A comment by Greens co-leader Russel Norman on Radio New Zealand’s Summer Report this morning laid bare the envy and resentment that lies at the heart of the left’s approach to wealth and taxation.
Norman complained that New Zealand already had “a very significant problem” with inequality, then attacked the report of the Taxation Working Group for recommending that the top personal tax rate be reduced from 38 percent. If the top rate is reduced, Norman suggests, we will have “greater inequality”.
What he seems to be saying is that making tax rates more equal promotes inequality. This is a miracle of inverted logic. It confirms that in the eyes of the left, inequality isn’t inequality as long as it’s the wealthy, or anyone the left perceives as being wealthy, who are being treated detrimentally.
The Taxation Working Group isn't suggesting that lower-income earners should be taxed more to offset reduced taxation on high incomes. They would be no worse off. But this is still too much for Norman, for whom it’s an article of faith that the better-off should be made to pay for their success.
The Labour government in 2000 gave legislative effect to this warped mindset when it penalised high-income earners by increasing the top personal tax rate from 33 to 38 percent. It was an envy tax, pure and simple – a vindictive gesture that grew out of the same ideological conviction that treats business not as a creator of wealth which benefits the entire community, but as a greedy monster that must be controlled and punished for its wickedness.
Even supposedly conservative governments subscribe, at least in part, to the notion that the wealthy are fair game. Progressive taxation – the system under which your tax rate increases the more you earn – is so firmly embedded in liberal democracies that hardly anyone bothers to question it. Yet the arguments in its favour have nothing to do with fairness or even economic efficiency. Progressive taxation springs from a mixture of the pragmatic (we’ll tax the rich more because they can afford to pay it) and the ideological (we’ll take money from the rich because they don’t deserve it, and in the process we’ll create the perfect society where everyone is equal). Neither seems a particularly sound, still less moral, justification.