The Centre for Independent Studies

The Government Giveth and the Government Taketh Away

Overview

Australians are more prosperous than ever before, so the number of people needing government assistance should be falling. Yet the welfare state keeps getting bigger. This book explores this paradox. It asks why the government is spending more than ever on the welfare state when increasing numbers of people are earning enough to take care of themselves.

Saunders contends the answer lies in the growth of ’tax-welfare churning’. In the past, he argues, the welfare state operated like Robin Hood, taking money from the rich and giving it to those who needed help, but today it operates more like a giant ’piggy bank’, taxing everybody but then giving most of the money back to the same people who paid it in. Saunders maintains it would make more sense to leave Australian citizens with their own money to spend themselves rather than forcing them to hand over responsibility for key areas of their lives to politicians.

Saunders suggests three ways Australians could be given back more control over their lives. Government should stop taxing low income earners. Workers should put money aside to cover temporary periods of joblessness rather than relying on benefits. And those who want to provide for themselves should be allowed to reduce their tax payments in return for accepting full responsibility for their own health care and retirement savings. He argues that these reforms would result in a welfare state that would still help those who need assistance, but would no longer undermine the self-reliance of those who do not.

Table of Contents

How did we get into this mess?
The welfare state we no longer need
Why churning is bad for you
Security with responsibility
Opting out of the welfare state

Appendices:
1. Part-time workers eligible for benefits
2. The possibility of an indirect tax credit

Of interest...