By Susan St John*
The Green Party made waves recently when it proposed to tax net wealth over NZ$2 million for individuals and $4 million for couples. As part of a broad range of actions, the policy aims to “end poverty”.
Reactions ranged from endorsement to accusations it was fuelled by envy, but the debate signalled what could become a major election issue: the wealth gap and how to fix it.
The claim it amounts to an “envy tax” assumes all wealth has been fully earned and fully taxed in the first place. But we know that’s not the case. A good portion of the wealth accumulated at the top is attributable to fortunate circumstances generating significant tax-free gains.
Inland Revenue’s recent survey of the wealthiest 311 New Zealand families revealed an average net worth of $276 million. At the same time, we know many households are struggling with the rising cost of living.
According to Stats NZ, around 155,000 households feel their incomes aren’t sufficient to meet everyday basic needs. Foodbanks report ever-rising numbers of families unable to feed themselves.
The major source of this lopsided wealth is the housing market. New Zealand has seen the biggest housing boom in the western world. Property owners have ridden the wave to make large tax-free capital gains, while others languish in substandard emergency housing or are forced to live in garages and cars.
Far too much of our scarce labour, building materials, imported fixtures and land have been diverted to unproductive high-end housing, leaving too little to meet the real housing need. Because it isn’t taxed properly, investing in housing has been encouraged as a way to accumulate wealth.
Right now, there is enough money tied up in untaxed wealth to lift every single family in this country out of poverty.#nzpol pic.twitter.com/f3ODNOK9hH
— Green Party NZ (@NZGreens) June 12, 2023
The trouble with a wealth tax
While the Greens’ wealth tax is a useful start to a wider discussion about inequality, it inevitably creates obstacles that in the end may be too difficult to overcome.
Probably the biggest hurdle is that this kind of tax can be incredibly complex and would provoke endless debate about what should be included.
The Greens’ proposal, for example, would capture business assets, shares, art above a certain value, and cars above $50,000. But what if you have two cars worth $49,000 each – why should they be excluded when one valued at $80,000 is included?
And how is debt factored into calculations of net wealth? House mortgages may be straightforward, but what about credit card debt, car finance or borrowing to finance overseas travel?
Not a capital gains tax
For all these reasons, it’s time to get away from debating notions of a confiscatory wealth tax and make the issue simply one of treating all income the same for tax purposes.
Instead of a complicated net wealth tax on everything, let’s start with the biggest culprit – housing. This would address the under-taxation of income from holding housing as an asset.
This is not the same as a capital gains tax – those days are over. Numerous tax working groups have failed over 30 years to make headway on this. Politically it is a dead duck.
Besides, the real problems – inequality and misallocation of resources – wouldn’t be touched by a capital gains tax. Such a tax can only apply to gains made on houses sold in the future, not the accumulated gains over many years, and it will always exempt the family home.
Tax specialists warn over intricacies of capital gains tax https://t.co/YqzhInWjBW
— RNZ News (@rnz_news) April 26, 2023
How a house tax works
Instead, let’s take the total value of all housing held by each individual, subtract registered first mortgages, and allow a $1 million exemption to reflect that everyone is entitled to a basic family home.
Then we treat this net equity as if it was in a term deposit generating a taxable interest return. When houses are held in trusts and companies, in most cases the income would be taxed at the trust or company rate with no exemption.
Calculated annually and pegged to the capital value of properties, this effective income would be taxed at the person’s marginal tax rate. It would affect those with second homes, multiple rentals, high-value properties – but without significantly affecting the great majority of homeowners who have much less than $1 million of net equity.
Thus a couple living in a $3 million house with a $1 million mortgage would fall under the threshold.
This approach would help put investment in housing, after a basic home, on the same footing as money in the bank or in shares. Better choices for the use of scarce housing resources should follow.
Landlords would no longer need expensive accountants to minimise taxable rental income. And it would reduce the blight of “ghost houses” and residential land-banking.
A circuit breaker
The simplicity of this income approach means the government can build on the existing tax system. It lives up to the mantra of a “broad base, low rate” tax system and affects only the very wealthy and those whose tax rates are highest.
Moreover, it is possible to implement quickly, using existing property valuations and registered mortgages, unlike a net wealth tax where the devil is in the contentious detail.
The effect should be positive for those struggling in the housing market, as more housing for sale or rent is opened up. Good landlords should welcome the greater simplicity.
In the longer term, the extra taxable income could produce revenue for redistribution and social investment. Critically, however, it would start to give the right price signals to reduce the over-investment in luxury housing and real estate held for capital gain.
The approach is essentially a circuit breaker that can simply and quickly address the accumulation of wealth by a small group of people.
Crucially, it has a sound economic rationale. By taking the first step and including luxury and investment housing returns that are currently under the radar, it reduces the advantages of holding housing rather than more productive investments.
*Susan St John is Honorary Associate Professor at the University of Auckland Business School. This article is republished from The Conversation under a Creative Commons license. Read the original article.
220 Comments
Perhaps the Greens could stop supporting policies that give $8000 of tax payers money to millionaires wives so that they can buy a Tesla. I earn enough to get no handouts from the Government but not enough to afford a Tesla. I'm now taxed on my salary to give to both the poor and the rich.
To the millionaires wife who is over 65 and claiming a pension which goes on the drinks package for her bi-annual cruise, while other less fortunate pensioners claim their "equal share" of the seemingly limitless pension pot, and struggle through winter.
Meanwhile you and I hand over fists full cash on tax, praying one day we get something back in the form of an adjustment to the tax brackets or heaven forbid some of the net taxpayers out there coming off 3% fixed mortgage terms receive some tax relief, maybe in the form of mortgage interest deductibility as a thank you and an apology..
Hand outs at both end, paid for by the working middle class.
The rich pay for expensive new cars - conned by the rebate - and all second hand cars fall in value. I've no problem with that.
None at all - especially as I have just used the same logic as a negotiating tactic on a low mileage Toytota Yaris Hybrid from a 'careful lady owner' who just bought a new E.V. (Replaces my extremely trusty and economical Toyota Vitz 1.0L with over 450k on the clock.)
Is this what you are referring to?
Christopher Luxon quizzed about claiming Clean Car Discount on new Tesla | Newshub
Luxon won't confirm if Clean Car Discount used for wife's Tesla (1news.co.nz)
If I was in a public facing role then first thing I would do is to ask my family to be on same page as me because on one end if I am criticizing the policy and on other end my family is benefiting from it then it doesn't make me look good.
In grand scheme of things the EV rebates would have been peanuts for someone in this position.
The point is about principle and not about claiming or not claiming discount/rebate.
Personally I would prefer missing out on a little gain rather than being a hypocrite - do as I say not as I do.
