It would be well worth reading the following article, "The Pitchforks are coming for us Plutocrats" alongside the post below ...
Death and taxes are the great certainties of life. Last week listening to someone - have forgotten whom - on the radio talking about taxes I heard mention of 'death duties' as a tax worth exploring. For overseas readers we do not have death duties or tax payable on estates. But, to coin a phrase, 'I've been thinking' and I wonder if we should discuss death duties as part of the politics of Jesus.
In my view some very mischievous talk takes place about taxes. Recently I read a report of an otherwise sound and sensible NZ journalist asking a party leader committed to tax cuts why, if part of government, he would 'give' more money to the wealthy. Er, when we work for money, the income is ours, the government takes some it as taxes, the only 'giving' in the transaction is from the earner to the Inland Revenue. A tax cut is taking less from the earner not performing a charitable act!
In the end, from the politics of Jesus perspective, summing up teaching in passages such as Romans 13, taxes are contributions made by citizens for the apparatus of the state, including defence of the realm, and for an efficient means of enabling shared societal goals to be reached concerning the welfare of all.
Taxes have nothing to do with, say, depriving the wealthy of wealth, or redistributing income in order to equalise incomes or to at least compress the differences between highest and lowest earners. The latter goals may be laudable according to socialist theory, desirable in terms of developing a harmonious society, and - most importantly - they may be agreeable in terms of a proposal to an electorate which is accepted through voting at an election, but they have nothing to do with the politics of Jesus. Those politics require the care of the weak and vulnerable but doing that via voluntary charity is as much an expression of Jesus' teaching as doing it via a tax funded welfare system.
My view on taxes as a means of creating an agreeable society is that I happily pay taxes in order to fund a welfare state as I prefer the dignity of people in need receiving benefits rather than sitting or lying outside every shop begging (literally) for their livelihood. Funding education (assisting people to be ready to take their place in the workforce) and health (ditto re avoiding begging for money to pay doctor's bills) is a logical extension of social contracting to be a welfare state rather than a non-welfare state. Elections, in such a society, in one perspective, are about the amount of tax required for that agreeable society.
Thinking in this way, responsible governments have a duty of care to the medium and long term future of the welfare state to ensure the economy is humming away: workers earn incomes from which taxes are taken. To take too much tax can be to drive down the number of workers (in NZ's case, people tend to avoid high taxes here by heading for overseas jobs) and/or to force away from NZ the entrepreneurial business people who start and develop new industries and businesses. If we really care for the poor we will want a rockstar economy! (Apparently we have one at the moment ... that is a better state to be in than a poorly performing one).
If all such talk means that we take care not to over tax incomes, nor to drive businesses away through unreasonable burdens of taxation, then the question arises, as it is around the world, are there nevertheless ways in which we can prevent the rate of growth of inequality as some wealthy people/families acquire more and more capital leaving less and less for the 99% (or even the 99.9%) to share in?
Death duties potentially are a means of constraining that growth. They have the advantage of not constraining business people through taxation while they are using their skills and acumen to grow and develop their wealth. Breaking up large estates is something NZ has form on: a long time ago large farms were forcibly broken into smaller parcels of land in order to allow more people to farm.
Of course in the politics of Jesus nothing is directly said about death duties. But quite a bit is said about the inability of wealth to be utilised after death! Our treasure should be built up in the Bank of Heavenly Credit, not stored in barns below.
23 comments:
Hi Peter
Addressing death duties might be complicated due to people using trusts to protect assets from being used to pay for high retirement home fees. My grandfather (not having such a trust) could have potentially lost his own house when my grandmother had to go into care.
As for people leaving NZ due to high tax rates? NZ tax rates aren't actually that high unless you want to compare them to the USA which has a different social welfare system, or the majority world countries (where one could argue economic growth due to lack of taxes hasn't been advantageous to most of the population as the money goes offshore).
While of course balance is always the best option between taxes rates and welfare provision, I am afraid the biblical notion of redistributing wealth might work only if the majority of NZ adhered to biblical teaching.
Blessings Jean
Hi Jean
I decided to keep the post at a reasonable length but a longer post would have included some of the usual caveats re death duties (a bit like some discussions re capital gains taxes): no tax on (say) the first million (which would take care of many family homes the typical 'mum and dad' or 'grandma and grandad' estates have have plus a few savings allowed to be passed on); yes, some means to deal with family trusts; maybe exemptions to one degree or another re farms, etc, etc. To be honest I suspect one reason we no longer have death duties is because these questions are complex to deal with!
Perhaps NZers don't leave because of high taxes but we do leave because of perceptions of no jobs available and those perceptions can be fuelled, from era to era, by the way tax impositions constrain the development of business.
