John Key is being a Spurious George again. In explaining why he’d love to cut taxes for (mostly) the rich, but just can’t afford to yet…
Key pointedly said that when National took office the average wage was $47,000 a year but had risen to around $55,000 today, and was expected to climb to $62,000 by 2017. This was creeping towards the top tax bracket, where salary earners pay 33c in the dollar for earnings over $70,000.
“I don’t think it was anyone’s intention that someone on the average wage would be paying the highest marginal tax rate in New Zealand,” he said, echoing arguments National has been making in private for months.
Well, Mr. Key, it also wasn’t anyone’s intention for the incomes of the rich to rise so much faster than those of the poor, pushing up the average (mean) income to a level less than 30% of people reach. (Actually it was some people’s intention: right-wingers who think inequality is a good thing)
Key is trying to give the impression that the average (mean) income is the income earned by the person in the middle. But mean doesn’t measure the middle of the people, but the middle of the money; and of course the money is weighted towards wealthy outliers at Mr. Key’s end of the spectrum, who push the average up with their exponentially higher incomes.
A far more useful statistic is the median income: the amount that half the people earn more than, and the other half earn less than. This truly represents the average Kiwi. The median individual income is almost exactly $30,000 p.a. – just under the middle of the third-to-top tax rate band.
It’s actually getting more and more misleading to portray average income as a reflection of middle-income earners: As inequality worsens, the “middle of the money” (average income) is moving further and further from the “middle of the people” (median income). My eye makes it less than 10% difference in 1980, up to about 25% now:
It’s also worth noting that the increased average income Key mentions has accrued almost entirely to above-median earners:
Another problem with mean income figures is they hide inequalities like these and portray a boon for the rich as a boon for everyone.
I do agree in principle with indexing tax-rate thresholds (in fact, all thresholds… *cough*student loan repayments*cough*) for inflation, but Key’s trying to use that principle as a smokescreen for more tax cuts to the rich, spinning this as a release for the average NZer from crippling over-taxation, which is not true on any level whatsoever. Taxpayers between the median and mean incomes actually pay the lowest proportional tax:
And in the context of a supposedly progressive tax system it’s the rich who are really best off:
“At very low incomes, New Zealand’s taxes are a little above the OECD average … But for high incomes, our overall “tax wedge” … is the lowest in the developed world.
Our tax system asks too much of those with little, and too little of those with much.”
This would only get worse under National’s proposed 2017 tax cuts.
In any case, if Key is really worried about too many NZers in the top tax bracket, there’s an obvious solution: Implement a new top tax rate(s) for the super-rich, like most similar countries have:
Soooooooooo: whatever people’s intention about who should be on the top tax rate, it’s clear John Key’s intention in referring to the mean income, rather than the median, is to mislead (or perhaps he simplify misunderstood statistics in a conveniently misleading way, as with child poverty at the last debate). Sadly he’ll probably largely achieve that intention.
The two faces of National’s hitherto successful PR strategy
UPDATE (19 Aug, evening): Literally in the last few hours, National have unveiled some policy on their website. This renders the first two graphs and table out-of-date. But the second half is still relevant, and I reckon it’s worth leaving the first half online as a time capsule of what National’s campaign looked like until WhaleGate. Coincidence? What do you think?
Original blog (19 Aug, afternoon):
“the left have given up on the policy argument. They don’t think they can beat the National Government on the issues … so what they’ve decided is they’ll play the man, not the ball … but we’re going to keep talking about the ball.”
This is similar to his quip when Laila Harré announced she was running against Key in his local seat:
“we won’t be having much of a debate about policy – the only policy the Internet Party has is to make sure Dotcom isn’t extradited.”
In fact, I’ve been following and compiling the various parties’ policies, and the Internet Party have far more policy on their website than National do – even though the IP have only had a few months to formulate theirs. In fact, National have less policy on their (single) policy page than any other party – significantly less than most of them. On word count, they only provide literally 2.4% as much as Labour or 1.1% as much as NZ First:
It is true that some parties (notably Labour, the Greens and the Internet Party) provide fuller versions of their policies or additional documents, linked from their main policy pages. This is the main difference between National’s and the IP’s policy websites.
