Our current tax system, note analysts like Robert Salmond, rates as much tougher on the poor and more generous to high-income earners than tax systems elsewhere in the developed world.
In New Zealand today, life overall rates as much tougher for the poor. Some 28 percent of New Zealand’s children now live in families experiencing income poverty. Back in 1982, only 14 percent of children lived in that poverty.
New Zealand’s affluent, in the meantime, have done quite well. The incomes of our nation’s most affluent 10 percent averaged about five times the incomes of New Zealand’s poorest 10 percent three decades ago. That gap has nearly doubled.
The bottom line: In the early 1980s, New Zealand had a level of inequality about as low as Denmark, one of the world’s most equal nations. Today, New Zealand and Denmark sit at opposite ends of the inequality spectrum.
And that difference matters. A great deal of research worldwide links rising income inequality to everything from low levels of social cohesion to economic stagnation and instability. In an increasingly unequal New Zealand, our social ills are getting worse. We are not progressing as we could — or as we should.