But hey what do I know, it seems these days money takes priority over man's principles.
It’s a good policy incentivising good purchasing behaviour. It’s irrelevant what car people choose to buy - I doubt you would care if folks used it for “traditional” Audis or Toyotas (although both have feeble EV offerings).
And the Scheme is not using “tax payers’ money” - rebates are collected from fees on equally expensive dumbass utes.
However, you & I both find ourselves in the target zone for higher income taxes. Therefore, in the true interests of equity, we must broaden the tax base beyond PAYE, and therefore Susan’s ideas have much merit.
I agree with broadening the tax base and quite like TOPs approach to this now that I understand the detail. I do think it was a bit dodgy for Luxons wife to take the EV rebate while he bashes the policy. The left can’t talk of redistribution to the poor from one hand, whilst giving free money to the rich with the other, however many of Nationals’policies do appear to focus on giving money to the rich, so Luxon should really support the clean car scheme.
Great comment. The issue is not about clean car scheme which is not a tax but a very successful scheme to reduce carbon emissions by improving purchasing decisions. It’s about broadening tax base so that tax rates may be reduced and equality improved. This is a far bigger issue for NZ than paying a bit more for choosing a heavily polluting new vehicle
That's because it is an envy tax and as the majority of New Zealanders are home owners it will never get off the ground. We are already being taxed to death in this country, pretty soon it will not be worth getting out of bed to go to work in this country, easier to just sit at home in a state provided house and collect a benefit. What needs a shake up is the tax brackets and the government needs to stop taxing your term deposit. Stop chasing the little guy trying to make $20 to cut the lawns and go after the corporates who are avoiding paying millions in tax.
Could someone create a neat list of which taxes are envy taxes and which aren't, please? Or even a definition. Or is it just a throw-away term to use to shut down discussion of a tax you don't like?
If you want to encourage work, then higher taxes on wealth and assets and less taxation on income would achieve that.
That's the secret, all taxes can be labelled envy taxes:
- Income tax: envy of those with (high) incomes
- GST: envy of those that can afford to buy things
- Company tax: envy of those that can make money in business
- Inheritance tax: envy of those with wealthy parents
- Asset tax: envy of those with assets
- Land value tax: envy of those with land
- Housing tax: envy of those with housing
and so on
Susan,
If any of your schemes involve ascertaining a capital valuation for all properties then you have immediately hit an iceberg. The current property maket, for instance, is awash with examples of selling prices bearing absolutely no or little correspondence with so-called capital valuations.
Setting local body rates partly by way of valuations is bad enough, but basing a tax on these valuations would be a can of worms.
It is best to have a scheme that doesn't involve subjective assessments of valuations of property assets. In my opinion some form of stamp duty would be more equitable as it catches the true valuation.
Alternatively, you could have an aggressive one-off wealth tax as a broke Britain did after the First World War to break up the large landed gentry estates. Some of these estates were hundreds of years old and had been granted to the original recipient on the basis that they wormed their way into some king or queen's favour at the time.
Dynastic wealth also leads to inequity. I suppose some of our current wealthiest citizens must be thinking of creating a dynasty or else why would they carry their wealth to the grave knowing that life is so short. Their wealth wasn't created in a vacuum but within the context of all the rest of the population; everyone else contributed one way or another to their acquisition of wealth. Why not give some of their wealth by way of tax to the struggling to help lift them up to a reasonable standard of living.
Couple of questions, Susan. Have you spoken to the NZ Property Investors Federation about it? What do they think about this alternative for tax purposes, I wonder?
I also wondered how this would apply to rural and rural residential (lifestyle block) properties - how would the house(s) and land be valued and how would one apportion the mortgage on the property?
One thing very easy/straight-forward about the Greens proposal was the flat tax on the value of assets in trust.
If you look at the proportions in terms of where the government earns its income by way of taxation;
https://www.interest.co.nz/public-policy/121283/budget-202324-summary-all-tax-collections
You can clearly see the over-reliance on individual PAYE. As unemployment increases, that revenue source is very much under threat (and with it goes consumption) - and I suspect we are about to experience a significant wave of employment disruption. The emergence of AI alone, for example.
Hence, yes, we must broaden our tax base: the choices are not all that wide - you can tax labour, consumption, profit, assets (capital) and pollution. Note the ones missing in the pie chart.
Or maybe, just maybe, boomers should pay their way for once and give back 50% of their capital gains to the govt to pay for their super and healthcare. It still penalizes the younger generations as they are the ones taking out massive mortages and paying Billions to the banks in interest payments - just to give Boomers an inflated net worth.
If you travelled back in time 40 years you couldn't plan it any better.
Here's the pie chart - pension payments equate to 13.7 billion out of the total welfare budget of 25.09 billion;
Note also that 'Benefits and assistance' includes sickness, disability, foster care as well as Jobseeker (unemployment), and that cost (5.9b) is only a bit more than double that allocated to landlords via the accommodation supplement (2.26 billion).
It's really important to work with the facts.
We aren’t. And home ownership is reducing year on year and generation on generation. Left unchecked we will end up like feudal society with a small landed gentry and a majority peasants who every now and then rise up and lop a few heads off.
See, I can make a hyperbolic scenario out of it too
Wealth taxes and their ilk are why the second biggest French city is (or at least was, I'm not sure if that holds after Brexit) London. On one side of the ocean are people protesting to protect cushy pensions and short work weeks, while those who can produce head elsewhere as soon as they are able to.
Looks like Norway didn't notice that the UK under Dennis Healy (Socialist Chancellor) increased taxes to make the pips squeak, squeak they did and the tax take dropped to be later reversed by Tory's and the tax take then increased. Many politicians simply do not understand human behaviour that if you legislate in a way that is unacceptable people either refuse to play the game or play with no enthusiasm which is what is happening globally - the exodus from California and NY reflects the taxes/laws and crime and its coming to NZ soon. The obstructionist bureacrats and oppressive legislation means I just do sufficient business to live on, no employees required now and no investment or plans to expand so my tax payment reduced - the only thing Labour and other clowns have succeeded in managing.
There are a lot of extremely wealthy persons in California and New York. Some will leave for other places as they always have but to speak of exodus is quite frankly wrong.
NZ has nowhere near the wealth of these places. And those wealthy here who threaten to go would never leave, they’ve zero chance of competing overseas.
Dunno. Losing $92B in tax revenue would seem like an exodus to me.
https://finance.yahoo.com/news/york-california-lost-combined-92b-141000…?
The lead paragraphs of the Norway story says is all:
"A record number of super-rich Norwegians are abandoning Norway for low-tax countries after the centre-left government increased wealth taxes to 1.1%"
Seriously, how can you call yourself "super-rich" and then spit the dummy when you have your wealth taxed at 1.1%?
