“So you think a tax cut program funded by cutting kiwisaver is a good thing?”

Yes.

“So while we are fantasizing about what the government SHOULD do what do you think about universality vs. means testing and a basic income?”

Universality – yes, as targeting through means testing is atrocious. However, I can accept that there can be a case for means testing.

Basic income – very much agree. I feel that it is part of our social contract as a society to provide a basic living standard to people. If this is the case we should do it directly. I can understand when people don’t agree with me on this though.

“I think the more important reason for cutting EMTRs is to drive investment and savings rather than labour supply.”

So you think a tax cut program funded by cutting kiwisaver is a good thing?

Increasing GST just is not politically viable. So while we are fantasizing about what the government SHOULD do what do you think about universality vs. means testing and a basic income?

Quibble? I felt it was a slight side track is all as my post has nothing to do with prior tax cuts, which were the result of a democratic election (which should represent social preferences to some degree).

However, as I said earlier, my marginal tax rate is virtually unchanged as the ACC levy also rose.

Personally, I do not believe that labour supply is that responsive to EMTRs anyway (but don’t tell my brother that 😛 ) – I think the more important reason for cutting EMTRs is to drive investment and savings rather than labour supply.

But to reiterate – I am not trying to debate the value of progressivity here. I have written posts supporting progressivity before, even on efficiency grounds, as demand for skilled labour is relatively inelastic.

When I discussed the GST rate increase I could have also discussed an increase in income taxes, or externality taxes – ultimately I just wanted a tax that would fill the spending hole (which I assumed would not be cut) but I didn’t want it introduced straight away because of the belief that we are in a “demand deficient” recession. Putting a tax in the future MIGHT actually help us pull out of the current recession as well as preventing a credit downgrade.

Governments do decrease tax rates – otherwise we would have a 90% top rate at the moment 😛

Problem is, governments never reduce tax rates (we’re probably going to see some proof of that today).

I wasn’t disagreeing with your first comment – but I was discussing what I felt was your criticism of my initial post.

I’m not saying how progressive the tax system should be – if we want it to be more progressive then fiddle income taxes. The tax system IS progressive – I don’t know if voters want it to be more progressive or less, but I hope that the democratic process will help lead us to the outcome society wants.

My point was that if we don’t want to cut spending we need to increase tax rates – and committing to do that in the future has benefits. That is it – as I said, if we also want to increase progressivity then cool, do that. But the progressive nature of taxes is not the target of my post – the idea of committing to an increase in the future is the goal of the post.

But it is true.

Furthermore, the relatively “regressive” change was the income tax cuts. The increase in GST, which is independent, is an income neutral change.

So if National make our tax system more regressive you can defend this by saying it is still somewhat progressive. I can assure you the issue will not be framed in that manner anywhere outside the ACT party.