One day, when he was contributing to the Tax and Welfare Working Group, economist Gareth Morgan made an off-the-cuff remark that the solution to all of New Zealand's tax and welfare woes lay in abolishing the present welfare system and radically overhauling the tax system. He called this idea the big kahuna. The big kahuna sparked plenty of debate, and got people thinking. Gareth was one of those people: he set about finding out whether what he proposed was feasible and desirable. This book is the result of his deliberations.
The Big Kahuna takes as its base assumption that we don't, as a society, accept that huge differences in income are acceptable and that we therefore choose to redistribute wealth. While they are generally regarded as separate, the tax and welfare systems are fundamentally both methods of doing just that - redistributing income from those who have plenty to those who don't.
Historically, our tax and welfare policies have been developed separately and in a piecemeal fashion. Morgan shows that our tax system emerged at a time of great crisis, in a response to World War I, the Depression and World War II , and it has merely been amended in an ad hoc fashion ever since. Welfare policies, meanwhile, have been driven by ad hoc responses to vested interests.
The result is an unholy mess of policies that contribute to the rich getting richer and poor getting poorer, not the other way around. Our tax policies are hopeless in that many well off people can dodge their tax obligations (The Big Kahuna shows you what they are up to). Our welfare policies are equally hopeless, in that many well-off people can access benefits clearly not intended for them.
This is just as big a problem, if not a worse one, than the benefit abuse that the media and sections of the government are fond of focusing on.
The authors argue that if we're to have to coherent and fair system of redistributing income and wealth, it's necessary to redesign both tax and welfare policies. In this book, they propose a radical change to income support policies: every adult gets an unconditional, tax-free basic income which provides income to those who have no other means, but which is equally given to all. Anyone who chooses to work can do so without any added financial penalties beyond a simple flat tax paid on every dollar earned (a big improvement on what we have now).
The Big Kahuna also proposes that the administration of tax be revolutionised, so that wealth is effectively captured in the system, spelling an end to the tax dodges so carefully designed by tax planning accountants.
In a nutshell, The Big Kahuna seeks to show that if the job of redistributing wealth and income is worth doing, it's worth doing properly.