Robert Carling of the Centre for Independent Studies has just released a paper, with the title “Voting for a Living“, an even more offensive reprise of Joe Hockey’s “lifters and leaners” rhetoric of a few years ago. The Oz (no link) ran a report by with the opening claim
The top fifth of households by income are almost entirely supporting the bottom 60 per cent of earners
Of course, this is absurd. The actual CIS paper centres on the fact that 60 per cent of the population receive more in benefits and public services like health and education than they pay in taxes, while the top 20 per cent pay more in taxes than they get back. The claim then is that the parasitic 60 per cent are voting for a redistributive state. That’s a long way from “almost entirely supporting”.
If this sounds familiar it’s because Creighton made almost identical claims in 2014. I rebutted them at the time, in a piece for the Guardian. The key point is that, since government spending and taxation must be approximately equal, we collectively get back from government what we pay in, whether this takes the form of cash payments or public services. So, if services are provided more or less equally, those with an income below (above) the mean will get back more (less) then they put in. Add in the fact that, thanks to income inequality, mean income is higher than median, and you get the Carling result automatically.
The current version of the paper extends the 2014 analysis in a couple of ways. First, it has a broader coverage of revenue (including GST) and expenditure (including health and education). Second, it includes a claim that the position of the median household has shifted since the 1980s, from being roughly in balance to being net recipients. However, a closer look suggests that all of this change occurred between 1983 and 1993 that is, under the Hawke-Keating government. And, since there’s no data before 1983, we can’t say much about longer term trends.
The other notable change is that the report is even clearer in stating that there is no legitimate basis for asking high income earners to contribute to society as a whole, for example to reduce income inequality.
Shorter Carling and Creighton: High income earners pay more tax than everyone else and that’s bad.
All this contrasts strikingly with last week’s rightwing talking points, making much of the relatively limited growth of inequality in Australia due, almost entirely, to the redistributive policies introduced under Hawke and Keating. The Oz was all over this, and one of their sources was none other than Robert Carling
fn1. A couple of qualifications on this, which work in opposite directions. Some government spending is financed by growth in debt and income other than taxes, which means that, on average, by the Carling calculation, we get back more then we pay. On the other hand, some spending categories, such as defence, aren’t included, which goes the other way.