Taxes

[62_Kiwi]

The following is an extract of a speech by a kiwi politician named Rodney Hide who is the leader of (in my opinion) NZ's most intelligent political party (ACT) - unfortunately also one of the smaller parties.... <br /><br />What he's saying is aimed at NZ's left wing government, but the argument could apply to most of the world's modern economies. In NZ, taxes currently soak up 40% of our economic output...<br /><br />I particularly like his description of the four ways that money can be spent and the key source of waste in NZ being the government.<br /><br />What's your view on taxes ? Do you think governments are the biggest wasters of our cash ? Can people be trusted to spend their own money on their own welfare ?<br /><br />

<br /><br />To be richer as a country means being able to provide for our elderly and our young - and everyone in between.<br /><br />To be rich we must produce more of what the world wants. That requires work, investment and entrepreneurship.<br /><br />To get more of all three we need to cut taxes - not just a little but dramatically.<br /><br />Taxes penalise work. Taxes penalise investment. Taxes penalise entrepreneurship.<br /><br />Taxes are the government-applied penalty to productive activity. To prosper we need to cut that penalty. Tax cuts put more money in everyone's back pocket - but more importantly tax cuts make for a more productive and prosperous economy.<br /><br />To prosper, we must also cut waste. Poor investment and poor spending waste our hard-earned wealth. The key source of waste in New Zealand is our own government. That's because of the way governments spend money.<br /><br />Consider the four ways that money can be spent.<br /><br />The first is to spend your own money on yourself. When you spend your own money you take great care. You make sure you get value for money.<br /><br />The second way is to spend your own money on someone else. You still care about the cost. But you are less concerned about what you buy. That's what happens when we buy a present.<br /><br />The third way is to spend other people's money on yourself. That's the lunch you have when I pay. You don't care what it costs but you are very concerned about what you get. <br /><br />The fourth way is to spend someone else's money on someone else. You don't much care what it costs. You don't much care what you get. And that's how government works. It spends your money on someone else. <br /><br />That spending makes up 40 percent of all that we produce.<br /><br />There is so much that government now does that we could do so much better if we were left with our own money to do it.<br /><br />Sure, there are some things that government has to do - national security, police, the justice system, basic infrastructure, looking after those who truly can't look after themselves - but these basic functions of government don't account for 40 percent of all that we produce. <br /><br />

 

[Boomyal]

Re: Taxes

Sounds to me like the guy is swimming upstream, 62. IMHO, the Western World has gone soft in it's thinking of how the world should rightfully turn on it's axis.<br /><br />Of course the guy is spot on! Just few are listening anymore. Recognition of human nature is neither easy, nor does it produce many votes.<br /><br />Your last paragraph sums up the dictates of the US Constitution.<br /><br />".....to provide for the common defense and to promote the general welfare..." <br /><br />Nothing more is the logical part that central governments should play in our lives.

 

[roscoe]

Re: Taxes

I think he's got it write, but has a tough battle ahead of him.

 

[PW2]

Re: Taxes

While all of this is fine, and no one, including me, likes to pay taxes, in order for it to mean anything to suppot "cutting waste" and lowering taxes, you have to define what precisely you mean.<br /><br />In the case of the US, for example, there are four fundamental uses of tax revenues:<br /><br />1 Social Security and welfare<br />2. Defense<br />3. Interest on the national debt<br />4 General programs<br /><br />"waste" is generally mostly associated with number 4, yet it only comprises a small portion of the budget itself. It is tough to cut enough "waste" to make any appreciable difference.<br /><br />To the extent that lower taxes increase revenue, that is not necessarily a linear relationship. And the biggest risk in this is a spike in interest rates, which has a far greater impact than any "waste cutting" program.<br /><br />In a perfect world, of course, we would have taxes that would produce a balanced budget, fund only necessary programs we all agree on, and retutn everything else to the taxpayer.<br /><br />We don't unfortunately live in a perfect world.<br /><br />Complaining about taxes are too high, and we should "cut waste" is meaningless until we start defining what waste is, and analyzing the impact of specific tax cuts.