Representation Through Taxation

I used to be a pure democrat, convinced that the concept of one man (or woman), one vote had a moral sanctity that could not be questioned by any right thinking person. But I am becoming increasingly convinced that it is our system of universal suffrage that has led to the current economic plight of most Western nations. Specifically, it is the separation of representation and taxation that is the problem in my mind.

The American Revolution was started with the catch-cry of "no taxation without representation," a protest about King George III's government levying taxes on the American colonists without granting those colonists representation in Westminster. In the West we have gone to the opposite extreme - every adult has an equal say in the election of the government irrespective of whether they pay any tax at all.

Benjamin Franklin said "democracy is two wolves and a lamb voting on what to have for lunch," and this is precisely the nature of Western democracy. In most Western countries the vast majority of the taxes are paid by a very few taxpayers (in New Zealand, the top 17% of taxpayers pay 97% of income tax and in most Western countries it is a similar ratio). This means the small minority of people who pick up the bill for almost all government spending are held to ransom by the majority who pay nothing and who continue to demand more and more.

The current prolonged economic downturn in the West is, in the opinion of an increasing number of commmentators, likely to be worse than the Great Depression. Almost all Western governments are living beyond their means, running up huge budget deficits and adding to their existing mountain of debt to fund them. The only response by governments is to spend more through so-called "quantitative easing" while calling for the productive few to pay even more taxes. The situation is unsustainable and few politicians have any alternative solutions.

I believe most leaders in the West know what is the real solution to the problem but lack the political courage to implement it. The solution, of course, is to significantly cut government spending and regulation, balance the budget and put money back into the hands of the productive few who will invest it to grow their businesses and create new jobs.

The issue with doing this is that politicians are not going to reduce expenditure and handouts to the unproductive majority while that majority determines whether they will continue to govern. Turkeys cannot be expected to vote for an early Christmas. That is why we must change the voting system if we are to change the economic behaviour of governments.

I believe the answer is a system that I call "Representation Through Taxation". I discussed this in an earlier blog and reiterate its key points below.

I would like to see a revision to our electoral system, call it a new form of proportional representation if you like, where you get to vote in proportion to the taxes you pay. Under this system, taxation could become voluntary but if you wanted to influence the political system you would have to pay taxes to, in effect, buy votes. Each $1000 you paid in taxes would buy you one electoral vote. The average of your tax contribution over the three years prior to the election would be taken to avoid stacking the votes in the last year of an electoral cycle. If you paid no taxes, you would get no votes. I see no reason why corporations shouldn't be given votes in proportion to the taxes they pay as well.

But what about those who contribute to society through unpaid voluntary work, I hear you ask? Well, it would be simple to ensure those people are recognised for their efforts too by giving them equivalent tax credits for the hours they worked in their voluntary jobs.

This is a radical change to the fundamental premise of "one man, one vote" that, I am sure, will have the left-wingers screaming from the rooftops. They will shout it down with claims that it is a return to the feudal age where the aristocracy got to determine who governed everyone - but it is not. It is system that gives everyone who contributes to society a vote proportionate to their contribution and it holds governments accountable to those who pay the bills. It is, therefore, a system that will promote economic rationalism and responsibility.

It is time those who paid the piper got to call the tune.

A New Form of Proportional Representation

New Zealand, like many countries, has been living beyond its means in recent years. Our government is borrowing $300m per week to make ends meet and we are headed for an economic oblivion similar to that currently being experienced by the "PIGS" countries - Portugal, Ireland, Greece and Spain (a very appropriate acronym).

The problem is our form of democracy and in particular our Mixed Member Proportional (MMP) electoral system that gives every minor political grievance party an inordinate influence in our House of Representatives.

Benjamin Franklin said democracy was "two wolves and a lamb voting on what to have for lunch" and this is perhaps truer of 21st Century Western democracy than it was of 18th Century America. In our democracy a diminishing minority of the populace are held to ransom through the tax system by an increasing, unproductive majority.

We need to introduce fiscal responsibility to our system of government and I believe the only way to do this is to give greater political power to those who pay the bills.

I would like to see a revision to our electoral system, call it a new form of proportional representation if you like, where you get to vote in proportion to the taxes you pay. Under this system, taxation could become voluntary but if you wanted to influence the political system you would have to pay taxes to, in effect, buy votes. Each $1000 you paid in taxes would buy you one electoral vote. The average of your tax contribution over the three years prior to the election would be taken to avoid stacking the votes in the last year of an electoral cycle. If you paid no taxes, you would get no votes. I see no reason why corporations shouldn't be given votes in proportion to the taxes they pay as well.

This system would solve our nation's fiscal problems in short order and would ensure policies that promoted the economic well-being of the country.