If we’re generous, we can include a couple of documents from January about their 2014 priorities in this category… the speech is largely not policy, but they do link to these documents at the bottom of their policy page. This time National manage to claw their way up to 2nd-to-last, because ACT only expand upon two of their policies – but they’re still left in the dust by the left-of-NZ-First parties he accuses of giving up on policy:
It’s also worth noting that Labour and the IP both state that even more policy is forthcoming, and the Greens are frequently updating theirs. I wonder if National’s are on the way, too? [update: I guess so! National also now say there’s more on the way]
Here’s the full data, if you’re interested:
While I spent an embarrassingly long time on this [update: now-obsolete! grrr…] number-crunching, we actually didn’t need these numbers to know that National try to run policy-free campaigns and policy-free politics wherever possible. They don’t engage with public questions like this, this or this. They don’t engage (openly) with blogs; certainly not opposition ones, and certainly not on policy questions.They don’t really put policy on their billboards – some people had to do it for them last election. Their flagship policies are generally pretty unpopular. They [update: still] have [basically] no policy about some of the biggest issues facing NZ (climate change, child poverty, inequality and the housing crisis) – in fact, they often deny that they’re issues.
Nicky Hager’s Dirty Politics has provided some alarming insight into what kind of politics they do instead of policy politics. I haven’t read it, but Danyl McLaughlin helpfully summarises the basic thesis thus:
John Key’s National government uses a ‘two tier’ communications strategy; positive communications, which are focused around John Key, who is presented as ‘relaxed’ and decent, and negative/attack communications, which are conducted covertly by senior staffers in Key’s office and fed to the media mostly – but not exclusively – through Cameron Slater’s WhaleOil blog.
Obviously, the emphasis of the book is on the negative ‘tier’; the positive ‘tier’ was already quite obvious… but in fact both strategies involve “playing the man, not the ball” … positively, they focus on “the man” of John Key, his smiling face [update: which emblazons 12/18 of these and 4/4 of these plus a bonus] and perhaps some content-free feel-good generalities coming out of it. Negatively – well, you can read the book or the excerpts or the leaks or the blogs yourself.
Playing the man in these two ways has been a winning strategy so far, and has kept National riding high since Key took over (they’re currently polling well over double their 2002 election result). Will Dirty Politics and Whaledump change that? I hope so, but I can’t say with confidence.
What I can say with confidence, though, is that Key’s latest accusation is the most brazen hypocrisy I’ve witnessed since I’ve been following NZ politics.
Post-script (21 August):
Here’s the updated first graph now that National finally have some policy (5965 words of it, to be precise):
They’ve also deleted the two documents they previously linked to, but they’ve added a whole lot of links on each of their policy pages (mostly past news stories about what they’ve done while in government, which is kind of cheating… but also some fuller policy statements). I can’t be bothered counting that up at this stage. My guess is it’s still much less than Labour and probably less than the Greens and Internet Party too (definitely if we only include policy announcements proper).
And yesterday, Mickysavage from The Standard responded to the latest idiot millionaire (good at making money, not so good at fact-checking National spin) to whom the corporate media has given uncritical voice to trumpet this propaganda. He says it better than I can:
Rod Drury: “What I’d like to see is the Government have another term because they’ve had two terms where they got the debt sorted …”
Mickysavage: “Such economic illiteracy coming from such a senior businessman is a worry. It obviously needs to be repeated that in June 2008 Labour had paid off
allcrown debt and the crowns accounts showed a slight surplus. By September 2013 net Crown debt had reached $60 billion and increases in debt are predicted for years to come.
Of course many will then trot out Key’s mantra that Labour had left the country with a decade of deficits but this statement is essentially a lie. The Global Financial Crisis was the cause of the sudden change in the country’s finances but instead of Helen Clark and Michael Cullen being blamed I can suggest many other names of those who should take responsibility. Names such as Wall Street, Morgan Stanley, Bear Stern and my personal favourite Merryl Lynch. Because it was a bunch of robber merchant bankers that brought the world’s economy to its knees.”
Here’s a couple more graphs and a couple more quotes, to help illustrate the various impacts of the GFC (for which Key was partly responsible), the 2010 tax changes (which made tax regressive for the majority of incomes), and the Canterbury earthquakes.
However, please note that the main point of this blog was never to say National have been irresponsible with their deficits and debt (I tend to think they have been, but it’s a complicated question). The main point was to show that the right-wing suggestion that Labour are irresponsible with deficits and debt is completely unfounded.
“The estimated cost of the Canterbury rebuild has been increased … Mr Key said the budget would also show the estimated net cost of the earthquakes to the Crown would rise from about $13 billion to about $15 billion.”
“Tax as a proportion of GDP is slightly below OECD averages and has declined markedly over the last few years … New Zealand has, like other countries, faced a cyclical decline in tax revenue as a result of the global financial crisis but there were also important policy steps which reduced tax revenue between 2004–05 and 2009–10.”
I’ve written a sequel blog on the equally pernicious lie that National are better for employment than Labour, because (it’s assumed) beating up beneficiaries and keeping wages low are good for unemployment.