Quotation of the Day from French Economist Frederic Bastiat in the 1850s http://t.co/2ECWtb6m9u—
Mark J. Perry (@Mark_J_Perry) August 14, 2015
Why @NZGreens @nzlabour @GreenpeaceNZ hate applied welfare economics
21 Aug 2015 Leave a comment
in applied welfare economics, economics of regulation, energy economics, environmental economics, health economics, international economics, labour economics, law and economics, politics - New Zealand, Public Choice Tags: antiforeign bias, antimarket bias, expressive voting, Greenpeace, Leftover Left, make-work bias, methodology of economics, New Zealand Greens, New Zealand Labour Party, rational ignorance, rational irrationality
Marginal tax rate of average earners in USA, UK, Australia and New Zealand since 2000
21 Aug 2015 Leave a comment
in applied price theory, business cycles, economic growth, economic history, labour economics, labour supply, macroeconomics, politics - Australia, politics - New Zealand, politics - USA, public economics Tags: Australia, British economy, productivity shocks, real business cycles, taxation and labour supply
Interesting to notice that in New Zealand and the USA after these increases in marginal tax rates on single taxpayers, their economies slowed down. What appears to have happened is a number of people reached the next income tax marginal tax rate threshold.
Source: OECD StatExtract.
Best 2 Minimum Wage Cartoons
21 Aug 2015 Leave a comment
in labour economics, minimum wage, politics - Australia, politics - New Zealand, politics - USA Tags: antimarket bias, expressive voting, Leftover Left, offsetting behaviour, rational ignorance, rational irrationality, The fatal conceit, The pretense to knowledge, unintended consequences
Best 2 Minimum Wage Cartoons Ever, from Henry Payne, Updated for Seattle's $15 "Economic Death Wish" @HenryEPayne http://t.co/vatUzkHMss—
Mark J. Perry (@Mark_J_Perry) August 18, 2015
The great divergence in average and marginal tax rates in New Zealand since 2000
20 Aug 2015 1 Comment
in applied price theory, applied welfare economics, human capital, labour supply, politics - New Zealand, public economics Tags: family tax credits, lost decades, taxation and the labour supply
21% would have been a good guess of the average and marginal tax rates of the New Zealand single earner or couple including with children and even a second earner in 2001. New Zealand average and marginal tax rates have been on a wild ride since the year 2000.
Sources: OECD StatExtract and OECD Taxing Wages.
As the above chart shows, while the average tax rate of a single earner with no children is pretty much unchanged at about 20%, he now faces a marginal tax rate of 30% or more rather than 21% in 2001.
For a married couple with one income, as the above chart shows, their average tax rate has been about zero for a good 10 years now but their net marginal tax rate is a good 50% or more because of abatement rates on family tax credits, which is a skewed incentive situation. A large income effect from the family tax credit encourages the consumption of leisure but a high marginal tax rate discourages working more.
Sources: OECD StatExtract and OECD Taxing Wages.
For two earner couples, their average tax rates have fallen because of family tax credits but their marginal tax rates have gone through the roof as the above chart shows. A tax system that discourages quite severely any further work or investment in human capital by average earners may have adverse effects on the long-term trend growth rate of New Zealand.
Some tax cuts for families! Average tax rates on married couple with one income, 2 kids in USA, UK, Australia and New Zealand since 2000
20 Aug 2015 Leave a comment
in economic history, labour economics, labour supply, politics - Australia, politics - New Zealand, politics - USA, public economics Tags: Australia, British economy, taxation and labour supply
Source: OECD StatExtract.
Marginal tax rates of New Zealand average households since 2000
19 Aug 2015 Leave a comment
in economic growth, fiscal policy, labour economics, labour supply, macroeconomics, politics - Australia, politics - New Zealand Tags: Australia, lost decades, marriage and divorce, productivity shocks, real business cycles, taxation and labour supply
In 2000 in New Zealand, the marginal tax rates of single earners, married couples and dual income couples were 21%.
Sources: OECD StatExtract.and OECD Taxing Wages.
