Back in 1999 Cullen decided to 'soak the rich'. Did you really expect anything else??

The text is correct but in the video Bernard misinterprets these figures.

He says that the number of high income earners dropped. The numbers did not drop, they actually increased by around 10-15%p.a. for incomes between $100k and $1m.

In all income brackets the numbers continued to grow. What dropped was the rate of growth in the higher income brackets, particularly $1m+.

It should also be noted that shifting assets to a trust or LAQC only reduces the tax payable by 9%.

The incentive has been to use the system to drop down into the lower taxed levels. Savers have had the encouragement to buy shares in fully imputed corporates. The double tax has gone. The capital gains potential are untaxed. You do face the risk of a Cabinet of politicians opting to destroy the share value as Labour did with aia.

Jimmy...are you saying the govt needs to steal a larger amount of wealth from the wealthy to hand it out to the not so wealthy?

But don't the top 10% of taxpayers in NZ pay the majority of the tax?!

Below is a post someone else posted months back on this site regarding tax:

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "˜Since you are all such good customers,' he said, "˜I'm going to reduce the cost of your daily beer by $20. "˜Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes, so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his "˜fair share?'
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so,

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 ( 22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
"˜I only got a dollar out of the $20,'declared the sixth man. He pointed to the tenth man,' but he got $10!'
"˜Yeah, that's right,' exclaimed the fifth man. "˜I only saved a dollar, too. It's unfair that he got ten times more than I!'
"˜That's true!!' shouted the seventh man. "˜Why should he get $10 back when I got only two? The wealthy get all the breaks!' "˜Wait a minute,' yelled the first four men in unison. "˜We didn't get anything at all. The system exploits the poor!' The nine men surrounded the tenth and beat him up. The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.

RW is right. He forgot to say..." and take your wealth with you" which is what most do.

Roger , Roger . Cullen wasn't the worst option . And the KiwiSaver was a positive step . But the damage the guy caused out-weighs the good he did , I believe . He muffed the opportunity to build strength in our economy , during a global commodity boom . .............. Bill English , by contrast , is muffing the opportunity to re-position our economy , during the financial crisis . Both finance ministers are/were preferring political expediency , focusing on the next election , rather than getting our economy re-balanced . ...........Oh for a Paul Keating in this country !

So you didn't have Harris and mob staying over xmas then SL...?

@sore-loser: "We have not changed GOVERNMENT thinking"¦one IOTA"¦it seems we never will."
Haven't we all missed the point? The raison d'etre for politicians is to represent those (interests) that put them into power. It IS NOT , therefore, their job to try to improve the country; change the system etc. That is OUR job at the next election. The sadness in that statement, though, is that we do not have much of an alternative. Those with the courage of (early) Keating, and yes Lange, get quickly "reminded of their elected mandate"

Ok, thanks.

So if we use a capital gains tax/ land tax code, what happens to personal tax codes?

They must come down! Significantly.

Doesn't NZ have one of the highest tax rates on the rich? At 70,000, one is hit 38% which is only twice the avg. income, while other OECD countries have their highest taxes at three to five times their avg. incomes.

Also, I think businesses pay the most tax in NZ (like any capitalist country), where 60 - 70% of taxes are from corporates, while 10% trusts and the rest "personal taxes". The rich may well pay 90% of that "personal tax" proportion.

If Govt. wants us out of property and into exports/ shares, then what are the incentives?

There are none, just possible punishment for being in property (via CGT/ LT).

I have a solution to govt lethargy over efforts to rebalance the economy. They opt today for doing zip because they judge it to be the best way to retain power and keep collecting the dosh. Let's be honest..mostly it's about money. We need a Treasury/RBNZ committee that is tasked with determining the extent to which previous govt actions have resulted in real wealth creation. They would be empowered to determine what bonus payments would be paid to past ministers of the Crown based on the contribution made by the ministers. These would be substantial sums. Enough to encourage Cabinets to look past the possibility they would be voted out because they didn't 'slice the pork' to buy the votes. I doubt any govt would mess with this 'committee' for obvious reasons. The incentive to perform for the better of the whole economy, would then be in place and take precident over the current incentive to 'slice the pork'. Likewise no govt would set out to destroy wealth since it would be reported as such and cost them an election and any future bonus.

