Who would be left to pay? – Updated

31/08/2011

Susan Guthrie and Gareth Morgan have come up with a grand plan which they say will ensure equal opportunity and choice for all:

A total rewrite of our taxation and transfer policies to correct the tax dodges available to owners of capital, to explicitly recognise the importance of non-paid work, and to foster equal opportunities for all citizens to participate in society and the wider economy, will go a long way to reasserting the values of egalitarian New Zealand.

In short, the following package addresses what is needed to get back on this path, while ensuring no blowout of government finances.

– An unconditional basic income (UBI) for every adult – $11,000 after tax, whether you’re in the paid workforce or not. This enables more people to choose paid or unpaid work – or not to work at all. Most importantly more would be able to pursue what they want to do, rather than what financial penury forces them to do. We are a rich society so to compel people to opt for paid work or face the stigma of qualifying for a benefit has no logic.

Let’s look at that last sentence again:

We are a rich society so to compel people to opt for paid work or face the stigma of qualifying for a benefit has no logic.

It depends on how you define rich.

We are a country blessed with a wealth of natural resources and human talent but we don’t have the income to pay for all the first world services and infrastructure most of us regard as necessities.

That income comes from work, particularly work which leads to exports, savings and investment from which tax is paid.

Anyone is free now to choose not to work with the very reasonable proviso that they don’t expect the rest of us to pay them when they exercise that choice.

Some people are unable to work and that is why we need a welfare system as a safety net.

But giving anyone who could work the option to do so or be supported by the rest of us is madness.

Why would anyone bother to work unless they could get considerably more than they were being paid for pleasing themselves and who would be left to pay not just for them but little things like health, education, roads and other services and infrastructure which we all net taxpayers contribute to now?

This is not a recipe for equal opportunity and choice, it’s a recipe for social and economic disaster.

UPDATE: Lindsay Mitchell points out other flaws – including that invalids and sickness beneficiaries would be much worse-off.


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