Tax avoiders bad: tax takers good?

Mark Hubbard drew my attention to a post about tax avoidance by Massey University tax lecturer Deborah Russell:

Despite everything you might hear, most New Zealanders mostly pay their taxes, on time and in full. We’ve got a very good compliance rate here. Somewhere between 80% and 90% of taxpayers pay their tax on time, and over 60% file their returns on time.

Like we have any option? The case for citizen buy-in is impossible to assess or prove when the law forbids choice.

People who won’t pay their taxes free ride on other New Zealanders.
Tax aoviders not only free ride on other New Zealanders, but they undermine the whole tax system. Tax compliance is a trust game: if people think that other people comply with tax law, then they are more inclined to do so themselves. But if they think that other people are rorting the system, and not paying taxes, and squirreling money away, then they lose confidence in the system, and start to avoid paying taxes themselves. The reasoning is straightforward: who wants to be the only schmuck left.

This interests me because it's exactly the same thought process I've heard blamed for benefit exploitation in Europe. The reason for the decades-long increase in people relying on state hand-outs is attributed to progressive capitulation from those thinking, "If you can't beat them, join them." The more normalised living off the state becomes, the greater the benefit uptake will be.

The one defense that these tax avoiders might try is that their activities are perfectly legal...But even if the procedures used are legal, it’s not clear that they are ethically acceptable. This is in fact the closest I can get to understanding exactly what a rort is: it’s something that is technically legal, but nevertheless pushes the law to such an extent that it is immoral.

Again the "perfectly legal" tax avoidance defence has its parallel with the 'perfectly entitled' tax take defence. Many have become far more concerned with legal entitlement to benefits than moral.

But look what follows:

We’ve heard a great deal of nasty rhetoric about people on benefits in recent years, but very little about the scungy behaviour of tax avoiders and tax evaders.

By Russell's logic, we should be hearing "nasty rhetoric about people on benefits" if the behaviour of tax avoiders and evaders is also "scungy". If people who don't pay tax are "free riding" so too are those who take it when they do not need to.

The problem is both groups are failing to accept her "common good" philosophy.

This isn't a defence of greed or laziness. But without the "common good" ends realised only via state force, those character traits would be visited upon their bearers - not you and I.

That portrait of Margaret

Back in my 'student' days, art student that is, back when I was reasonably apolitical, I wanted to paint a large scale portrait of someone famous. It was an exercise in capturing a likeness really. I can't recall why or where but I came accross this amazing photo of Margaret Thatcher back in the 'big hair' days.  It was the composition that drew me in; that and the expression in her eyes. Now I wouldn't even know where to find the original image though a google search might locate it.

It seems to me it could do with a few more coats and is far more detailed than anything I'd produce today. It lacks weight. Perhaps, typically, I lost interest when it came to the clothing. But I wasn't displeased with it at the time.

Of course it unleashed a few derisive sneers and raised eyebrows amongst some of my folk. Not for the attempted grandness but because I grew up in a 1960s Labour household where Harold Wilson had been loved, like Mickey Savage. Benevolent Harry and his lovely labradors I remember.

My parents hated Thatcher. Or that's what I recall. Though I never knew or cared why. They just gave me the overwhelming impression that she was callous and hard. As children, even young adults, do, I believed them without giving it very much thought.

Later though realised what an amazingly determined and steely character she was. And of course I came to understand and believe in the same political and philosophical values she espoused - free markets and individualism. "There is no such thing as society..." doesn't mean every man is an island. It means that in the final analysis any true right or responsibility lies with the individual. Assign them to groups and they cause conflict.

So I dragged out my portrait today and we'll have it sitting on the mantelpiece in her honour. RIP Maggie.

4 in 5 Maori children born outside marriage

The earliest statistics kept on Maori ex-nuptial births were in 1968. The percentage of Maori children born outside marriage would have been even lower pre-1968.

Does marriage matter? Of course it does. Married people tend to be wealthier, are more likely to stay together, and provide their children with greater security and opportunity. A great deal of Maori disadvantage is due to the picture below.

What's wrong with Radio Live?

The NZ Herald reports that latest Auckland audience polling shows Radio Live losing listeners in a big way. Marcus Lush, Michael Laws and Willie and JT all lost significant audience share. And it isn't just Aucklanders tuning out.

Laws may have lost audience because he was leaving. People anticipating his departure began looking for an alternative earlier than they needed to? I listened to Laws sporadically usually because he was running a subject that interested me and he didn't suffer fools.

Lush is an unknown but from the promos for his show I've never been tempted. Not enough gravitas in his presentation or content.