Net personal marginal income tax rates increased:
- to 51% for one earner couples with two children in 2001 and stayed up above 50% until 2014; and
- to 33% for single earners with no children in 2004 because income growth pushed them into the next tax rate bracket which then dropped down to 30% in 2011.
Sources: OECD StatExtract.and OECD Taxing Wages.
Net personal marginal income tax rates increased:
- to 33% in 2004 for two earner couples with the second earner earning 33% of average earnings and then increased to 53% in 2006 and stayed high thereafter;
- to 33% in 2004 for a two earner couple with the second earner earning 67% of average earnings and then increased further to 53% in 2006 and stayed high until 2014 when their marginal income tax rate dropped to 30%; and
Sources: OECD StatExtract.and OECD Taxing Wages.
These large increases in marginal tax rates on single earners and families coincided with a slowing of the economy in about 2005. The economy started to pick up again when there were tax cuts introduced by the incoming National Party Government. Is that more than a coincidence?
Sources: Computed from OECD StatExtract and The Conference Board. 2015. The Conference Board Total Economy Database™, May 2015, http://www.conference-board.org/data/economydatabase/.
A flat line in the above figure is growth at the trend growth rate of 1.9% of the USA in the 20th century. A rising line is above trend growth for that year while a falling lined is below trend rate in GDP per working age person.
In the lost decades of New Zealand growth between 1974 In 1992, New Zealand lost 34% against trend growth which was never recovered. There was about 13 years of sustained growth at about the trend rate or slightly above that between 1992 and 2005. The entire income gap between Australia and New Zealand open up during these lost decades of growth between 1974 and 1992.
Sources: Computed from OECD StatExtract and The Conference Board. 2015. The Conference Board Total Economy Database™, May 2015, http://www.conference-board.org/data/economydatabase/.
Australia grew pretty much in its trend rate of growth since the 1950s. The so-called resources boom is not visible such as showing up as above trend rate growth.
No tax cuts for you? Net personal average tax rate of single American, British, Australian and New Zealander on average earnings, no children, since 2000
19 Aug 2015 Leave a comment
in economic history, labour economics, labour supply, politics - Australia, politics - New Zealand, politics - USA Tags: Australia, British economy, taxation and labour supply
Source: OECD StatExtract.
Life expectancy by age and sex in New Zealand’s, 1990 to 2013
17 Aug 2015 Leave a comment
in health economics, politics - New Zealand, population economics Tags: capitalism and freedom, life expectancies, The Great Escape
The Canadians are coming! The Canadians are buying up our land! What has @NZGreens to say about that?
17 Aug 2015 Leave a comment
in economics of regulation, entrepreneurship, financial economics, politics - New Zealand Tags: Australia, Canada, China, FDI, Japan, Left-wing hypocrisy, left-wing popularism, New Zealand Greens, right-wing popularism
Canada was the largest source of foreign investment during the period, as its pension fund bought 18 properties in a portfolio from AMP and increased its stake in Kaingaroa Forest.
The benefits and costs of the @NZSuperFund since its inception
17 Aug 2015 Leave a comment
in applied price theory, applied welfare economics, economic growth, economic history, entrepreneurship, financial economics, fiscal policy, industrial organisation, labour economics, labour supply, macroeconomics, politics - New Zealand, public economics Tags: ageing society, company tax rate, deadweight cost of taxes, demographic crisis, efficient markets hypothesis, laffer curve, New Zealand superannuation fund, old age pensions, retirement savings, social insurance, sovereign wealth funds, taxation and entrepreneurship, taxation and investment, taxation and labour supply
Most mutual funds still can't beat their benchmark read.bi/1GkTig1 http://t.co/r7ezoDGJbV—
BI Chart of the Day (@chartoftheday) June 03, 2015
The New Zealand Superannuation Fund, the sovereign wealth fund part funding New Zealand’s old-age pension from 2029/2030 onwards, has been a bit of a wild ride. Sometimes the earnings of the Fund were well below and sometimes earning well above the long-term bond rate.
