Tuesday, May 27, 2014

Taxing our way into prosperity?

A letter I wrote was published in the DomPost this morning -  but only half of it.

This is the entire letter:

Dear Editor

Silvio Famularo (May 24) wrote that benefits should be lifted because then poor people can spend more, increasing demand for goods and services, and creating more jobs.

To increase benefit expenditure the government would have to increase taxation. That means taking more money off people will in turn have less to spend on the same goods and services. Perhaps Silvio intended more tax on the wealthy or companies. But that will result in less support for high value commodities, less profit and less investment. Ultimately, fewer jobs.

Winston Churchill said, "We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle".


JC said...

Its my experience that one of the most pernicious myths of a people is that the wealthy neither need or deserve natural justice which means there's nothing wrong in taxing them harder than anyone else.

Apart from the proven negative effects of such policies (the Laffer Curve being an example) its a screwed up mentality that encourages welfare dependency, Govt profligacy and Noble Corruption Cause and does little to raise the general standard of living and enhances stagnation.


Anonymous said...

Sorry Lindsay but I have to agree with Silvio. The beneficiaries do deserve more money. Where I differ from him is that we shouldn't just be giving them the exra money they deserve. We need to make sure the recipients know the value of the extra funds. The best way I can see this being done is by making all beneficiaries work for their own benefit. That way they will know the value of their own efforts.
I will admit that there are some draw backs to this as we know that some will work harder than others, so we need to make sure the amount they are paid are aligned with the amount of work and productivity that they individually do. That way we won't have freeloaders being carried by the hard workers,
I don't think this work should be limited to the government alone either. For many years the private sector has shown that they are better at meeting demand and supply in all things economic. Indeed the amount of work provided by the public sector should only be a smaller fraction since we run the risk of taxing the productive sector to fund make work schemes.
Besides which, the private sector can fund the beneficiaries to greater extent when the work they do means the business providing the welfare have greater productivity and returns on investment.
Lastely in an effort to reduce the costs to this generous scheme that Silvio has wanted, we should make it compulsory. If any beneficiaries don't engage in the scheme they should have their benefits stopped after a suitably short term unless they have a real impairment that stops their enrolment of the social security scheme.

Brian M.

Lindsay Mitchell said...

Apart from the compulsory aspect, aren't you describing the existing public service and private employment market?

Anonymous said...

Yes Lindsay. The point I have poorly conveyed was that work is the best social security scheme. Sometimes my warped sense of humour is a bit vague.

Regards, Brian M.