Willie and JT are entertaining at times but the (sometimes juvenile) slagging each other off wears thin. A lack of professionalism and repetition of race-related comment make Willie tiresome. JT has a wider field of knowledge and depth of insight but seems to mentally (and physically) disappear quite often. His solo shows make for more compelling listening. Their political panel show frequently degenerates into the verbal equivalent of a bar brawl. Again, I'm only a sporadic listener.

I tuned into Sean Plunket a couple of times during his first week. His style was unchanged since hosting NewstalkZB in Wellington 2011-12 during which time I started to gravitate over to Laws and RadioLive. Perhaps if he incorporates more interviews and news content - competing directly with his nemesis, Radio NZ - he could pull in people like me who refuse to listen to state radio but don't necessarily want music.

Duncan Garner is totally not my cup of tea. Three or four times I've persevered through the hour before Larry Williams starts on NewstalkZB. Garner gets an idea or takes a position (eg a nasty set against Susan Devoy) than asks people to text their support - repeatedly. He has a motor-mouth but not a motor-brain. Shallow and disappointing.

I've listened to RadioLive since the Radio Pacific days. Through many hosts like Jenny Anderson, a consummate professional, Paul Henry, very quirky and comical then, John Banks, cutting and polarising, Alan Dick, personable and forthright.

They just don't have any talent right now.  Perhaps they get what they pay for. In which case it's a downward spiral.

(Mea culpa to Mitch Harris who does run a good show when he gets behind the mike.)

Bulls**t detector

Here's a bit of fun. The NZ Initiative asks,

"How full of it are you? Run your writing (or indeed any writing at all) through this website to get a bulls**t reading. "


I've scored from .17 to .22 - apparently showing "only a few indications of bullshit language" to "some signs but within acceptable limits."

Truth column March 28 - April 3

My Truth column for March 28 - April 3

Labour was once proudly the party for the workers; the triers and the battlers.
That’s how our oldest living generation remembers them.  But, over the decades they’ve morphed into the party that espouses entitlements and rights before responsibilities.  They shut down free-thinkers with political correctness, but champion free-riders with their promotion of generous, unconditional social security. If you doubt me, consider this recent parliamentary exchange between social development minister Paula Bennett, and Labour’s Jacinda Ardern, complaining about sole-parent benefit reforms:

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"I don't like the income tax"

Another great quote dug up by the Freedom Foundation:

I don't like the income tax. Every time we talk about these taxes we get around to the idea of "from each according to his capacity and to each according to his needs." That's socialism. It's written in the Communist Manifesto. Maybe we ought to see that every person who gets a tax return receives a copy of the Communist Manifesto with it so he can see what's happening to him.
 

- T. Coleman Andrews, Commissioner of Internal Revenue, U.S. News & World Report [May 25, 1956]

UK Chancellor defends welfare reform

The UK Chancellor is the equivalent of our Finance Minister. A report from today's Scotsman:

GEORGE Osborne yesterday attacked critics of the UK government’s welfare reform claiming they were talking “ill-informed rubbish” as he defended his controversial policies.
The Chancellor said the welfare system was “fundamentally broken” and he was “proud” of the stance being taken by the government, which has come in for severe criticism for introducing such measures as the “bedroom tax”.
Speaking at a Morrisons’ distribution depot in Kent, Mr Osborne also defended the decision to cut tax for higher earners by slashing the top rate.
“In a modern, global economy where people can move anywhere in the world, you cannot have a top rate of tax that discourages people from living here, from setting up businesses here, investing here, creating jobs here.”
His speech provoked a furious backlash in Scotland where the SNP claimed 105,000 households will be £600 a year worse off as a result of the changes.
But Mr Osborne said: “Those who campaign against a cap on benefits for families who aren’t working are completely out of touch with how the millions of working families, who pay the taxes to fund these benefits, feel about this.
“I’m proud of what we’re doing to restore some common sense and control on costs. In recent days we have heard a lot of, frankly, ill-informed rubbish about these welfare reforms.
“Some have said it’s the end of the welfare state. That is shrill, headline-seeking nonsense. I will tell you what is true. Taxpayers don’t think the welfare state works properly anymore.”
Mr Osborne said the system had not only become unaffordable, it was now so complicated people were better off on the dole rather than going to work.
“These vested interests always complain, with depressingly predictable outrage, about every change to a system which is failing. I want to take the argument to them,” he said.
“Because defending every line item of welfare spending isn’t credible in the current economic environment. Because defending benefits that trap people in poverty and penalise work is defending the indefensible.
“The benefit system is broken; it penalises those who try to do the right thing; and the British people badly want it fixed.”