Buy the biggest negatively geared house(s) you can and rent it, Andrew! Off set any PAYE income you have against the negative property cash flow, and regain it with the capital gain at point of sale. Tax implication? How well can you say the words,"My intentions at the time of purchase have changed".

Funny what annoys people....Nick....Capital.

AK... likewise....as I said people only argue the toss who do not understand what is the problems affecting us all and created by idiots and perpetuated by those who think they are right to disparage and not find a consensus for change.

No theft involved...I pay my way, always have, always will.

I am just frugal. A word seldom used today.

I spend wisely, not work. It took me a lifetime to achieve that. The incentive to work differently was a bonus. Now I help people who DESERVE it.

I didn't have to be beholden to idiots like Cull-en & Hell-en, even Banks...etc.

They steal indiscriminately....from all fiscally irresponsible people.

It is IDIOTS who annoy me.......so I annoy them, by not complying.

We do not all have to work till we drop. It is called fiscal prudence to actually be able to be self-sustaining eventually.

Sorry if that offends you. I do not steal your money, I conserve MINE. I live well on way less than the National average.

It is called having no DEBT.

If you actually read what I said, I minimise my taxes legitimately, but I still pay heaps, just not via PAYE.

No theft imvolved here. Just minimising my taxes by not working in the same way as PAYE.

Once you have enough investment income, why keep working as PAYE slave.

I actually left working so that others may have a job funded by me.

I am not greedy, but I am not stupid.

You would not live the way I do....I am sure. In fact most people do not.

That is why you may never know, nor understand, why I even RANT.

Kin.... may have an idea...

Wally I only paid for my family this Christmas and friends......something I have always prided myself on doing, until the family could pay their own way. They learnt fiscal prudence too.

I bring them all together each Christmas.

It is what Christmas is all about in my opinion.

If fiscal prudence was taught in schools and 1.7 million kiwis listened and learnt, then maybe the 1.8 million working would not be TAXED so heavily.

May be we would be a rich nation again, not an indebted one.

"If fiscal prudence was taught in schools"...are you kidding SL?...can you see Tolley's tests testing fiscal prudence when Bill is borrowing a billion a month...likely as not most pupils would think it was a sex lesson. Haaaaarhahahaaha.

Jimmy asked, Doesn't NZ have one of the highest tax rates on the rich?

No - Aussie's got one up on us in that top tax category as well - see;

http://en.wikipedia.org/wiki/Tax_bracket#2009.E2.80.932010

Chris_J - well if we're talking 5's of %'s! ;)

Something that should also be mentioned is that Trusts and LAQC's were only the vehicle for a shift in investments, they were not the reason. If they didn't exist, people would have simply bought property (for instance) in their own names.

All this banging on about LAQC's is boring and misleading.

Kate, and one is on 180,000 AUD, that's about 216,000 NZD or about 6.1 times the avg wage here!

Avg in Oz about 60K so top tax bracket is on 3 times avg wage.

Here 38% is paid on only 2 times avg wage!

We are worse off.

This is from Bill English's May Budget docs: "Who pays income tax, and how much?"

http://www.treasury.govt.nz/budget/2009/taxpayers/b09-taxpayers.pdf

Wow the top 9% of income earners pay 42% of the tax... and you only have to earn over 70k to be in that bracket... who is it that's complaining they're hard done by?