![image_thumb[3]](https://utopiayouarestandinginit.com/wp-content/uploads/2015/08/image_thumb310.png "image_thumb[3]")
Source: New Zealand Superannuation Fund Annual Report 2014.
Since its inception, the Fund earned an average annual return of 9.78%, which was 5.06% above the long-term bond rate, and 1.03% above its reference portfolio.
No information was given in the annual report of the New Zealand Superannuation Fund on the marginal dead weight cost of the taxes raised to fund the New Zealand Superannuation Fund to see whether there is any net benefit to taxpayers from its establishment and continued operation.
The New Zealand Government has contributed $14.88 billion to the fund from prior its inception in 2001 to the suspension of contributions in 2009 by the incoming National Party Government.
Source: New Zealand Treasury.
Over the nine years in which contributions were made, the company tax rate of 28% could have easily been up to 10 percentage points lower.
The New Zealand Treasury estimates that a one percentage point cut in the company tax costs about $220 million in forgone revenue if there are no other changes to the tax system. These are static estimates that do not include any feedback from greater investment and higher growth.
The New Zealand Superannuation Fund must beat the market every single year to make up for the deadweight cost of its funding, a premium for the investment risk added to the Crown’s portfolio and the cost to New Zealand’s growth rate of higher than otherwise taxes on income, entrepreneurship and investment.
Source: Abolish the Corporate Income Tax – The New York Times.
UK has the lowest company tax rate in the G20
16 Aug 2015 Leave a comment
in applied price theory, economic growth, fiscal policy, macroeconomics, politics - Australia, politics - New Zealand, politics - USA, Public Choice, public economics Tags: British economy, company tax rate, company taxation, optimal tax theory, race to the top, tax competition
IFS Friday Figure: UK has the lowest corporate tax rate in the G20 #Budget2015 announced a 2% cut by 2020 #IFSFriFig http://t.co/T4Oq6ZXYd4—
IFS (@TheIFS) July 24, 2015
“Family silver’ looking a bit tarnished
15 Aug 2015 Leave a comment
in applied price theory, industrial organisation, politics - New Zealand, public economics Tags: privatisation, state owned enterprises
In the editorial today in the Dominion Post on the Solid Energy fiasco, the editorial writer made quite an extraordinary statement:
“Ideologues of the Right will claim that the whole sad fiasco shows the dangers of the state getting into business. This is simple-minded. Not all SOEs have ended up hundreds of millions of dollars in debt. Some SOEs have been well run; some have not.”
It is absurd to claim that making a $20 million net profit on a portfolio of $30 billion in state owned enterprises in 2013 is some sort of reasonable investment for the taxpayer.
Opponents to the sale of minority shareholdings in a few state owned assets would have us believe that the government is selling the family silver.
Treasury’s annual portfolio return shows that silver isn’t returning much:
Government businesses with assets worth $45 billion made a total net profit of just $20 million in the year to June 30, according to the Treasury’s annual portfolio report.
The assets don’t include Meridian Energy, Air New Zealand and Mighty RiverPower, which were partially privatised, but cover troubled entities like KiwiRail, Solid Energy and New Zealand Post, which are all struggling to make their business models work.
The annual review covers Crown-owned assets valued at $125b.
A return of just $20 million on $125b is lamentably low.
“For the residual commercial priority portfolio, overall performance (with some notable exceptions) was mediocre,” the Treasury’s Crown Ownership Monitoring Unit says in the report. . .
Total shareholder…
View original post 332 more words
Unexpected kind word for Parliament House protesters @GreenpeaceNZ @RusselNorman @NZGreens @greencatherine
15 Aug 2015 2 Comments
in constitutional political economy, economics of crime, environmental economics, global warming, law and economics, liberalism, politics - New Zealand, Public Choice, Rawls and Nozick, rentseeking Tags: civil disobedience, climate alarmism, expressive voting, Greenpeace, John Rawls, Justice Scalia, Leftover Left, rule of law
PRESS RELEASE: Greenpeace Parliament Climbers Convicted of Trespass bit.ly/1DRfKMG #realclimateaction http://t.co/sxRokpwRNk—
Greenpeace NZ (@GreenpeaceNZ) August 13, 2015
The Greenpeace vandals who trespassed at Parliament, climbing up to put signs down the front in flagrant disregard of the most ample possible options for peaceful protest right outside at least had the integrity to plead guilty. That shows some sort of fidelity to law and an acknowledgement that what they did was a criminal offence.