Minister Bennett mistaken or misled

A 'welfare commentator' must be politically even-handed. If Jacinda Ardern gets it wrong I'm quick to criticise.

When it was reported  Paula Bennett said, "There were 659 subsequent children born to parents already claiming a benefit this January," I knew the number was either aberrant or wrong.

So I queried the number with MSD and received this response,

"to answer your question the number does not necessarily relate to children born in January - but rather children who were to be added, in January, to client benefits as subsequent children."

So then I asked,

What were the ages of the subsequent  children added to an existing benefit in January?

 but was told

unfortunately we are not able to provide an age breakdown for subsequent children

A subsequent child could be added to a foster carer's benefit; or moved into a 'safer' family at CYF instigation; moved from a mother to a father; adopted (particularly whangai) and so on.

Subsequent babies born directly onto a  benefit number annually around 4,800 or
400 monthly.

 "As the second round of welfare reforms come back before Parliament, Social Development Minister Paula Bennett says the 650 children born to women already claiming a benefit in January are reason enough for her tough reforms"

250 would represent an increase of 62 percent.

There is no need to exaggerate  statistics to justify crucial reforms, especially when inaccurate claims could undermine support.

Pay your weight

What's the difference between carrying extra kilos in baggage and extra kilos on your person, except you get charged for the first? The economies of air travel are directly linked to weight carried and in an increasingly tight market I'd expect this policy to become more widespread. It will only take one major airline to adopt it, making them more attractive to most flyers, and the competition won't be able to afford not to. The NZ Herald is running a poll:

Is it fair to charge overweight passengers more to fly?

1500–1550 votes

Yes - it should be a policy on all airlines.

69%

Maybe - but only a small fee.

12%

No - it's discrimination.

19%

Reducing inequality among road injured

Data has been available for some time that shows Maori are statistically more likely to be involved in a road accident. Now the University of Auckland has measured the risk for Maori children in that region:

Maori children are 65 per cent more likely to be killed or hurt on our roads than children of other ethnicities.

This is synonymous with heightened risk of poverty, neglect, abuse, ill-health, educational under-achievement,  involvement with crime, etc. It is hardly surprising. What captured me was this sentence:

University of Auckland researcher Dr Jamie Hosking said the report highlighted what needed to be done to reduce inequality among those injured.

Another 'inequality obsessed' academic not thinking through the implications of his words.

A reduction in inequality amongst the injured could be achieved if more 'rich' people had accidents. Or more Asians, who are apparently the safest road users.

The goal is surely a reduction of injuries irrespective of ethnicity or economic status.

Does he come out with this sanitised-speak simply to avoid saying, we need to see an improvement in the safety practices around and on roads by Maori, and particularly Maori parents?


Of course describing road-risk  as an 'inequality' problem segues nicely into the logical next step which is, naturally enough, to spend more money righting it.

Calls for more spending/borrowing are astonishing

It is not my primary intention to argue against tax cuts but I couldn't accept the PSA Secretary Richard Wagstaff's rationale for extending Paid Parental Leave. My response in Monday's DomPost:

DomPost: Early work tests for adding children to a benefit fair

Yesterday's DomPost editorial was pleasantly forthright.

After the usual preamble about welfare being a social contract which most beneficiaries do not exploit, it continues,

"Sadly, however, some beneficiaries see it as their God-given right to remain on welfare for life and not only make no effort to improve their lot, but add to the burden on taxpayers.
They include women on the domestic purposes benefit who seem to believe they can have as many children as they want while remaining dependent on the state, and that workers will be happy to pay for them to have that privilege...."

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The falling teenage birth rate

A commentor yesterday was surprised that the teenage birth rate is dropping.

I've extracted the data from Statistics NZ and charted them. The first chart shows the birth rate per 15-19 year-olds has been dropping since 2008. The Maori rate is much higher which left me with the question, is the total rate falling only because the Maori rate is?

So I've charted births in absolute numbers. There's a slight quirk in that the Maori data is for births under twenty but there are very few under 15 so the line wouldn't change significantly.

Births for both Maori and non-Maori are dropping. I didn't chart the Pacific and Asian data but the trend is the same. So the reasons, whatever they are, are at least cross-cultural. That's a start. It'll be fascinating to see where the lines go in the next seven years.

Update. The birth rates are falling in every age group except 40 plus. Better half has just said to me it's the recession and that the same thing happened in the Depression. I imagine that the 40 plus females are going against the trend because they are running out of time and have better financial means. Also WFF introduced in 2005 seemed to produce a bit of a temporary baby boom, so a return to more 'normal' rates would be seen as a fall. But the teenage birth in 2012 was the lowest it's ever been (at least according to data going back to 1962 and you wouldn't expect it to be lower in times when people married and started families relatively young).