The article goes on to state that one of the super-rich who moved away was worth $NOK19.6bn and would cost Norway $NOK175m a year in lost tax revenue. Hmm. If my math is correct, that's a tax rate of .1%.
I say, don't let the door hit you on the way out....
And before you say "Yah, but what about the tax intake from all those jobs that went with him...?" They didn't. He moved, his company didn't.
So lets this straight, if someone owns a home say 1 million above the threshold, and it goes up by say 10% the now are taxed extra on that 100,000 even though they did not receive one cent, awesome. You know the threshold would also not be lifted as house prices increase, just like the tax brackets.
Also "This approach would help put investment in housing, after a basic home, on the same footing as money in the bank or in shares"
That is nonsense I can own shares and they can go up by 1,000,000% and I would not have to pay 1 cent in tax on that as long as I am not considered a trader. So not consistent at all.
Taxing interest and income works because you actually get that money.
"Landlords would no longer need expensive accountants to minimise taxable rental income." wow, no they still need accountants to do rent, what every body will need is expensive property valuers to asses the value of their houses.
So you're saying we need the same progressive tax rates on house owning trusts and companies as we do with income tax?
Good plan. I'd go along with that. [evil grin]
Edited: After some further further thought that idea has considerable merit! Very considerable merit.
Here's the usual response, but as price keep falling, it becomes less and less of an issue.
"But what about the little old couple that bought their home in 1973 for $30,000 that now worth $3,000,000, mortgage free. Why should they have to pay this tax through no fault of their own? Do they have to move and downsize just to pay the bill?"
Just make it a Withholding Tax in those few situations where that applies to anyone on the national superannuation scheme. The accumulated amount to be retained from the property when it's sold or passed on in due course.
You are right. Rates are a land tax as the price we pay is based on the value of the property, not on the price of the services.
Now go ahead and calculate the effect of taxes like this one in terms of a rate rise.
Then reflect on the backlash and angst the proposed 13% increase caused.
Presumably, Susan St John, in a downfall such as the current one, I would receive a massive tax return back in my pocket when values decreased. So, as a single person in a $3m home, if I was on the top tax bracket and it lost $1m on paper, I would be getting $390,000 cash back.
"In the absence of inheritance tax, otherwise $3m would pass to the children making the wealth divide problem worse"
People don't get ahead because of wealth inequality. They get stuck in a rut because their parents have largely failed them. Classic example is rates of truancy in South Auckland. Kids can't read. Can't write. Mum and Dad don't give a fig that little Johnny is running amuck at 2am in the morning. Mum didn't take the kids to the library in the weekend to help them foster a love of reading. Dad was in the big house.
And you think taking money off people will fix this? Christ I hate these left leaning 'blame everything on (whites, rich, old people, immigrants). Loosers need to pony up and start working alongside making good decisions. Can't afford the rent? Why the F have 4 kids...smoke, drink, buy lotto tickets....and then get pregnant again.
I'll pay more tax for state subsidized sterilisation. Vasectomy and tube tying.
Disclaimer-blue collar immigrants from England.
Does the Government earmark spending from their tax take? I.e. would the Government go broke if nobody paid taxes? I don't recall digging up $NZD from the ground to pay taxes to fund the Government activities.
What would probably happen, is everyone would have annoying letters from IRD, red ink sales would go through the roof, the Government would still spend their budget and everyone would crybaby about inflation.
Yep.
"The upshot is that David Parker's IRD "High Wealth Individuals" report's main finding has little to do with the desirability or otherwise of capital taxes - indeed the report does not say a thing about the optimality of our tax system. Instead it stands as official confirmation that our government - a government that stood for equity more than anything else - has delivered more unequal outcomes than ever before."
Not a bad idea. (But any changes to rebalance our woeful tax system are not bad ideas either.)
A concern I have is that people may work to ensure they keep enough debt to ensure their tax obligations are minimized. I can see conversation in some households, "Hey we need to use the reovolving credit account to pay for a big overseas holiday. Why? To minimise our tax bill".
One of the critical things in all taxes is that they are set low enough that they don't influence financial decisions.
This is one reason NZ's tax system sucks big time! We tax only incomes - As we earn it and when we spend it (GST).
I have an idea. Why don't governments stop massive demand for land by deliberately importing people? Kicking people in the teeth with yet more tax after deliberately creating this ridiculous bubble is a clear example of the ineptitude in some parts and lack of balls in other parts, of our ruling elites. Can't think of a single one worth my vote!
They deliberately import people because there is a shortage of labour that wants to work in NZ. Labour that pays taxes and generates the income to pay for things we all want. Back in early days of this government they were going to 'build back better' post Covid by not bringing back the migrants that had gone home. After wasting about 1.5 years getting nowhere with this idea as getting the 'bros off the couch' was totally beyond them ( that's the good old welfare state for you! ), they buckled to pressure and opened the flood gates again. So here we are today.
They deliberately import people because there is a shortage of labour
Yes, our migration system is designed to address shortage of labour, not skills.
Take construction for example, a standard design house takes 10-12 months to complete from scratch in NZ and 4-6 months in Australia. Instead of reforming our system to boost sector productivity (better planning laws, encourage use of prefab), the authorities simply stamp more visas, this case roughly 2x the labour to build houses at the same rate as Aussie in a single year.
With productivity growth having stalled in NZ at lower than the average OECD levels, GDP growth in this country has simply been a proxy for debt and/or population growth for more than a decade.
Wow a bit of casual racism there. The problem isn't bros enjoying their sofas, we have record low unemployment. It is a huge cohort of needy elderly who havnt saved for their retirement and Healthcare and expect the state aka working people, to cover this. That's why we need immigration.
Correction ableism. Most of those under 65 receiving benefits are disabled, many physically cannot work while most are denied work opportunities. They cannot work those ghost jobs you suggest as literally none of those employers crying wolf for migrants are even considering hiring someone with a disability who is perfectly capable of doing the work but denied the employment.
Protip most disabled kiwis want to work and many have the experience and skills needed. The crux: MOST EMPLOYERS DONT HIRE DISABLED PEOPLE.
Correction ableism. Most of those under 65 receiving benefits are disabled, many indeed physically cannot work but most are denied work opportunities. They cannot work those ghost jobs you suggest as literally none of those employers crying wolf for migrants are even considering hiring someone with a disability who is perfectly capable of doing the work but denied the employment.
The average Kiwi is clocking in more hours a year than many other high-income nations - 1,730 to be precise.
Kiwi businesses often favour immigrants for their "good work ethic", which as we all know is a euphemism for slogs in the kitchen, construction site or farm - no questions asked.