Death duties may be a good idea. I generally support taxing unproductive, unearned and unneeded income/wealth more than productive, earned and needed income/wealth; and inheritance surely falls into that category. It wouldn't completely solve the problem of privilege and poverty being passed down through the generations, of course, because by the time people die their children have already benefited (or not) from their financial position hugely.
To your mention of Scripture on wealth being unable to be used after death, I'd add the Law's provisions against wealth (including property) being concentrated in a few hands; debt cancellation, land returning to original families, etc.
A few nitpickings, though...
"In the end, from the politics of Jesus perspective, summing up teaching in passages such as Romans 13, taxes are contributions made by citizens for the apparatus of the state, including defence of the realm, and for an efficient means of enabling shared societal goals to be reached concerning the welfare of all."
If the title of this blog series is a reference to Yoder (or even if Barth/Yoder/Hauerwas are right about the politics of Jesus - never mind references), that's by no means a politics of Jesus perspective. It's a politics of the world perspective, sure, but what does it have to do with Jesus - unless you read Romans 13 as saying the politics of Jesus is the same as the politics of worldly common sense?
I would comment on the sense in which the government does 'give' money to the rich, and on Romans 13, and on redistribution of wealth, and on whether economic growth is automatically good for the poor, but I'd only be repeating myself (and in some cases you) from previous blogs.
Lastly, I actually came to your blog to show you this, which I thought might interest you. It makes lots of good points.
All good points, Caleb.
I am using 'politics of Jesus' in a very general and/or Peter Carrell sense, rather than trying to reproduce something consistent with, say, Yoder.
Interesting article you link to, Caleb and I will add the link into the post.
Hi Peter
Maybe. Most of my friends who left for overseas jobs did so not because they did not have a job, but firstly because they wanted to travel and secondly because of better pay rates due to the exchange rate. Some returned because of lifestyle - there is always a trade off.
As for tax restraining business growth. I think this to is complicated a bit like your death duties concept. Many NZ business take their production off-shore for cheaper tax and labour costs, and choose countries such as China or Taiwan ironically to compete with imported goods produced in such countries; there aren't many who choose European countries.
As labour laws and standards of production have yet to meet those in NZ it can lead to exploitation of people in the developing country as well as undermining business growth here. Recently face-paint imported from China to NZ was found to contain a level of lead 90% higher than safety standards required in NZ.
If you were to ask manufacturer's if it was tax rates or competition from cheaper imported products that made their business less viable I think you would find the later more likely. If this leads to the question of whether we should have tax and labour rates similar to those of developing countries I think the natural consequences would speak for themselves.
Just as consumers have the choice to pay more money for ethical fair trade products we also have the choice to pay more money to support New Zealand businesses. Let's not sacrafice quality, ethical practices and the better way for the easy way.
Cheers Jean
Hi Jean
I am reasonably confident that our tax regime 'is about right' and has been for a while.
However some of our politicians, e.g. on carbon credit type things, talk taxation measures up, up, up and that worries me.
Hi Peter
I suspect I would be part of your dreadful 1% or whatever you want to label them at.
We have never been on really high incomes, though as graduates we were also not on the minimum wage, and for almost 20 years we lived on one income so that I could be a stay-at-home mother to 4 children.
However, we have always made sure we spend less than we earn, and by doing that ever since we have been married we have amassed some assets which that I hope will not only help us through our retirement years, but also provide some legacy to our 4 children.
To do this we have lived in a more modest house than our peers, run old cars (currently we are running one from the 1980s and one from the 1990s - and they are both to old to even be of interest to thieves), had very basic wardrobes, food, and entertainment (none of those luxury overseas trips).
And now you are saying we should be compelled to give it to others.
Where is the justice in that? What you are really suggesting is that we should have lived large and make "the rich" suckers who scrimped and saved pay for us instead!
Mary
Hi Mary
Given that death duties on any scheme, let alone my 'thinking out loud' here, would likely kick in below, say, a $1m estate, it does not sound (from your outline, which sounds a bit like our own, though I confess one of our three cars is a 2000s, but their combined value would be less than $10k ...) that you would be affected.
However you make a good point that death duties could penalise the frugal, and it could, depending on various factors, be voided by the clever-lets-put-it-in-a-trust crowd.
I guess my plea would be for consideration of death duties as a way to break up the wealth which accrues to some so that there are families in Canterbury worth over $100m, there are business empires belonging to some in the billions and so on.
These days, "investing for the future" means putting money in an investment fund that will pay back out once you retire. Once, "investing for the future" meant kids. Your kids, not your retirement fund, were your social security.
Conversely, inheritance was partly about Dad & Mum's money, but it was partly your share of the family's labour, that you had worked for.
It's interesting to consider the connection between death taxes, retirement funds, inheritance, and the atomisation of the family.
Hi Peter
As we live in a main centre our house is worth about $700,000 -- so it does not take that much saving over 40 years to get to that $1 million mark.