John Rawls makes the point that the purpose of civil disobedience is not to impose your will upon others but through your protest to implore them to reconsider their position and change the law or policy you are disputing.
Rawls argues that civil disobedience is never covert or secretive; it is only ever committed in public, openly, and with fair notice to legal authorities. Openness and publicity, even at the cost of having one’s protest frustrated, offers ways for the protesters to show their willingness to deal fairly with authorities. Rawls argues:
- for a public, non-violent, conscientious yet political act contrary to law being done (usually) with the aim of bringing about a change in the law or policies of the government;
- that appeals to the sense of justice of the majority;
- which may be direct or indirect;
- within the bounds of fidelity to the law; and
- whose protesters are willing to accept punishment. Although civil disobedience involves breaking the law, it is for moral rather than selfish reasons; the willingness to accept arrest is proof of the integrity of the act.
Rawls argues, and too many forget, that civil disobedience and dissent more generally contribute to the democratic exchange of ideas by forcing the champions of dominant opinion to defend their views.
Legitimate non-violent direct action are publicity stunts to gain attention and provoke debate within the democratic framework, where we resolve our differences by trying to persuade each other and convince the electorate.
Too many acts of non-violent direct action aim to impose their will on others rather than peaceful protests designed to bring about democratic change in the laws or policies of the incumbent government. That ‘might does not make right’ is fundamental to the rule of law. As United States Supreme Court Justice Antonin Scalia said
The virtue of a democratic system [with a constitutionally guaranteed right to free speech] is that it readily enables the people, over time, to be persuaded that what they took for granted is not so and to change their laws accordingly..
Both sides passionately but respectfully attempt to persuade their fellow citizens to accept their views. Win or lose, advocates for today’s losing causes can continued pressing their cases, secure in the knowledge that an electoral loss today can be negated by a later electoral win, which is democracy in action as Justice Kennedy explains:
…a democracy has the capacity—and the duty—to learn from its past mistakes; to discover and confront persisting biases; and by respectful, rationale deliberation to rise above those flaws and injustices…
It is demeaning to the democratic process to presume that the voters are not capable of deciding an issue of this sensitivity on decent and rational grounds.
The process of public discourse and political debate should not be foreclosed even if there is a risk that during a public campaign there will be those, on both sides, who seek to use racial division and discord to their own political advantage. An informed public can, and must, rise above this. The idea of democracy is that it can, and must, mature.
Freedom embraces the right, indeed the duty, to engage in a rational, civic discourse in order to determine how best to form a consensus to shape the destiny of the Nation and its people. These First Amendment dynamics would be disserved if this Court were to say that the question here at issue is beyond the capacity of the voters to debate and then to determine.
John Rawls’ view that fidelity to law and democratic change through trying to persuade each other is at the heart of civil disobedience reflects the difference between the liberal and the left-wing on democracy and social change as Jonathan Chait observed this week:
Liberals treat political rights as sacrosanct. The left treats social and economic justice as sacrosanct. The liberal vision of political rights requires being neutral about substance.
To the left, this neutrality is a mere guise for maintaining existing privilege; debates about “rights” can only be resolved by defining which side represents the privileged class and which side represents the oppressed…
Liberals believe that social justice can be advanced without giving up democratic rights and norms. The ends of social justice do not justify any and all means.
How the left-wing and liberal visions of democracy are different nymag.com/daily/intellig… http://t.co/Qk5vS9SaV4—
Jonathan Chait (@jonathanchait) August 13, 2015
Utopia, you are standing in it! 
Recent Comments