Auckland came 5th in Forbes work-life balance as average worker does 26 hours a week. 26!!!!
we are lazy, that’s why our productivity is terrible. We don’t have enough kids to replace population and so have to bring people in to wipe asses, serve food, provide medical services etc
This actually makes far more sense than the Greens' proposal. I know wealthy people preparing to shift to Australia if there is clear indication the Greens would get their way. Why do the Greens want to chase out those who already pay 70% of the tax now? And those people have the means to make complex arrangements to avoid such a tax in a big way if it were implemented. The proposed tax is going to hurt small to medium sized businesses. It will kill investment in NZ. Those small businesses employ most of the workers. But the Greens really seem to have no economic sense at all.
You might be right about wealthy people getting fed up & emigrating, let’s assume you are.
Does that mean taxes can only ever go down and never go up, because we are at some kind of “natural maximum?” That sounds like BS to me.
Broadening the tax base to reduce the focus on income taxes must occur, because I’ll be damned if my middle middle class life is going to be taxed to death because the multi-millionaires have a tanty and threaten to bail out.
Does that mean these multi-millionaires take whatever businesses they have with them when they go? *Gasp* we won't have anyone to fill their place in the market. But then you have the multi-millionaire heart surgeons we do want to keep.
I think a clear distinction could be made between a heart surgeon who is focused on saving lives and has guaranteed steady income, and a businessman who is focused solely on bottom lines and finding where the next million will come from. The latter is probably making the most noise, and is actually the easiest to replace.
NZDan - taking you principle and purely as a 10 year pilot excercise evaluate Politicians and Public servants on the basis of what they promise or what they are supposed to achieve and what (if anything ) they actually achieve and in the interim say annually pay them the average wage until review and top up as determined by results.
The businessman is responsible for paying the wages of hundreds if not thousands of workers. When they go, the business goes, and so do all those jobs. The country loses not just one man's income taxes, but the corporate tax, the income tax of all the workers, the GST that the business pays, and the Govt is now responsible for paying the unemployed workers a benefit. How do you "easily replace" a successful entrepreneur who has the skills to start a business that is so successful it employs thousands? They're not exactly hanging out in the WINZ office waiting for a chance. Even now, NZ struggles to keep wealthy founders in NZ as their businesses leave (Xero, Rocketlab, AllBirds) - why would we want to make business flight even worse?
by elmoboy12 | 21st Jun 23, 1:19pm
"I know wealthy people preparing to shift to Australia if there is clear indication the Greens would get their way."
Absolutely. Personally I worked hard and took significant risks to eventually build up a net worth in the upper 3% of NZers. I'm pre-65 retired, living entirely on income from invested capital (not property). Fully taxed income, no trusts or tricky stuff, and zero government handouts.
I'm already getting established in Australia, and will stay here and promptly move all my investments out of NZ if Kiwis are really stupid enough to elect a nightmare Labour/Greens/TPM coalition in October.
Judging by some of the comments here, I'll probably be wished "good riddance" - but believe me, many folks far more wealthy than me also have plans. So regardless of any moral posturing about fairness and taxing the rich pricks, Green's proposed wealth tax will simply result in massive capital flight (just as they have in almost every country they've been tried).
Good leave. It will save our health system far more than you earn spending on your health and older age care costs in retirement. Take your medical debt with you. Fun fact is you cannot take the houses or the land so either you have to pay for someone more qualified than you to manage them ethically or sell up also.
I have comprehensive private health insurance. Do you? Have you arranged your affairs so that you won't have to depend on the public health system or superannuation (i.e., the taxpayer) as you get older? I'm guessing not.
And as I said, my investments do not include property.
You've missed the point, so let me spell it out - the wealthy Kiwis who currently pay most of the tax in this country WILL move their wealth (and perhaps themselves) out of NZ. Think about the implications.
The "flavour of government"?! Well yes, adding literally tens of thousands of dollars to my annual tax bill would leave a bitter taste in my mouth. No tears though, easy enough to avoid.
The kicker is that when the wealthy leave, there won't be any taxes to pay for your health care either. Nor will there be any doctors or surgeons left in the country (because being wealthy themselves, they will leave too). So enjoy your 24 hours ramped in the ambulance bay, the 3 day stay in Emergency, the 6 week wait for critical life saving surgery (during which period you will probably die), the interminable pain and suffering of being on a waiting list for elective surgery that will never be performed, and the knowledge that you won't have access to any life saving cancer drugs because the country is too poor to buy them.
I am afraid your assumptions may be coming true. As you can see from some comments, there are plenty of Kiwis who are envious of people like you and who would be glad to see you go. However, the top 20% by income in NZ pay over 68% of the tax. A wealth tax would be another case of Kiwis shooting themselves in the foot. Many of those who pay the most tax will leave for Oz if such a tax looks likely.
Yep, just as expected!
I've always been amazed at NZ's bizarre tall-poppy syndrome. People in other countries where I've lived and worked generally respect and value those who manage to be financially successful - especially those who create businesses and jobs.
Not so in petty little NZ!
Seems that Kiwis don't seem to understand that wealth is CREATED by clever entrepreneurs (for example, Sir Ian Taylor). Instead, NZers hold some simplistic concept that there's a fixed-size pie that must be divided equally: "Gimme a piece of that pie, you rich prick!"
Similar situation, financially to you. Retired at 50, live off invested capital (not property), pay my full taxes (in two countries, I might add), don't own a trust or tricky tax avoidance measures, no government handouts - including no superannuation (I'm 65 now and I don't need it).
The big difference between you and me is I don't feel the need to move my investments or myself because I am asked to pay more taxes. I can afford it and so can you. I mean, can you really be in the upper 3% if you can't afford a bit more in tax? I also love this country and my love can't be bought by a lower tax rate elsewhere.
As for the tax at the heart of this article, I am not a fan of taxing unrealised gains. I don't think most people will have the liquidity to make that work; particularly if they've owned the home for a long time and have aggressively paid down their mortgage. I also don't think a wealth tax will work. The wealthy will always find a tax accountant who makes them look poor come tax time. I prefer a CGT on all realised gains (houses, stocks, etc). I think the US has got this right. Long and short term capital gains rates to encourage long term thinking, same CG exceptions on the family home (basically a cap on the CG that is tax free), etc.
The other difference between me and you is that I will vote Labour/Green. Go ahead, call me stupid. We can compare notes after your move to see who is happier.
Now this article will have lots of comments 😁😁.
I agree we need to tax houses but who's got the steel balls to do it?
We live in a world where no one wants to take strong and effective decisions. We are just toooo soft and only believe in doing this which makes our life easy today. Sometimes need to take strong decisions which might be pain today but very effective and good for the country in the long run.
Enough said.
Confusing wealth with income is pretty ignorant IMO.
