Deborah Russell: We all deserve to get a fair go

We don't want to make everybody tall but we do want everybody to be able to see the parade. Photo / Thinkstock

In the United States, when politicians want to connect with voters they talk about freedom. It's a big deal: any politicians who want to be elected need to show they are committed to freedom. Barack Obama used the words, freedom, free and liberty 16 times in his 2012 inauguration speech. The next most common word was people, which appeared 11 times.

In New Zealand, we don't talk about that so much. Our big shared value is fairness. We think that everyone ought to have a fair go, a fair chance at getting ahead and a fair opportunity to participate in our society. We'll hear politicians talking about fairness a lot this year in the lead-up to the election.

But what exactly is fairness? When I ask my taxation students about how to tax fairly, they quickly come up with three ideas, all of them "fair" in some way.

Some students suggest we could charge every person in New Zealand exactly the same dollar amount of money each year. They usually suggest about $5,000 a person. That's not too far off the mark: we'd need to charge everyone, including children, about $6,250 a year to raise the same amount of tax as we do now. It's "fair" because everyone pays exactly the same amount.

But will people accept it? Probably not. When Margaret Thatcher tried to bring in a similar "community charge" in Britain there were riots in the streets.

Other students like the idea of a flat tax, charging everyone the same rate of tax. About 20 per cent seems to be right to them. That could be regarded as fair too, because the same proportion of everyone's income would be paid as tax.

This idea has some support in New Zealand. But when Roger Douglas proposed a flat tax, David Lange called for a pause and a cup of tea.

Most of my students are more comfortable with asking people who earn more to pay a higher proportion of tax.

They argue about how much the rates should be but, overall, they think this is the fair way to go. And research published by Professor Phil Gendall shows most of us agree that people earning higher incomes should pay a higher rate of tax.

Our attitude to tax shows that when New Zealanders talk about fairness they are concerned about outcomes. We can't make the outcomes identical for everyone but we do try to even out at least some of the biggest differences.

Think of it like this. Imagine three people wanting to look over a fence to see a parade: a short person, a middling person and a tall person. If we find a box of exactly the same size for each of them to stand on, then the short person still can't see over the fence, and the tall person has a great view. That's "fair" because we made sure each of them had the same size box — but the short person is left staring at the fence.

Then imagine if we gave two boxes to the short person, and the tall person just stood on the ground. Each person could see the parade because we made sure that we took their individual needs into account. That's being fair, too.

So which sort of fairness is best? Treating everyone exactly the same or treating people according to their needs? The right of politics prefers people to be treated the same. The left thinks we ought to take some account of individual needs so everyone can get a fair go.

When you look at our tax system, you can tell what matters to New Zealanders. We don't want to make everybody tall but we do want everybody to be able to see the parade.

• Dr Deborah Russell is a lecturer in taxation at Massey University and Labour candidate for Rangitikei. The Herald on Sunday is publishing a range of views "out of leftfield".

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