Taxation as a % of GDP in Australia and NZ and New Zealand’s Lost Decades

Revenue is a percentage of GDP has always been higher in New Zealand as compared to Australia for as far back as data is available. Tax revenue grew by a third as a percentage of GDP between 1965 and 1989 in New Zealand with a sharp spike from 1984 onwards. The growth in tax revenues as percentage of Australian GDP was smoother rather than spikes such as in the mid-1980s in New Zealand.

Data extracted on 18 Oct 2015 02:10 UTC (GMT) from OECD.Stat.

Interestingly, this faster growth in the New Zealand tax revenues as a percentage of GDP coincided with the two lost decades of New Zealand growth between 1974 and 1992. Furthermore, the chart below shows that an emerging recovery in labour productivity in the early 1980s stalled when tax revenues started growing again as a percentage of New Zealand GDP.

Source: Computed from OECD StatExtract and The Conference Board. 2015. The Conference Board Total Economy Database™, May 2015, http://www.conference-board.org/data/economydatabase/

Between 1974 and 1992, New Zealand lost 34% and productivity against trend of 1.9%. In the chart below, a flat line is growth at a rate equal to the trend rate of growth for the USA in the 20th century which is 1.9%. A falling line indicates growth at less than 1.9% for the year. A rising line means growth in excess of 1.9% for the year. The chart below confirms what the chart above says. Productivity stopped falling in the early 1980s then started falling rapidly at the same time that tax revenues spiked as percentage of GDP in the early 1980s.

Source: Computed from OECD StatExtract and The Conference Board. 2015. The Conference Board Total Economy Database™, May 2015, http://www.conference-board.org/data/economydatabase/

in the above chart, Australia had pretty steady growth since about 1970. There is a productivity slowdown in the 1970s and above-average growth as the economy recovered from the Keating recession in the early 1990s. The so-called mining boom is hardly noticeable in Australia’s trend growth rate.

Mises on prosperity and inequality

Image

@HackneyAbbott @JeremyCorbyn4PM Another bad day for British ruling class

#TPA more popular among democrats

Poverty traps in America

@NickTimiraos the company tax rate should be zero? Tax havens are working class heros?

I do wonder how much less wages, innovation, entrepreneurship and investment in capital would be but for the valiant efforts of tax havens to limit the size of government and the burden of business taxation in the developed countries.

Source: Abolish the Corporate Income Tax – The New York Times.

But for the possibility of capital flight, company taxes would be much higher in the industrialised countries.

Tax havens are working class heroes because of their contribution they make to increasing the returns to corporate savings and private capital formation so vital to high wages everywhere.

The Australian tax – transfer system after 30 years of heartless neoliberalism

https://twitter.com/JohnDaley_/status/646505463710773248/photo/1

@nzlabour @NZGreens New Zealand state-owned enterprises dividends paid and capital injections since 2007

The New Zealand Labour Party and New Zealand Greens both make much of the fact that when you privatise a state-owned enterprise the taxpayer is no longer entitled to dividends from the privatised business. The fact that the sale price is the net present value of those future dividends is a rating fallacy that is not the subject of this post.

image

Source: New Zealand Treasury –  data released under the Official Information Act.

What is the subject of this post is whether there are indeed any dividends paid to taxpayers after capital injections. 2007 was the last year in which dividends to the taxpayer exceeded capital injections. The reason was that dog called KiwiRail.

@nzlabour @NZGreens Adjusted return to equity on the New Zealand state owned enterprises portfolio since 2008

I asked for information from the Treasury for as far back as 2000 but could only get information back to 2008 on the return on equity of the portfolio of state-owned enterprises to the taxpayer.

image

Source: New Zealand Treasury – released under Official Information Act.

Apparently, long-term information on the performance of the state-owned enterprise portfolio is not available. Anyone wanting to know the performance of an individual or group of listed companies simply looks at the share price was far back as they want. The prices of individual shares reflect market expectations of future dividends and future price movements, and they go up and down as new information is revealed. The history of a share price indicates the ups and downs of a company in one number far better than any other available indicator.

I also included the adjusted rate of return on equity taking out the two dogs in the portfolio: Solid Energy and KiwiRail.

image

Source: New Zealand Treasury – released under Official Information Act.

The Great Escape and old age pension duration

https://twitter.com/ONS/status/641644852925566976/photo/1

The herd immunity role of #vaccinations explained

Some public goods can be not provided much at all if even a few do not contribute – free ride. These are called weakest shot public goods. The link in the chain is only as strong as the weakest link for some public goods. The fighting against communicable diseases is an example of that.

The classic example given by that brilliant applied price theorist Jack Hirschleifer is a dyke or a levee wall around a town. It is only as good as the laziest person contributing to its maintenance on their part of the levee wall. Vicary (1990, p. 376) lists other examples:

Similar examples would be the protection of a military front, taking a convoy across the ocean going at the speed of the slowest ship, or maintaining an attractive village/landscape (one eyesore spoils the view).

Many instances of teamwork involve weak-link elements, for example moving a pile of bricks by hand along a chain or providing a theatrical or orchestral performance (one bad individual effort spoils the whole effect.)

Another example of weakest shot public goods is community cooperation after disasters. The quality of the public good provided is equal to the contribution of the weakest person who may start a criminal rampage despite the good efforts of everyone else.