Income is required to pay for food or other consumption, deferral of consumption is required to build wealth.
Taking from one groups wealth to subsidise another groups consumption will be ineffective in addressing the wealth gap.
Increasing income earned by workers is a better path. Invest in education and reduce reliance on welfare, teach people how to save.
Make kiwisaver contribution tax free to encourage and enhance wealth creation.
This is the correct response. Allow Kiwisaver contributions to be tax free, to a certain limit. Canada has a very good system RRSP which does exactly that.
Canada also have a TFSA (Tax Free Savings Account) where you contribute after tax income but you can use as a stock trading account and all dividends and gains are tax free.
Once capital gains is applied to all property then the above two systems come into play.
Lol, "everyone is entitled to a basic family home". As soon as someone claims entitlement, they have no argument. Where is there a rule that someone is ENTITLED to a "basic family home"? And laughably, there is no mention of Government, both central and City's role in increasing house prices. So Government can manipulate house prices for tax gain. Genius. As always, Susan St John heads off down the socialist rabbit hole. "We need more money to pay for stuff for other people". Of course, it hasn't worked for over 80 years yet here we have people proposing that it will work. What's the definition of stupidity?
So you're saying not everyone should have a right to have somewhere to live? A basic family home could be an apartment, but it's not a cardboard box under an overpass. This is not some arbitrary thing made up all of a sudden, it's part of the UN's universal declaration of human rights:
Article 25
- Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
https://www.un.org/en/about-us/universal-declaration-of-human-rights
UN Member states - from Afghanistan to Zimbabwe which bookends tell you all you need to know about that organisations lifetime hypocrisy & gaslighting on human rights: Member States | United Nations
Since the UN was formed in 1945 the worlds population has trebled, mostly in countries which have no intent or ability to provide their citizens with any standard of living that their people can't/won't/don't provide for themselves &/or that their corrupt Govts can extort from guilt trips on the wealth of more successful nations.
What losses?
The proposal is to tax net house equity exceeding $1m "as if it was in a term deposit".
So if net equity is $1.1m , tax is something like $100k x 6% x 33%. So about 2 grand tax to pay.
If net equity falls to $900k, you fall below the threshold and therefore have no tax to pay.
There is one feature of this particular wealth tax that I like, and that is it is tied to your marginal income tax rate. So it automatically reduces for those likely to be cash poor.
In terms of bad ideas this has got to be one of the worst...
Even worse idea is lean on the left leaning Green party, who lets face it - are 'environmental activists' to advise on financial/ monetary matters outside of their core competency
This is basic 101 robin hood thinking...
How do you think that will end - taxing peoples assets?
Property taxes have the major downside of discouraging capital improvements; if you build more housing on your land, you get taxed more.
A far better solution is a tax switch, reducing distortionary taxes like income tax and GST, and instead taxing land. The only party currently proposing something like this is TOP, but other parties should get onboard with it.
This prevents capital flight (the land doesn't go anywhere if wealthy people leave the country to avoid it), encourages productive investment (you can build more housing/garages/whatever without getting taxed more), and will reduce the price of land, enabling more people to own their own homes.
If "everyone is entitled to a basic family home", then this is the most effective solution to reduce land prices, enabling more people to purchase a basic family home.
Huh? So you have money to invest and have the choice of where to invest it.
A. Invest in property where your initial investment will be highly taxed with an LVT.
B. Invest in practically anything else.
I am choosing option B, but can you please explain your reasons to choose option A?
What we are looking for as a society is to have our housing supply increase in line with or exceed our population growth.
What an LVT will do is pause investment in building houses until the investments make sense again. Pausing as the price falls to a new level will take years, while we add another 75,000 to 100,000 new people each year. Rents will go up a lot.
Yes, that is certainly possible. It's a difficult issue. In general, I would like to see taxation used to discourage lazy use of land and housing, land banking, and excessive hoarding of rental properties but I appreciate that the transition could be problematic. If it was introduced in a phased manner and well sign-posted years in advance maybe we could get somewhere and the price of land would fall steadily in preparation, but we simply don't have the political stability to achieve that kind of thing with major parties flip-flopping on significant policies whenever it takes their fancy.
If you believe those counting actual departures vs arrivals then now may be a good time to make a change, as more seem to be leaving than arriving. Maybe the immigration numbers will be more reliable when the new arrival cards are introduced?
So many people just surviving at the moment the average wage couple has no chance of buying a home while getting stitched up paying ridiculous rent payments which makes sure saving for a deposit is near impossible. The government should use any money from taxes raised from housing and put into building housing and renting out at low rate this will stop the people who are taking advantage of the young people who have to rent. Society is breaking down at the moment because a huge amount of the population cannot afford to survive and live week to week,
Anyone that doesn't think all assets should be taxed the same, is in denial or is bias. In accordance though, if we are to apply the tax across all assets like I've mentioned, the income for the state should be calculated and income rates should be adjusted accordingly to ensure we aren't just giving more of our wealth to the state.
That's across all tax brackets, not just one or the other.
"What about the family home?" Well, if all homes were taxed, family home included, it wouldn't affect family home owners as the entire market is in the same boat. If you took out huge debt to buy a home recently, you took that risk borrowing huge amounts to enter a market where the rules are subject to change, don't blame anyone but yourself. If you're going to treat it like an investment, then treat it like an investment when it goes into the negative.
If you think housing should be exempt, you're happy to continue the overvalued bubble it has become and are fueling a ponzi like scheme, that is deteriorating this country inside out. Young kiwis aren't just leaving because of better paying jobs, if the affordability to have a future here (house, family), was as equal as other nations, they would most likely stay.
This will most likely get some comments that don't agree with me, but hey, look how your thinking has panned out and how it will continue to pan out. I want a viable future for this country, myself and my kids if I raise them here. If that means the end of your non-productive wealth leeching "investment property", so be it :)
The long-standing problem we have; untouchable any politician regardless of ideology, is being addressed - one way or another.
And anyone who doesn't see that articles like this, and others, are now coming thick and fast is ignoring the probability that 'something' is going to happen. Whatever it is might be progressive, but Change is here. We can take note and act accordingly, or ignore that at our peril.
The "...articles like this, and others, are now coming thick and fast..." are always written repeatedly ad nauseam by the same few self opinionated politicians, media, academics, economists etc who cannot consider any possibility that people take responsibility for their own choices & children, therefore they are stealing from people who do.
"The problem with socialists is that they eventually run out of other peoples money." Maggie Thatcher
I appreciate your perspective, but it seems like labeling the call for equitable treatment of housing as socialism is a bit of a stretch.
My intention was not to advocate for taking from one and giving to another, but rather to propose that housing be subject to the same tax regulations as other asset classes. Moreover, it is crucial to ensure that any adjustments to tax brackets accompany these changes so that the state doesn't accumulate more wealth than it currently does.
