Friday, January 18, 2008

Tax cuts versus tax rebates

Here is a nice, simple commentary from the Washington Times about why tax cuts are preferable to tax rebates. That's an issue which will be integral to this year's election as National offers its alternative to Working For Families.

Remember too that whatever is economically preferable is also, in the long run, socially preferable. The Left seem to think that the goal of 'social justice' through redistribution, can be wrung out of the economy by force and the process isn't damaging.

The current government has two major aims. One is to lift economic growth. They don't like tax cuts so they need to increase the size of the workforce.

But the second aim is to put more money into young families with children with no commensurate work effort on the parent's part. Hence they naturally work less.

These two goals are antithetical through the present method of redistribution. The obvious way to achieve both is to let people keep more of their money in the first place.

2 comments:

Anonymous said...

"The current government has two major aims. One is to lift economic growth. They don't like tax cuts so they need to increase the size of the workforce."

Increasing the size of the workforce might lift economic growth if those jobs were in the productive sector. Most of the increase in employment is in unproductive public service jobs, a means of concealing embarassing unemployment statistics. However it does use up tax surpluses and creates a "voting dependency".

"But the second aim is to put more money into young families with children with no commensurate work effort on the parent's part. Hence they naturally work less."

This device creates a "voting dependency" in the short term, but in the longer term creates a Labour household from which future votes are likely to emerge as the children reach voting age.

"These two goals are antithetical through the present method of redistribution. The obvious way to achieve both is to let people keep more of their money in the first place."

The two goals are redistribution and retention of electoral power.
Letting people keep more of their own money is a preposterous suggestion.

Lindsay said...

Anon, in the case of this govt cynicism = reality. My oversight.