One line leaps out at me from the tax report published on Wednesday. It says the top 10 per cent of income earners now pay 44 per cent of all personal income tax. Think about that.
Nearly half of all personal tax revenue is contributed by just 10 per cent of us. Is this socially healthy? Progressive taxation is a fine principle but its ardent proponents seldom calculate the disproportionality of contributions to the common good.
D'ya think that's bad? As they say on the telly - but wait; there's more (our emphasis added):
Read a few lines further into the Tax Working Group's report and the picture gets worse. Once you distribute family tax credits, welfare benefits and national superannuation those top 10 per cent of taxpayers have provided 76 per cent of what is left for general public services. Seventy six per cent.
The Working for Families refund alone results in 40 per cent of households effectively paying no income tax. It would be cheaper not to tax their wages at all. The dependency ratio is not quite as bad as this of course because everyone pays GST at the same rate. Progressive taxers hate GST for precisely that reason.
We will hear from them if the Government adopts the working group's suggestion to raise the rate.
This, of course demonstrates the dilemma that the government faces in reforming the tax system it inherited. Much as the far right calls for Working For Families to be dismantled, it will not be. The plain fact of the matter is that it CANNOT be, because it is so entrenched. That dear readers, is the REAL legacy of the Clark government.