This is incredible and should ring warning bells about the attitude of a Government with the Greens in it to taxation.
Its horrific that Dr Norman thinks tax is not a burden, and even worse calling it so is right wing.
When the state takes a large proportion of your income, of course it is a fucking burden. If they didn’t do it, you’d have
less more money.
If tax wasn’t a burden, then hundreds of thousands of people would pay extra tax voluntarily. Does Dr Norman wake up every morning and send a donation in to the IRD?
Plus the stupidity of Norman’s comments are highlighted by the fact that he got owned on Twitter by Gareth Richards who pointed out that Dr Norman himself had in the past used the term himself. So in fact Dr Norman was just attacking poor civil servants for using the same term as he had used. He should apologise to the Treasury officials he maligned.
Norman tried to defend his new found view that tax is not a burden on the basis the Government spends tax revenues on some good things. Eric Crampton points out:
Taxes are a bad, public services are a good. Saying the first doesn’t mean denying the second.
Again I’m horrified that we may have a senior economic minister in a future government who does not think taxation is a burden on hard working New Zealanders who fund the tax system. It reflects a neo-marxist view I guess that all income is really the property of the state’s, and we should be grateful they allow us to keep some of it.
Also Eric schools Dr Norman on some basic economics:
More importantly, economists use the word ‘burden’ in a particular way. A few useful notes about Principles-level (maybe intermediate) economics for someone who thinks himself qualified to be finance minister:
‘Burden’ measures the total cost of a tax. The ‘excess burden’ is the amount by which the cost of a tax exceeds the amount collected. Treasury tends to reckon that excess burden is around 20%: it costs us about $1.20 to raise $1.00 in tax. The $1.00 raised is a transfer from the public to the government; the $0.20 is pure loss due to distortions in economic activity consequent to increases in our current mix of taxes.
Russel Norman suggests only “right wing” economists talk about tax burden. Here is a JSTOR search on “tax burden”. There are 61 pages of search results with 100 results per page. Item number 177 on a date-sorted list is famous Right Wing Economist John Maynard Keynes discussing the Colwyn Report on Natinoal Debt and Taxation. Item 398 is rabid right-winger Nicholas Kaldor’s call for wage subsidies to reduce unemployment (1936).
Burden is just the term used by economists to describe the cost of the tax and to help sort out the difference between statutory and economic incidence. Like “While X writes the cheque to IRD, the burden of the tax falls on Y and Z.” That’s it. It’s the standard term used in the main texts to describe this thing. Richard Musgrave (centre, maybe centre-left) uses it. James Buchanan (right) uses it. Pick a random public finance text, you’ll find “tax burden” or “excess burden” somewhere in it.
Then on Twitter Dr Norman goes further rejecting both the labels burden and distortionary for taxes!
My challenge to all those who agree with Dr Norman that tax is not a burden, to write out larges voluntary cheques today to the IRD. That means it is no extra burden on you, and reduces the burden on the rest of us.
UPDATE: Russel has actually referred to the tax burden in Parliament, as has Metiria Turei. This reinforces that Dr Norman should apologise to the Treasury officials for his attack on them for using the exact same language both Green co-leaders have used in the past.
Tags: Eric Crampton
, Gareth Richards
, Russel Norman