Thursday, November 3, 2011

Mike Butler: Rich pricks vs bludgers

The current New Zealand election campaign is increasingly looking like a showdown between what are colloquially referred to as “rich pricks” and “bludgers”. The term “rich prick” was widely circulated when former deputy prime minister Michael Cullen used the term in a heated debate in Parliament in December of 2007, in reference to National Party leader John Key. Cullen later claimed that he did not mean the outburst to be heard.

Economist Gareth Morgan coined the term “nation of bludgers” in a 2005 commentary on the Working For Families policy. According to the Concise Oxford Dictionary, a “bludger” is a loafer who avoids work.

In New Zealand, a “rich prick” could be one of the 1 percent who are people with net assets of around $900,000. The top 1 percent own 16.4 percent of the nation’s wealth, according to a Statistics NZ report titled Wealth Disparities in New Zealand. (1)

In New Zealand, the so-called “rich pricks” pay most of the tax. Households with income of over $150,000, whether these include one person earning say $150,000 or two people earning $75,000 each, and comprise 10 percent of all households, fund 71 percent of net taxation.

A large chunk of everybody else receives more from the government than they pay in tax. Households with an income of $50,000 or below pay no net tax at all, and receive around $4.40 in benefits for every $1 of tax they pay. So they pay $1.7-billion in tax and receive $7.7-billion in welfare (excluding superannuation). Therefore, 44 percent of households are net tax recipients. (2)

The so-called “rich pricks” did not necessarily start out rich. They were the people who worked a second job on evenings and weekends, saved for a house, paid it off, invested, took a few risks, and continued to work long hours, while their idle friends would drink, eat well, and sleep.

The fortunes of the two groups diverge as time goes by so that after 20 years the drinking, eating idle would be coping with alcohol and obesity related health issues. They would be facing the rising cost of living with their static income either from a job or a benefit.

Wealth disparity is part of the human condition, and transcends ethnic, cultural, and religious divides.

The sheer quantity of bludgers in New Zealand means that most political parties, including the National Party, pander to the deeply ingrained “free money from the government” way of thinking.

Only the ACT and Conservative parties recognise that government generosity has to be paid for – largely by the 10 percent who pay most of the tax.

Sources
1.Wealth Disparities in NewZealand, http://www.stats.govt.nz/browse_for_stats/people_and_communities/Families/wealth-and-disparities-in-new-zealand.aspx
2. Net Taxpayers, http://www.kiwiblog.co.nz/2011/07/net_taxpayers.html

5 comments:

Aaron said...

Good on ya Mike.

Anonymous said...

Only the ACT and Conservative parties recognise that government generosity has to be paid for – largely by the 10 percent who pay most of the tax.

But neither of them have come out with the truth - that if we want to stop following Greece, Spain, Italy, Ireland and indeed the mass of the EU straight down the toilet NZ must immediately stop welfare spending and cut taxes on the "rich pricks"

There just isn't any more money - for the dole or DPB or whatever Smile'n'Wave the State House Kid has renamed them as; nothing for state houses either, let alone "free" GPs, Hospitals, Drugs, Schools, Kindys etc etc WFF ACC etc etc.

The only responsible policy for NZ is immediately stopping spending and pay back as much debt as we possibly can.

Anonymous said...

> "Households with an income of $50,000 or below pay no net tax at all, and receive around $4.40 in benefits for every $1 of tax they pay. So they pay $1.7-billion in tax and receive $7.7-billion in welfare (excluding superannuation). Therefore, 44 percent of households are net tax recipients. (2)"

This definition of a "household" is misleading and old-fashioned. And plenty of nearly “rich pricks” (ie, those with household incomes well into six figures) are receiving welfare in the form of Working for Families tax credits.

I think it is high time we talked about single-person households, who receive few if any benefits from the state, except maybe a subsidy for an irregular doctor's visit. These constitute a significant and rising proportion of the population, who have to pay the same rent/mortgage as a couple would, but with half the income - certainly in the likes of Auckland and Wellington - unless of course they live like a student or in a hostel for the working poor, neither of which is an inexpensive proposition, either.

Like the "rich pricks" these are the people subsiding those who choose to have children - including those earning well into six figures - but can maybe if they are lucky just afford to live a respectable life themselves. Far from not paying any tax at all or being net tax recipients, these people are funding the life choices of others, including the services that many "rich pricks" consume at a much higher rate.

I think it is high time the country stopped returning taxes to those who make life choices that not only cost the country those taxes returned in the form of credits, but also whose life choices constitute the bulk of the state's services' provisions.

Otherwise, if many households with children deserve tax credits to subsidise the cost of rents/mortgages, etc, then many households without children do, too, which obviously the country can ill afford.

There are many things wrong with the NZ economy, but significantly cutting the number eligible for Working for Families tax credits would be a good start, which would also relieve the upward pressure on the cost of housing, fuelled by the tax credits to nearly "rich pricks".

Jack Spratt said...

Vote for a change from MMP, and there is a chance of getting back to having governments with mandates. Any mandate will do, compared with the mamby-pamby compromise-everything governments that MMP is delivering.

Anonymous said...

I am not a rich prick and I don't receive any Benefit. I am a poor prick that pays a third of my hard earned dollars to successive Governments to give to lazy people who don't wish to work. I had actually made up my mind to vote National party vote as the thought of Labour and the Greens horrified me. But on having a read of this whole newsletter I couldn't possibly do that while people are working so hard collecting for the Seabed and Foreshore petition. I will now vote Conservative. Also FPP.