For far too long, housing has enjoyed special exemptions, serving as a haven for tax benefits and being perceived as a nearly risk-free investment due to government interventions in areas such as immigration, the OCR, and housing consents.
It is important to recognize the distinction between a natural, free-market capitalist system and socialism. Implementing fair taxation on housing does not equate to advocating for a socialist agenda.
It seems that you are determined to defend the current housing market dynamics, perhaps because you have worked hard to own your home or are currently managing property-related debts with banks. However, it's disheartening that your username, "kiwi kids," doesn't align with the stance you've taken.
I'm talking more about your kids future... with the way that you want things to be, your kids would be looking at an average or more of 20x annual income to buy a house of a couple, is that the "much better place" that you're talking of?
kiwikidsnz, how is taxing property like what it is "an asset", like we do for all other assets in this country, taking from one and giving to another?
People like you are the exact reason we're in the mess. You believe because you've bought into the ponzi system that it should continue and the future suffering of younger generations for your wealth is justified, get a grip mate. Grow some balls and admit you're wrong. For gods sake.
I'm in my 20's, it's no wonder everyone around me is exiting this nation.
I'm being blunt because someone like yourself is in denial and too deep to admit that it is a ponzi system, and that for a brighter future, it needs to change - it needs to be treated as a fair asset, like how all assets are treated.
I am relishing in the downfall of the market at the moment, both celebrating those who are suffering by sponsoring this ponzi, and for those are now entering the ability to raise a family and have a future in NZ.
No. Deadbeat-can't provide the basics required for the children to lead a fullfilling and healthy life whilst going on to have more children.
In social housing-sucking off the state? Don't breed.
Struggling to pay bills? You are a deadbeat looser if you drink, smoke, gamble and put mags on your $5k car but the kids get takeaways at night.
Protip most beneficiaries are elderly or disabled. NO ONE CHOOSES TO BE DISABLED, to be born disabled or struck by illness or bad fortune. Just like no one chooses to grow old. Being unable to work due to severe disability is NOT a life choice. If you are so ill and disabled you are denied work, education and life opportunities by others your life still has enough value to have human rights to live. Unless it is in your country where right to life very much depends on how and who you were born to.
Gosh darn, so many people playing so many games to apply any solution other than the obvious. Land Value Tax, Universally applied by Local and Regional government at a much higher rate than now. Literally every economist (who wasn't a lying, cheating grifter or selling sophistry) has advocated for Land Value Tax as the best form of tax available.
Just apply LVT.
LTV is no panacea. It only partially deals with the real resource problem. if it applies to all land with no exemption it is as bad as rates---not tailored to a net position. Rates are painful as all pay them regardless of how well off they - they may have little net equity because mortgages are high , I dont hear any talk of a net land tax-- what part of the mortgage would you net off?
The argument that land is fixed applies to real estate in the whole including the house
Except it does. It sucks yield out of the housing market. It imposes a constant fixed cost on home ownership and suppresses prices. It means land must be used productively.
The housing bubble occurring for a second time was a mistake. Imposing strong LTV suppresses mortgage speculation, funds the state, imposes the cost relative to the use case of the land.
I proposed a solution to this a while back. Council owned banks provide the mortgages for people within their district, similar to S&Ls in the US circa 1930s to 1980s. These council owned but independently managed banks provide the liquidity for mortgages, funding the councils with bank profits in exchange for rates being exempt on properties which own a mortgage with that bank. In that system, the interest from the mortgage pays for the home of the mortgagee, while rates apply to the freeholder. Fund the individual council banks, which are geographically bound, through some sort of pseudo-central bank. Similar to the Bank of North Dakota.
A permanent solution require more systematic changes than what we have now.
Susan your proposed wealth tax discourages productivity improvements whereas LVT is easily implemented, hard to avoid, and does not tax productivity as numerous economists both modern and classic have explained.
Check this paper out for the more articulate explanation for why taxing land not capital is better.
https://www.ft.com/content/fadfbd9e-29ca-4d53-b69a-2497cc3ed95d
While I generally agree with your comments Susan, this one seem to miss the mark by a considerable margin. LVT doesn't need to be a panacea, it just has to be better than your suggested solution to be worth considering. I think it is, it can be applied to all land or not - this doesn't hurt the efficacy of an LVT in of itself (personally I think it would be best if applied to all land but could live with only privately held land).
Rates are not 'bad' or 'good' because they don't take into account a 'net position'. They are paid for services provided by the local town/city council and these are not distributed based on how large ones mortgage is. Subjectively, a given Council's spending might be good or bad but that is a separate matter.
I dont hear any talk of a net land tax-- what part of the mortgage would you net off?
Good, long may it stay that way, I want an LVT to disincentivise leverage which has been a huge cause of inequality and financial instability. An LVT incentivises the owner to use land whether or not it has a house on it and even if they do nothing with it they still pay for the privilege. I understand technically using a net method would be more correct, but in my view the uncertainty of obtaining a net that isn't manipulated via leveraging (even your method talks about 1st mortgage only, why? Because it gets complicated and hard to measure is why when there is no reason at all to exclude the 2nd mortgage too). Therefore, I say go the whole hog and make it simple. Your tax would be better than the current no question, but a Land Value Tax would be better again in my view.
Yeah so tax & some other reform as follows;
First 20% of income tax free
income from all sources treated the same - includes capital gains
secondary taxes abolished
means test the old age pension (referred to as superannuation)
a guaranteed minimum income - the savings from this one would be huge - social welfare admin would plummet and an ols age pension is no longer required
all the above = better capital allocation
That's fine bring it in. But then there should be you don't collect a benefit unless you work for it in the community if you break the law you lose your benefit. If you have kids to every Tom dick and Harriot then you are accountable for that. The benefit is for necessities not ciggies pokies or alcohol it comes in food stamps. You look after the state house you are in if complaints then you lose state house. If proven you belong to a gang you lose benefits. If we are going to tax law abiding hard working kiwis then let's go the whole hog and make everyone accountable for their life and actions. I can hear the screams from the greens now how dare I
While we are at it, we could cut the pension because very few recipients have paid enough taxes in their lifetime to fully fund it, even if you consider the time value of money. Nah, that's probably too harsh.
If only we could pull up the voting records for every person who voted Muldoon in 1974, make them ineligible for the pension. That's accountability. Because no way would we ever look at means or wealth as a way of determining eligibility for the old person's unemployment benefit.
