Low-tax egalitarianism?

The latest issue of Policy has an article by former Costello adviser Dave Alexander defending what he calls Australia’s low-tax egalitarianism.

Compared to other OECD countries Australia’s tax-welfare system combines a relatively low tax take with relatively egalitarian outcomes because benefits are more targeted on lower-income earners. Australia also has unusually high rates of voluntary opt-out from full government entitlements, with many people taking partially subsidised private options in education and health.

For Alexander, this policy mix helps Australia avoid some of the pathologies and dysfunction associated with either high levels of inequality or over-sized government.

The Catallaxy crowd aren’t convinced. And indeed in publishing the piece I expected some flak from my classical liberal comrades. But I thought the Alexander article was a strong one. In my own political life I have always been torn between my philosophical commitment to smaller government and my pragmatic sense of what it takes to achieve even incremental change towards that goal. Politically, relatively low-tax egalitarianism may be the only viable model we have.

9 thoughts on “Low-tax egalitarianism?

  1. That’s a really interesting piece. It will get picked up all over the place.

    The point that Australia’s income equality is better than the statistics suggest is very interesting.

    It will be interesting to see if more Americans pick it up. Australia shows a fairly small government can be combined with good health care and good social outcomes.

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  2. “good health care”?? When poor people eg pensioners may have to wait a great time for any care other than pills. As for dental care try getting it on a level with the well to do. Medicare is basically a second rate vetinary service.

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  3. I would have thought that Australia’s key advantage with egalitarianism is that it is a relatively young country and has not had time to develope much of an “elite”. Compared that places in Europe where most of the land and housing is owned by a subset of the population.

    Our minimum wage is decent. Compare to US and places in Europe where the minimum wage is both lower and there are large numbers of illegal immigrants earning below minimum wage off the books.

    The US income inequality is apparently mostly driven by changes since the late 70s. Mostly it is down to huge pay increases in finance compared to any other industry. Mid-level bankers earning huge salaries.

    It is interesting to see the comparisons against other countries. However there was no comment on the apparent rise of middle class welfare from the Howard electoral pork barrels every couple of years. Is that phenomenon overstated? Was Australia more egalitarian before the GST?

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  4. Though we’ve had more than 2 centuries of European settlement – plenty of time to build an elite. The FTB is surely a positive factor from an egalitarian perspective as it transfers large sums to people who are not destitute (which you have to be to get most cash benefits) but are in the lower income quartiles.

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  5. That’s a really interesting piece. It will get picked up all over the place. The point that Australia’s income equality is better than the statistics suggest is very interesting. It will be interesting to see if more Americans pick it up. Australia shows a fairly small government can be combined with good health care and good social outcomes.

    Like

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