The future of publicly funded welfare states is in doubt as costs trend upward. Yet there is little agreement about the shape of the necessary reforms. We show how tax cuts can be designed to establish compulsory savings accounts so that a publicly funded welfare system can be changed into one that relies largely on private funding. The government retains sufficient revenues to act as ‘insurer of last resort’. To our knowledge, showing how both a tax and welfare reform can be jointly designed to enable the transition to this new system to occur in a politically feasible way has not been done before.
About Roger Douglas
Roger Douglas, as Minister of Finance in New Zealand, won an international reputation as the strategist and driving force responsible for the reform of the country's economy, from 1984 to 1988. Sir Roger entered Parliament in 1969. He first became a Cabinet Minister in 1973, in the term of the Third Labour Government from 1972 to 1975. He held the portfolios of Broadcasting and Post Office and later Housing. His period as Finance Minister saw major deregulation of New Zealand financial markets. After leaving Parliament in 1990, Sir Roger was the Managing Director of Roger Douglas Associates, an international consulting firm, specialising in advice on economic restructuring and structural adjustment. He is a founder member of ACT NZ and re-entered Parliament as an ACT MP between 2008 and 2011.
About Robert MacCulloch
Robert MacCulloch holds the Matthew S. Abel Chair of Macro economics at Auckland University. A native of New Zealand, he worked at the Reserve Bank of NZ, before he travelled to the UK to complete a PhD in Economics at Oxford University. Robert was awarded a Royal Economic Society Junior Fellowship and pursued research interests at London School of Economics and Princeton University. He joined Imperial College London Business School as Director of their PhD Program, where he was awarded Best Teacher Prizes and the Rector’s Award for Distinguished Research Excellence. Robert subsequently returned to his alma mater in NZ. He has published in journals including American Economic Review, Review of Economic Studies, Review of Economics and Statistics, Journal of Economic Perspectives and Brookings Papers in Economic Activity.
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