Thinking with no future

Sue Bradford: "It's time employers started to pay their fair share and accepted that wages should be high enough to live on. The taxpayer should not continue to be expected to subsidise business to the extent they are at present through top-up programmes like Working for Families and the Accommodation Supplement. These are just forms of unrecognised corporate welfare."

Employee taxpayers fund the WFF programme and are often also beneficiaries of it. Employer taxpayers also fund WFF but will generally not be a beneficiaries of it. Bradford wants the employer to pay higher wages, in which case his income and/or profits will fall and he will pay less tax. The employees, with increased income, will pay more tax and lose eligibility for WFF. Neither the employer nor the employee is better off. All that has been satisfied is the Green's ideological yearning to see employers punished.

If the Greens were genuine in their desire to see take-home wages rise they would back tax cuts and reduce or abolish these expensive "income -churning" govt-run programmes which do nothing but reduce productivity.

This happens in two ways; 1/ by giving people money to do nothing (why would a household's potential second worker take a part-time job if they are going to sacrifice their WFF entitlements?) and 2/ they use up valuable and scarce labour resources creating non-productive make-work jobs.

Many economists talk about New Zealand's urgent need to lift productivity. Expanding government redistributionist schemes is not the way to do it.

Footnote; I am reminded of an exchange I had with Trevor Mallard during the election camapign. We were seated together and during one candidate's presentation he quietly said, "When I started work the top tax rate was around 70 percent."
"Which is about what effective marginal tax rates will be under Working for Families," I answered. "Aaah. But at least you can work your way out of it," he replied. "Why would you want to?" I asked.