As a matter of fact you would have to save almost exactly $2,500 per year for each of the 40 years with a 5% interest rate to get the $300,000 that would make you break the limit.
So you really think you should penalise families that save $2,500 per annum, and buy at the same time buy a modest house in a major centre?
Mary
Following up on my last -- I have calculated that to get to be one of your "rich"you would need to save $8,500 per annum over a 40 year working life. At a 5% interest rate that would give you $1,026,798.
Is that really the level of saving you are trying to penalise??
Mary
Hi Mary
You are making an excellent case for the limit below which death duties do not apply being $2m and not $1m. Or for there being a difference between living in (say) Auckland and Wellington and the rest of NZ re house prices ... no doubt a farming correspondent would have something to say also.
On the other hand, this morning's news, http://www.stuff.co.nz/the-press/10216391/Gough-family-feud-judgment-bared , speaks of one of our Canterbury families and their mega-wealth (by your and my situations!) ... are such situations to grow and grow over the decades or to be broken up like the great farming estates once were?
I would ask how they have come to "grow and grow". Is it through hard work and perserverence or is it through luck or abusing others?
Once upon a time this country celebrated those who worked hard and overcame the odds to do well, and looked down on those who "bludged". You seem to think that doesn't matter, and it is the end result, not how you got there is all that matters.
I wonder how you reconcile that view with the parable of the talents - which so clearly gave riches to those that worked, and took it away from those who didn't (and I am not talking here about those that couldn't).
I also wonder how you expect people to work hard through the heat of the day when all they get is the same as everyone else. I seem to recall a trial of that approach in the Soviet Union and they found that people just didn't, and everyone was poorer as a result.
Mary
Hi Mary
Growth of wealth can be complex. It is sometimes about hard work, sometimes about luck, sometimes about exploitation, sometimes a comb of any two of those or three.
Some families grow wealthy because the initial hardwork of generation1 is built on by generation2 more or less seeing the capital built up by generation1 grow through the work of others (a classic example would be a farmer's children who do not want to work on the farm but retain ownership while a manager and workers do the hard yards. It is a moot point, in my view, whether wealth accrued in such a way is a right for, say, generation3 to inherit in toto without some taxation of the increase in the process of handing it on from one generation to another.
I stress I am raising a matter for discussion, not trying to lay down the law.
I certainly do not want to over tax the income earned through hard work.
Nor for that matter do I want to see savers-for-retirement penalised through inflation eroding a hard earned and carefully saved capital base.
Hi Peter,
Where does one start?
In the Beginning. A God created world which was placed in the stewardship of the man that He made in His own image and likeness.
God was the lawfull owner and King Of His creation;but His steward rebelled and wanted to be in control.
The people wanted a king, so He allowed them a king.They then wanted a Parliament to take the place of the king.Our Parliament now says "Who is God?"
But when did we ever vote on becoming a secular society? And no one has ever laid down the definition of a secular nation.
We sail on as though we still have a Devinely appointed Monarch, but then disregard the Devine element.
If we want to live according to a 'Materialistic' world view ; by all means do so but be honest about it.
My objection is to atheist/agnostic politicians using taxpayer's money to promote themselves as would be saviours and buy votes.
This is so far removed from the intented purpose of man;it is hard to muster the desire to be part of it.
One of the most contentious areas of family relationship occur at or after the funeral of a loved one. The only way of avoiding fighting over the wealth accrued in the life of the deceased, is to make sure there is little left - except to take care of the burial and remaining spouse.
Our children have told us to enjoy what we have. They will not look for an infusion of great wealth after we die. So, apart from Church dues and our various charities, we are enjoying our retirement without having to worry about squabbles after our death.
Hi Peter
I understand from your replies and post you are talking about the wealth beyond what most and nearly all people would consider above and beyond necessary, rather than an attack on those who have worked and saved hard.
The 'pitchfork' article is really interesting.
Although he works on the premise that increasing the income of the middle/lower classes is a necessity in order to maintain the consumer market, rather than focusing on the worth or welfare of the individual, he has a few pertinent points.
These are:
* He acknowledges his extreme weath came from a lucky investment and family inheritance rather than any particular virtue he possesses, "There but for the grace of Jeff go I". The secularised version of "There but for the grace of God go I."
* His challenge from a capatilist perspecive of the failure of the trickle down theory, providing the flip side of that theory "if the rich get richer it will benefit everyone" by stating it's trade off "if the poor get poorer it will be good for the economy" and its resultinng failure.
* He introduces the notion of interdependence usually reserved for social commentaries into the economic stratusfere. The economic provision made for the average worker affects the rich because they are the consumers, and ultimately if no attention is paid to this there is no one to buy the products and at worst protests/pitchforks will be the inevitable result.
* He touches on what has newly been coined in religious circles as the theology of 'enough'. Stating that although he makes incredible amounts of money he does not spend it, as all he needs is two pairs of trousers.
