WANT TO REDUCE INEQUALITY OF WEALTH &
INCOME
A Human RightA UBI is a natural progression in defining
human rights.
• People were chattels of others• Male landowners vote
• Women vote• Social Welfare
We need a new SOCIAL CONTRACT
People should be able to live with dignity.
Many Advocates for a UBI
National Council of Women of New Zealand (April 2010 Circular)
Gareth Morgan & Susan Guthrie
The Swiss are to have a vote
Thomas Piketty advocates a global tax on wealth
“Inclusive Capitalism” is a term looking for a meaning.
Summing upAn Asset Tax can be used to fund the
UBI and reduce inequality.The proposed changes will greatly
simplify our tax and benefit systems.
NZ should plan transition to a UBIUBI & Tax levels need to be chosen
Please use your facebook & other contacts to spread the word
Use http://perce.harpham.co.nz
Some Frequently Asked QuestionsWhat about the bludgers?
Why will companies stay here?Why not tax all wealth?
Why not deduct mortgages from Assets?Why not tax shares & loans?
How can we transition?Where are the jobs?
Why not tax all assets used in companies?What happens to the State servants?