"You shouldn't leave a man alone with a baby"

Whaleoil has blogged a YouTube clip supposed to provoke outrage against male physical play with a baby.

By coincidence we had a visiting 15 month-old today.

My (almost) 19 year-old son looked after her from the outset. Her step Granddad was doing swing rides with secure hands, they encouragingly guided her up and down steps, they 'danced' to get her dancing. She loved every moment.

Any 'movement' against men looking after babies is tragic.

Reported progress with youth

The current government has been keen to increasingly involve the private sector  in a number of areas. MSD has just reported on the progress of their Social Sector trials which have been running in half a dozen locations - Taumarunui, Tokoroa, Te Kuiti, Kawerau, Levin and Gore - and will be extended and rolled out elsewhere. They involve smallish communities finding their own solutions to problem youth. Some of the trials are led by employed individuals, others by charitable trusts. They build on and co-ordinate  existing services and programmes which are highly practical. Apparently:

Momentum around the Social Sector Trials is strong. Anecdotal evidence suggests increased levels of cooperation, collaboration, transparency and accountability around programmes and services as well as progress towards impacts on outcomes.
Outcomes reported at the local level include:

• truancy levels trending downwards
• disengaged young people being identified and supported into engagement in education, training and employment (through new local programmes, advocacy, and exposure to opportunities)
• young people who would not normally access services being able to in their own environment (nurses, doctors, youth workers, and social workers being available in schools)
• individual plans being put in place for young people with high and complex needs
• young people having access to positive opportunities such as holiday programmes, youth hubs, intensive mentoring and community events
• more young people accessing help for drug and alcohol problems
• young people being supported to pay off justice sector fines and be supported through activities such as drivers licensing to reduce the possibility of fines occurring
• young people knowing how/where to access programmes and services

It's all very paternalistic but we are talking 12-18 year-olds. Someone has to step in when normal parenting is absent. Just a thought and mentioned before, I've been scratching my head over the dropping teenage birthrate. These programmes may be one factor.

Truth column March 21-27

My Truth column from March 21-27:

It is my fervent hope that National exercises its financial veto against extending paid parental leave from 14 to 26 weeks.
Apparently, many mums and dads and babies turned up at the select committee last week to support Sue Moroney’s member’s bill.
“Think of the children,” they said in one voice.
Well why don’t you, the parent, think about the children?

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DI rolls "heading for collapse" in US?

The NCPA has a piece on the soaring disability insurance numbers in the US:

Since 1970, the number of individuals receiving DI has grown sixfold (from 1.4 million to 8.8 million), and the program expenses have grown tenfold, which is unsustainable.

How does NZ compare?

Using sickness and invalid benefit annual totals, the numbers have grown from 14,310 in 1970 to 147,029 in 2011 - more than ten-fold. Measured against the total population there are 28 claimants per 1,000 in the US compared to 33 per 1,000 here.

(That ignores long-term ACC claimants.)

Meanwhile both country's populations have grown by around 55 percent over the same period.

Still, neither country's problem is as big as some EU countries.

She believed the rhetoric

When was the last time you heard someone say "It takes a village to raise a child"? Not long ago I bet. Or "... children are a community responsibility". All the time. These are OUR children we are told.

And that's what the mother of a baby left in a Porirua Pack'n.Save carpark thought too. Baby all tucked up and sleeping peacefully, she left a note asking anyone who saw it wake ring her cellphone.

But wait now for the howls of outrage from the collectivists....

Rubbish from Russel Norman

Green co-leader Russel Norman says:

90 percent of Kiwis not interested in Key’s asset sales

He bases this on the 425,000 registered expressions of interest as a share of the total population. That includes the million or so children.

Roughly, there are around 1.5 million households in New Zealand with an average of 3 occupants. In general only one occupant, the main bread-winner, would make the expression of interest. So 425,000 expressions could easily represent interest from 1, 2, 3 or more others.

Being as loose as Russel Norman with statistics I could simply say the expression of interest represents 28 percent of households. And then claim that  72 percent of Kiwis aren't interested.

Of course that would still be untrue as many people would be interested but 1/ unable to afford the shares, or 2/ simply not registered their interest. For instance, I'm still thinking about it.

I haven't registered an interest in buying Mighty River shares but I support their sale and asset sales in general.

It's just desperate and dishonest stuff from Norman. It must be humiliating to have to chase after the votes of fools. Only an idiot would believe this claim.