I'm not keen on benefits because they require huge admin. Better to have a simple transfer at a liveable level. The old age pension (superannuation) is a good example - it is universal if 65 or more no questions asked
To deal with bad tenants and gang members it is probably better in the long term to fix the underlying problems
If only it were all that easy/straight-forward. Work where/doing what and who's supervising the work of the unemployed in the community? Who looks after any pre-school children while the unemployed parent(s) work, and who pays for that? And the children displaced by your proposals (without housing) - how do we feed and house them?
Not expecting any answers because there are none, aside perhaps, from a UBI (per adult) and a child (non-cash, i.e., food, clothing/uniforms, toiletries etc.) benefit - then the state need not get involved beyond that.
So we just let generational welfare dependants. We have tried allowing people the privilege of getting a benefit for no accountability and we now have 2nd and 3rd generations of welfare recipients who just expect the benefit for no input. Maybe we need to invest in other ways to stop that and create accountability
Protip most beneficiaries are elderly or disabled. No one chooses to be born disabled, no one chooses to grow old. Being unable to work due to severe disability is NOT a life choice. If you are so ill and disabled you are denied work, education and life opportunities by others your life still has enough value to have human rights to live. Unless you live in NZ apparently. According to Colin all disabled children and older adults should be dead.
I'm concerned that someone who doesnt understand how an offset mortgage account works is now making up a tax system. This is exactly the problem with the Left who lack any financial understanding of the implications of their ivory tower theories.
If you borrow $500,000 and put the money into an offset account, you don't incur any mortgage interest. You don't earn any interest income. The cash cancels out the debt. https://www.moneyhub.co.nz/offset-mortgages.html
And since cash in the bank is not taxable, you don't pay any tax
Hi Susan, I'd be interested to have your thoughts on my situation, if you have time to comment.
About 2 years ago my property portfolio was valued around $12M. I had it looked at recently to establish some new lending, and it had dropped to about $9.5M. That's OK, it's a long term game, and I'm sure that it will go back up.
My question for you - if we were using your method, and I'd paid $48,750 at the 39% marginal rate on the $2.5M capital gain between $9.5 and $12M, would I then be expected to pay another $48,750 as the houses rose back up to $12M in value? Wouldn't that be double taxation?
Unless of course I can offset a $48,750 rebate for the drop in value over the past two years against my other income. Which would be nifty, and quite helpful.
How would you reconcile this using your method?
Would you not claim a loss over the years that the value falls, which can then be carried forward into future years?
- + $2.5m = $48k tax bill
- - $2.5m = $48k tax loss credited against IRD account, account is "$48k in credit"
- + $2.5m = $48k tax bill set off against the loss that was credited against your IRD account. Account is now $0/no tax to pay.
You don't get a "refund" but they record your loss so that they don't tax you twice for the "same profit".
hi MediumPangolin
It is not a capital gains tax.
If you had $12m in the bank at 5% you would gross $600,000 pa and be taxed in full on that.
Lets say you have a $6m home and 6 rentals at $1m each. Under the current system If fully rented to give a 5% net rental profit, you may have had taxable rents of $300,000. At 39% you would pay tax of $117,000, not allowing for any periods of zero rent.
Suppose our proposal had been in place and the total CV of your properties was $11m after the exemption . You have no mortgage debt so if the rate is 5% ( it could be less than this of course but always under the bank mortgage rate) then the income you would be taxed on will be $550,000. A 39% tax rate means you pay $214,500 tax. If there is any rental coming in it can offset this and you are saved the costs of determining net profit from rentals and paying tax on that.
Under the new system you will pay at least $97,500 more in total tax than you did under the old system
If the market falls and the next CV valuations total $9.5m your tax bill drops to $185,000
The annual charge goes up again when markets recover and CVs rise.
Between valuations, CVs could be indexed to a housing index.
To iron out all the rough edges we need a tax working group-- but it will be much simpler than a net wealth tax on everything,
Most of those sitting on property income are not doing any "hard work" for it. Compared to say nurses and farmers, or indeed even that of teachers and engineers. At best sitting on property equity is a phone call to get a revaluation... and boom enough for another deposit on a new property. Been there, done that. The system is far too broken.
Great. Another tax to address the failings of successive governments.
Beyond belief. Imagine in a business. You completely screw up the management then insist the shareholders bail you out. And if you think this money will be redistributed you are a fool.
Biggest issue is wastage by Gov. Zero accountability
Yep the biggest fools are the ones that think if we rob all the rich people, somehow it will make their life better. Watch that money disappear into a black hole of wasteful spending by incompetent governments. Only one way to make it in this world, get off your arse and work for it.
Yeah great, lets make the tax system more and more complex and easier to avoid.
People with 2 or 3 houses will simply get their kids to own the others. So you might end up with a couple with 3 kids with $5m of houses untaxed. Now stick a few mortgages over those houses and use the mortgages to buy additional houses in ever increasing amounts and you aren't fixing any problem whatsover.
TOPs LVT tax switch is much simpler and actually impacts everyone while reducing inequality. Just do that.
Enter the woke world Yvil, where it is always someone elses fault for your own choices or consequences from those choices and you can seemingly demand the world accept anything you say or do or shout loud enough to cause hurt to someone else due to your misguided choices and fragility. Sad, sad indeed, but reality always forces the hard answer on those of this volition.
Protip most beneficiaries are elderly or disabled. NO ONE CHOOSES TO BE DISABLED, no one chooses to grow old. Being unable to work due to severe disability is NOT a life choice. If you are so ill and disabled you are denied work, education and life opportunities by others your life still has enough value to have human rights to live. Unless you live in NZ apparently. You chose to discriminate against disabled people, you chose to design houses and workplaces to be inaccessible, you chose not to hire disabled people and treat them like they are less than human, you chose to perpetuate the worst abuse towards them, (physical, sexual, educational, financial and emotional abuse) by complicity with the state and private business and you chose to deny them a future. The least you can do is pay for your part in your mistakes.
Even your comment above is a literal hate crime towards disabled people. Time you were responsible for the harm you choose to perpetuate. Sad, sad indeed, but reality always forces the hard answer on those of this volition.
I never mentioned the disabled, I was talking about the colloquial 'wokeism' and how insidious it is. I take affront to your labelling of my comment equating to a literal hate crime as it is very clearly nothing of the sort. Clearly you are having a hard time in life, and I'm deeply sorry if that is the case for you or someone you love, but to accuse someone of a hate crime from a comment such as the above shows a clear disconnect from reality and an underlying matter that needs attention. I hope you find positivity in life, even the darkest tunnels have light at the end
Susan St John sees a flaw in the Greens' proposed hit-the-rich wealth tax, and suggests an alternative closer to what TOP the Opportunities Party wants.
She has the beginnings of a good idea, but to single out $1million of housing for exemption from tax seems to discriminate against those who might not own a house but have other assets (which might at some time go towards buying a home).