Those who think they are reasonably well off and some way up the pecking order have come out firing, defending their hard earned honour. Pulled out the old "5 men at the pub" chestnut, a flawed chestnut that produces false conclusions by assuming everyone in the story does as they were supposed to, no evasion or fraud.
The 48% of people earning between 20,000-80,000 pay 56% of taxes, most of these folks you will find are PAYE, cant fiddle and pay most of the stable revenue of the nation.
Although it appears in the stats that highest earners, mainly financial sector players, tax paid has increased disproportionately to PAYE sector, this disparity is often put up by those currently prospering above the pack from the current unfettered freemarket model, but it has been proven worldwide that the disparity at personal income tax level comes nowhere to matching the exponentially increasing disparity between actual income of high earning financial sector and low income real sector.
Then turn your attention onto the financial and corporate sector, so called direct foreign investment saviours, the financial sector is monstering the real sector yet it is exempt from GST, foreign corporates are taking an ever increasing cut of the generated profit of the nation yet only pay 9% of tax take, they claim that the tax of their workers is their tax contribution, that they create most of the employment, but the facts are they provide only 19% odd percent of the jobs within our nation, they are gutting and hollowing us, so settle down you little fish who think you are big fish, even Warren Buffet has realised in the current private central banker orchestrated crisis that the bankers could take everything he has any time they want.
For the full expanded tax facts go here and take note that finance costs exceed all other in core expenditure
http://www.treasury.govt.nz/budget/2009/taxpayers

Wally, come on you can tell us your real name and current/past occupation, we have had several before on this site who wouldn't because they were someone different to who they had portrayed themselves to be.
Ill take a stab, you are in the financial sector, in a large institution or not long out of one.?

Roger Thompson are of Staples and Rodway?

Pwilkie,
as of 1984 to be deemed employed for official stats you have only needed to have worked for 1 hr of paid employment in the week of the quarterly household survey, previous to this it was 30 hours per week. Douglas, Prebble claimed their reforms cost 70,000 jobs but created many more thousands of new ones were greatly beneficial to all in the nation, in-fact they left many who were deemed employed actually living in poverty. A far fairer measure of unemployment under the current methodology is the under-employed, those with one or more jobs who are seeking more work because they still cant make ends meet, this survey used to be carried out by a group who ran a site called - Jobs Letter - and used to run at around 30%.

As usual analytic,critical and thought provoking post by Iain.

sorry....... ouch!

have a play in here--use the left + right scroll option [by the pdf]
http://www.treasury.govt.nz/government/financialstatements/yearend/jun09...

Jimmy,

We have part-time politicians here already.

Part of the time they are taking a junket at our expense,

part of the time they are scamming the system at our expense,

part of the time they are managing their property port folios,

part of the time they are counting their chickens,

part of the time they are counting the money we waste on em,

part of the time they follow the party line,

part of the time we are paying for the party line,

part of the time we are paying for the party,

part of the time we may have a referendum,

part of the time they ignore the results,

part of the time they are fannying about in parliament, taking pot-shots,

part of the time they are miss-managing the state of the nation,

part of the time they are miss-managing the economy,

part of the time they are arguing the toss with each other,

part of the time they are covering up their own mistakes,

part of the time they are passing their pay rises under urgency,

part of the time they blow the budget,

part of their time they are enacting law changes to suit their agenda,

part of the time they do not look after their responsibilities,

part of the time they are illegally parking, speeding,

part of the time they watch businesses close and do nothing,

part of the time they enact stupid social engineering laws,

part of the time they fly around the world to meet with their counterparts from other miss-managed nations.

part of the time they cannot see that as a problem,

part of the time they sleep it off at our expense,

part of the time they favour the wrong people who never work,

part of the time they crate more paperwork for those who do,

part of the time they create make work schemes for the boys,

part of the time they do not see the problems with our infrastructure,

part of the time they throw money at that to make it worse,

part of the time they pay consultants to do their thinking for them , at great cost,

part of the time they are in committee,

(a committee is made up of other like minded nincompoops, wasting time... but I digress)

part of the time they are on holiday to get over the strain of miss-managing,

part of the time they are in the bankers pockets,

part of the time they have no idea what is required at all,

And the other part of the time they are totally ineffectual.

Part of the time I wonder why we bother having them. The other 99.99999% I am sure....

We do not need them to screw up the nation and the world we live in....they have already done it.

Capital......not.....today.

PS...that reminds me...

Part of the time they are in the Capital, part of the time they are not.

Part of the time they are wasting our CAPITAL.

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