* He advocates that investment in the income of workers does not threaten the economy rather it does the opposite as people are more able to care for themselves. Considering he is advocatinng for the rising of the minimum wage from $7.25 hr this argument is really a no brainer. Truly $7.25 an hour.
* He plainly challenges the justification for low wages being necessary to avoid job losses when at the same time the pay rates of CEO's and managers have astronomically risen - yet none of them have been shipped offshore.
I would disagree with his comments about downsizing government (but country comparison here may differ). I would still maintain governance of a country plays a role economics cannot replace.
These are good points for us to consider in NZ. Alongside examples of past examples of socially ethical but successful business entreprenuers in the past - the founder of Farmers in NZ; the founder of Cadbury in the UK (who kept all his staff on despite the depression), his reward - discovering chocolate.
I agree with you Peter re carbon taxes, one has to remain 'real' about the expenses business can absorb.
Blessings, Jean
Hi Peter,
Commenting on Ron's post of 2/7/2014;I question as to whether Solomon The Wise was only refering to physical wealth when he wrote:[A good man leaveth an inheritence to his children's children].
Or does it bring to mind,the truth that God's Covenant with Abraham was with him and his descendants.Gen.17:7&8 Psm.25:12&13 and also Deut 4:9&23.
For it was God who brought them into a good land.Deut 8:7-10. And it is God who we must thank for the wealth we have.Deut 8:11-18.
Forming a correct attitude to all created blessings which God has bestowed upon us is a continuing theme in C.S.Lewis's writing.In 'The Pilgrim's Regress,Mr Sensible tell John that the :[great art of life is to moderate our passions.Objects of affection are like other belongings.We must love them enough to enrich our lives while we have them-not enough to impoverish our lives when they are gone].
My objection to death duties and any form of socialistic wealth re-distribution is that the blessing was created by God and is His to dispense to whom he pleases.It is not the function of the secular State to interfer in this process.
If I and my children's children,have the correct attitude to a blessing from God;who is the State to say otherwise.
There is much Wisdom and Understanding in this Revelation of the Creating and Loving God.
The question of my attitude to my neighbour and his needs is taken care through my love of God who also created my neighbour.If my love of God is right,then my love of His creation, along with my care for my neighbour will be Godly.
Hi Jean, Cadbury was also a benefactor of theological education!
Hi Ron, yes I see those objections but it is also true that many children of 'large estates', such as the Gough family I linked to above, find the receipt of largesse an occasion for difficulty and not the recipe for happy families!
Saint Francis referred to money as 'ordure'; which like clergy, when spread around can do a power of good, but when accummulated in a heap, can just emanate a bad smell.
The second part of this simile was not initiated by Francis, but probably by a suffering lay-person.
Hi Peter,
Perhaps it would have been better to quote Prov.13:22 in its entirety:[A good man leaveth an inheritance for his children's children:and the wealth of the sinner is laid up for the just].
It would appear to come back to the old Jewish principle of teaching family stewardship of God's blessings upon us.As the generations pass,it is all to easy,to fall into the fall into the Deut.8;17 MINDSET :[And thou say in thine heart,my power and the might of mine own hand has gotten me this wealth.
By entering into that mindset,we have forgotten Deut 8:18,19&20,[But thou shalt remember the Lord thy God:for it is He that giveth power to get wealth,that He may establish His covenant,which He sware unto thy fathers,as it is this day]....[19....[20].....
This ethos is captured in the standard Liturgy [if there such a thing anymore];P.B.page 420:[All that is in the heavens and earth is yours,and of your own we give you].
Yes indeed he was Peter, so too was Robert Laidlaw the founder of farmers which you no doubt know all too well. They are two examples of business people whose faith guided their attitudes towards their employees and their profit. : ) . It's not so much what area of society we work in but who is Lord of our life.
Hope all your work is going well this week.
Hi Peter,
Being involved in Christian Stewardship,means that I must discard the two questions which drive secular ethics;that is,'how can I be good and how can I do good'? I must only seek the Will of the Creating and Sustaining God.
If God is the Creator and Sustainor of all that is seen and unseen;then the ultimate reality of both the world and me are found solely in Him and through Him.
The world was reconciled to the Father through Christ;as was man justified through Him and by Him.
To ask,how can I be good or how can my being good make the world ,[which has already been reconciled to the Father],better; is to change the penultimate reality which both I and the world have in Christ;into absolute realities.
Now Christ,my mediator, no longer stands between me and the world,as I can directly alter the state of the world[in my thinking].To me ,the Will of God is now superfluous.
This is the delusion that secular thinker has propogated.It serves the secular politician well, because it allows for the deception that paying one's tax suffices the meeting of loving one's neighbour.I have now made the world better by meeting my social obligations.
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