She writes:
'Let’s take the total value of all housing held by each individual, subtract registered first mortgages, and allow a $1 million exemption to reflect that everyone is entitled to a basic family home. Then we treat this net equity as if it was in a term deposit generating a taxable interest return.... Calculated annually and pegged to the capital value of properties, this effective income would be taxed at the person’s marginal tax rate.'
Surely the fair approach would be to make all assets assessable for income tax, with an across-the-board $1 million individual exemption (not applicable to trusts or companies).
Don't know about that. When Terry Baucher did this article on it (the Greens tax proposals);
My first thought was both Labour and TPM could likely support it (or a slightly tweeked version of it), if that turned out to be the coalition post-election.
That flat tax on assets held in trust is/would be easy to implement - and (according to Terry) 4 million people would be better off under the revised PAYE (labour) tax rates.
Susan,
Please put some of your considerable talents to work on the subject of how to increase the wealth of thise who have little.
Your ideas to date, as well as the Greens and TOP, if implemented, would have zero effect in the one thing that actually matters. That is increasing the wealth of the poor and turning around generational poverty.
Turn the argument around and you might be able to actually make a difference.
What is stopping you from trying?
Here's an idea - managed retreat - government pays to buy out all the dwelling/properties and relocate all the people in places/towns of low employment (i.e., Zombie towns). Need to seriously beef up housing and infrastructure in the cities first though. Oh, and government also needs to stand-up to all the nimbies, as generally they're the ones living in close proximity to all the main centers of employment.. intensification beyond you wildest dreams.
Stop, and have a think about how racist this proposal is. Or at least how those affected will be claiming its racist. Forced relocation off their land, moved into urban areas, stripped of their land-based culture, and made to work. Where have we heard this before???
Who said anything about forced relocation, and (it might be news to you, but) folks of all ages, races and religions live in areas with low employment/poor employment opportunities. Take the West Coast of the SI, for example.
You're the one wanting everyone to have a job! The taxpayer-funded, managed retreat policy being developed with respect to coastal/climate hazards is a voluntary one;
https://eds.org.nz/our-work/policy/projects/climate-change-adaptation/
See the second report down.
I don’t care about how complicated the system would need to be to implement the tax. Make it happen. Then reduce the tax for the lower tax brackets for a start. The only reason a CGT is a dead duck is because the two main parties are too gutless to challenge the top end of town. Make the tax on unrealised capital gains as well to keep the pipeline flowing from the top end into very necessary social investments including education, healthcare and infrastructure.
My understanding was that PAYE would eventually become a flat tax - not disappear altogether. Seriously, Colin, if you are going to make these sorts of statements - you need to provide a link to your source in order to back them up.
Douglas shocked Lange in April 1987 by telling him that his preferred option for the 1987 budget included a rise in GST from a rate of 10% to 15%, the extension of user charges in public health and education and the sale of most government assets, and the eventual achievement of a flat rate of income tax at 15 per cent.
https://en.wikipedia.org/wiki/Roger_Douglas#:~:text=Douglas%20shocked%2…
The problem with talking off the top of your head about historical matters - is that you misrepresent the facts.
You won't much like renting - poor security of tenure; regular inspections; poor/unresponsive upkeep; exorbitant prices (greater than your mortgage given landlords have to make a decent yield and tenants need to cover all the costs); probably won't be able to have a family pet - and the kids might have to move schools more than you'd like (think of the unnecessary uniform costs, let alone the furniture removal/relocation costs).
But yeah, the more you spend on other assets, the better for the country by way of GST income and/or tax on dividends from shares. Even investing in artwork helps our creative sector. And eat out lots; go on harbour cruises; bungy jump and ski your heart away - all good for the economy.
Makes sense.
Income earners are tapped out. Realised capital gains have dried up because we blew bubbles to unsustainable levels. That leaves unrealised capital gains/wealth. Politicians won't want to do it, but as the bottomless pit of need sucks them down they will have to start down this road, since meaningful expenditure cuts are impossible.
Going after the richest is the obvious start, then push the thresholds down as that money flees or is exhausted.
Just another aspect of sharing around the losses until NZ somehow lives within its means, if ever it does before default.
So if you make $75k NZD you pay 33%, then 15% on GST on what you need to purchase. So you are at 48% tax. Not including property rate if you own a home. At 48% tax what the hell do these people want? The writer mentions 311 families making big money in NZ. What a tiny percentage. Why is this obsession with more tax in this country. Why are poor people paying 10.5% or 17.5%. Why do a small proportion of earners pay so much tax in this country. What about rich immigrants coming in, going to tax them because they brought in their money? This country is too expensive to live in that is the real problem. But this is the typical socialist view we must all become bland and live in mediocrity.
People such as Susan St John live in a fantasty world.
Capital Gain is never an "income" until it is sold / realised.
Imagine you have a business or a farm and the value goes up $1,000,000 in a year.
You get taxed at 2.5% and have to pay $25,000 in tax.
Where is the real cash money supposed to come to pay for this fantasy income that is only a book value adjustment at best.
Not to mention the cost to value assets at end of each year which could easily be over $10,000.
All these fantasy stories about profits being made from people buying and selling houses over x amount of years, dont even look at things like maintenance or renovations which can easily be 100k to 300k to renovate a property these days.
Greens and Labour with these envy tactics will just stop anyone wanting to get ahead, and have them move base to Australia or USA or Europe.
Royalties on all natural resources, yes including land, is vital for a functional economy and to shift some of the burden off the working classes.
Land is fixed in supply, a fundamental of economics and an input cost into the cost of everything else. If you're wondering why no matter how productive we are, things only get more expensive to match our productivity. Look no further than landholding rights and responsibilities. Every gain in productivity is matched with an increase in the yield to landholders.
The 1980's shifted the societal burden off the landholders and onto the working classes with the abolition of land tax. We've run the experiment, the results are in. We never should have kicked down that Chesterton fence. https://www.legislation.govt.nz/act/public/1990/0092/latest/whole.html
While we're at it, we really do need to confiscate the fishing quota from all current owners and return it to the people of NZ.
“using existing property valuations”
Completely unsound from someone who obviously has no knowledge of RV assessments . They are mostly unreliable., particularly so in the main centers. The only reliable thing about them is their unreliability . Must be an academic …
This appears as a first step towards communisim, as assets are required to be sold over time to afford to pay the tax - with eventually only a few super wealthy left and all the rest "equal" at a mediocre level. Shameful. Why not come up with an idea that actually supports some ambition?
I've lost count of how many times Susan St John punts a scheme to socialise housing by state-sanctioned theft mechanisms.
Her notion of what 'good landlords' should 'welcome' should be treated with the scorn it deserves. The suggested approach also fails the principles she artfully advocates as the basis for a tax system.
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