Author Of Report On Income ‘Churning’ To Visit New Zealand
James Cox, the author of Middle Class Welfare, the first study to thoroughly document the extent of income churning in
New Zealand, will visit New Zealand from 14-16 November as a guest of the New Zealand Business Roundtable (NZBR).
In Middle Class Welfare, published in September this year, James Cox concluded that much government social spending
benefits middle and upper income households, the same groups that substantially fund it through taxation. Such
'churning' of income and the high taxation associated with it does nothing for equity, is economically wasteful and
damages economic growth.
The report found that in 1997/98 27 percent of total government expenditure on education, health and retirement incomes
benefited households in the two highest quintiles of taxpayers. These households paid around 68 percent of all taxes.
Around 46 percent of all such assistance went to households in the top three quintiles of taxpayers who paid 84 percent
of all taxes.
James Cox’s study also found that government social expenditures are high in New Zealand relative to many other
countries. The New Zealand welfare state absorbs about 75 percent of tax revenues and accounts for about 25 percent of
gross domestic product. This compares with expenditure of 5 to 10 percent of GDP in Hong Kong, Singapore, Korea and
Taiwan, 17 percent in Japan, and 20 percent in Australia and the United States. Only some European countries spend more
on state welfare.
James Cox has been a member of the Independent Pricing and Regulatory Tribunal of New South Wales since 1996. He advised
the New Zealand government on aspects of social policy changes during the early part of 1991. He is the author of
Towards Personal Independence and Prosperity: Income Support for Persons of Working Age in New Zealand (1998), published
by the NZBR, and has written extensively on economic and social policy issues.
The key feature of James Cox’s visit to New Zealand will be an address delivered in Wellington on 14 November. The
address will be followed by commentaries from Hon Bill English, Leader of the Opposition, and Professor Gary Hawke,
School of Economics, Victoria University of Wellington.