People tend to be more cooperative after natural disasters. They realise their contribution is more important than normal to the maintaining of the social fabric which is currently hanging by a thread.

Vaccinations are example of a weakest shot public good. The quality of herd immunity depends fundamentally on just about everybody contributing by getting vaccinated. Not all public goods depend on the some of those contributions made. In some cases  just a few people choosing to free ride can greatly undermine the public interest.

The reverse of a weakest shot public good is best shot public goods. Example of this is the development of vaccines themselves. The public good is only as good as the best effort at developing the new vaccine with all the others efforts pointless because the best of the vaccines is chosen.

The most curious people in New Zealand to oppose measures to address the under provision of weakest shot public goods are the New Zealand Greens.

https://twitter.com/KevinHague/status/642505850360213505

The Greens are usually the 1st to stress the importance of communities working together for the common good.

https://twitter.com/KevinHague/status/642530277177192448

Herd immunity protects those who cannot be safely vaccinated including new babies, those for whom the vaccine fails, which occasionally happens, and those with compromised immunity such as adults receiving chemotherapy.

We are all in this together. It is time for the New Zealand Greens to stop pandering to those are only think of themselves and what a free ride on others including the very sick and new babies.

Source: NOVA | What is Herd Immunity?

Herd immunity requires vaccination rates of about 94%. The near universal vaccination rates required for herd immunity are to smaller margin to pander to an awkward squad who do not want to vaccinate despite the harm they do to others.

Harm to others is grounds and has always been grounds for public policy and public health interventions. Instead, the Greens are anti-science, anti-public health.

image

Measles is the most contagious disease known to man. Seven children died in New Zealand in the last measles outbreak in 1991. The dead are already too many from the anti-vaccination quacks and cranks.

A Comparison of the Tax Burden on Labor in the OECD

via A Comparison of the Tax Burden on Labor in the OECD | Tax Foundation.

Image

US federal revenue has always hovered around 17% of GDP.

Whose workers paid most in income tax and social security contributions?

Marginal tax rates of 2-income couples with 2 children in USA, UK, Australia and New Zealand since 2000

image

Source: OECD StatExtract.

Previous Older Entries Next Newer Entries

Reason Magazine

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Coyote Blog

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Thoughts from the North

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Fardels Bear

A History of the Alt-Right

Vincent Geloso

Econ Prof at George Mason University, Economic Historian, Québécois

Bassett, Brash & Hide

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Truth on the Market

Scholarly commentary on law, economics, and more

The Undercover Historian

Beatrice Cherrier's blog

Matua Kahurangi

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Temple of Sociology

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Velvet Glove, Iron Fist

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Why Evolution Is True

Why Evolution is True is a blog written by Jerry Coyne, centered on evolution and biology but also dealing with diverse topics like politics, culture, and cats.

NoTricksZone

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Homepaddock

A rural perspective with a blue tint by Ele Ludemann

Kiwiblog

DPF's Kiwiblog - Fomenting Happy Mischief since 2003

The Dangerous Economist

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Watts Up With That?

The world's most viewed site on global warming and climate change

The Logical Place

Tim Harding's writings on rationality, informal logic and skepticism

Doc's Books

A window into Doc Freiberger's library

The Risk-Monger

Let's examine hard decisions!

Uneasy Money

Commentary on monetary policy in the spirit of R. G. Hawtrey

Barrie Saunders

Thoughts on public policy and the media

Liberty Scott

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Point of Order

Politics and the economy

James Bowden's Blog

A blog (primarily) on Canadian and Commonwealth political history and institutions

Science Matters

Reading between the lines, and underneath the hype.

Peter Winsley

Economics, and such stuff as dreams are made on

A Venerable Puzzle

"The British constitution has always been puzzling, and always will be." --Queen Elizabeth II

The Antiplanner

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Bet On It

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

History of Sorts

WORLD WAR II, MUSIC, HISTORY, HOLOCAUST

Roger Pielke Jr.

Undisciplined scholar, recovering academic

Offsetting Behaviour

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

JONATHAN TURLEY

Res ipsa loquitur - The thing itself speaks

Conversable Economist

In Hume’s spirit, I will attempt to serve as an ambassador from my world of economics, and help in “finding topics of conversation fit for the entertainment of rational creatures.”

The Victorian Commons

Researching the House of Commons, 1832-1868

The History of Parliament

Articles and research from the History of Parliament Trust

Books & Boots

Reflections on books and art

Legal History Miscellany

Posts on the History of Law, Crime, and Justice

Sex, Drugs and Economics

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

European Royal History

Exploring the Monarchs of Europe

Tallbloke's Talkshop

Cutting edge science you can dice with

Marginal REVOLUTION

Small Steps Toward A Much Better World

NOT A LOT OF PEOPLE KNOW THAT

“We do not believe any group of men adequate enough or wise enough to operate without scrutiny or without criticism. We know that the only way to avoid error is to detect it, that the only way to detect it is to be free to inquire. We know that in secrecy error undetected will flourish and subvert”. - J Robert Oppenheimer.

STOP THESE THINGS

The truth about the great wind power fraud - we're not here to debate the wind industry, we're here to destroy it.