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  Reply # 1685553 9-Dec-2016 23:18
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Geektastic:

 

Death Duties were responsible for the loss of so many wonderful country houses - it was criminal. The unfortunate owners who were faced with the taxes sometimes ended up demolishing the houses because after paying the tax they had nothing left to run them. Britain lost a significant chunk of it's built heritage.

 

 

Was it Death Duties? Or was it that a wealthy man built an ostentatious country house that was unsustainable long-term, being dependent on (a) an enormous ongoing income from tea or cotton or slaves or raiding Spanish galleons, and/or (b) an endless supply of cheap labour for servants, farm workers, gardeners, and house maintainers/repairers, and/or (c) the owners having skills to manage the house and servants and income, and/or (d) no owner ever doing stupid stuff like gambling/wenching/boozing/ostentation/getting scammed/supporting a treasonous plot.

 

 


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  Reply # 1685584 10-Dec-2016 06:36
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frankv:

 

OTOH, is it a fair share if you work harder, and work 60 70 80 hours per week, can't spend a fortune on higher education, so you earn the same as someone who works a lot less? I would also argue that wealthier people get more benefits from tax-provided services (e.g. they drive more, they fly more, their wealth is protected by tax-funded police, etc) so they ought to pay more.

 

 

People who do more, pay more, and create more wealth in the economy at large.  If you travel more, you use more petrol, your car requires more servicing, you take more taxis, you pay for more expensive options, all that money goes out into the economy and more employees are hired and paid, and more taxes are paid on all of this.  In line with your reasoning, they already pay their share with all they do, and the more they do, the share is still paid.

 

So what you're saying to me sounds like it is not really about them doing more, it's about them having more.  They can do more, therefore they should be taxed more than people who can't.  And we're back to an envy tax.  That those who have done well, should be pulled down, for simply having it and more opportunities because of it.

 

Is that you Gareth? lol.


 
 
 
 


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  Reply # 1685593 10-Dec-2016 09:02
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rmt38:

I saw the Paul Henry interview.  Henry just asked a quick succession of questions that I found reasonable.  Morgan lost a huge opportunity to put his case across, and clarify how this would actually work.  Instead he blustered and rambled, and just became defensive to questions that he could have used to his advantage to provide facts and details.  People can claim that Henry was not fair, but every Henry interview is like this, and he only has a limited time to get as much information out of the interviewee as possible.


What I took from it, was that Morgan hadn't thought this through, didn't understand all the situations where it might be somewhat problematic, and so on.  If this tax were a good idea, which I find based on the problems raised unlikely, Morgan should take a step back and find someone with better communication skills to put it forward.


Where does a retired person go, when there is no longer a pension (as some here think should happen) and unexpected costs and problems have eaten what assets the equity tax has left them / retirement savings?  Do they have to reenter the workforce?  What if someone has to leave the workforce to take care of a sick family member or...


How does this affect rent costs for a renter, and is it likely that the owner will just pass the costs onto them, and rents go higher?



Morgan would say lack of demand for higher priced rents would force rents down. My opinion is rents would go up or supply would go down or both. People aren't going to buy houses and let them if they can make money easier some other way and they would for sure put rents up to cover the new taxes.


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  Reply # 1685594 10-Dec-2016 09:03
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Geektastic:

 

MikeB4:
Fred99:

 

 

 

No it is on topic.  Yes that success can come, however statistically, it's highly improbable, hence the high regard given when somebody from a relatively modest background does "makes good" - such as our PM until Monday.

 

One of Morgan's objectives from the equity tax is for it to work as a kind of "estate tax" - to prevent accumulation of multigenerational wealth. 

 



That all reeks of the old death duties that nearly destroyed the UK heritage and resulted in many estates falling to decay or off shore ownership. His proposal is dangerous, it will not have the results he imagines. We would see a torrent of wealth being transferred offshore which will be extremely bad.

 

Death Duties were responsible for the loss of so many wonderful country houses - it was criminal.

 

 

It's a bit sad about the decay of some of the houses - from an architecture/historical POV.

 

Not sad at all about the break up of the estates.  That's why the death duties were brought in.  

 

Of course it wasn't just taxation that killed them off - it required considerable number of staff to run and maintain the estates, farmers, labourers, servants etc.  Post industrial revolution and with growing wealth and job opportunities, labour protection laws, a couple of wars thrown in last century, it became damned hard to get affordable peasant labour.  


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  Reply # 1685596 10-Dec-2016 09:09
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MikeB4:

The taking of home equity be it by taxation or reverse mortgage is a seriously silly idea. Most folks buy a home to live in with the aim of being mortgage free by retirement thus drastically reducing the amount of retirement income needed to meet accommodation costs which is very prudent. It also allows for contingencies during retirement.


If the equity in the home is taxed the required income to service goes up and this can bring greater burden on the state thus the taxation goes back in income support resulting in circulating revenue without gain.


Now take a retired couple who are free hold and living in Taupo, their family is living scattered across NZ and all is well. Their equity in their home starts to dwindle due to taxation or reverse mortgage.  Due to aging or ill health they can no longer live in the home and need to sell and move to where care is available. However, they now have very low equity and the net proceeds of a sales bring very little cash. They are now facing trying rent either a home close to family and medical services or try and fund a Rest home. They can do neither on their pensions, family cannot due to commitments help so they need to seek help from either charitable homes or heavy government subsidies. Again, circular finance without gain but considerable stress and health issues.


If this couple were to be able to keep their equity and sell gaining that equity they would have been able to address their needs from their own resources.


Mr Morgan’s idea will result in homeless, aging people having to try and exist on state funding and subsidy. The health services costs will escalate dramatically.  The burden on future generations will not be lessened it will be increased. The idea is dangerously unsound.


Yes, I have been scathing of Mr Morgan’s proposal as I believe it is dangerous and I believe shock jock tactics to try and get media coverage. However, it causes unwarranted and potentially harmful stress on those on or approaching fixed income existence. It could also greatly worsen the already shocking levels of age abuse we already have in this country.



Exactly why I said it isn't fair and of all segments of society Morgan's ideas disadvantage the people least likely to be able to look after themselves... the elderly. He even has a chart someplace (line graph) that shows it.

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  Reply # 1685597 10-Dec-2016 09:12
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rmt38:

tdgeek:


The renter. The landlord is running a business, so they dont get hit with CGT until they sell. So that should not affect renters


The owner however would be taxed without realising the equity. They are also being taxed on the equity not the capital gain. So, dont buy a house. If you do, interest only, and as the value increases, mortgage that and save, invest, buy stuff. You will then be paying more interest, but you can offset that by investing in shares, rather than you own property.  



What CGT?  This is an asset tax, so it has a yearly cost for owning it.


And who says that shares aren't taxed at their current value?  Just as property would be?


What bothers me most about this, is that it's a tax on unrealised value.  Let's say your property is worth a lot due to increasing demand, and you pay high equity tax on it each year.  But the demand falls, and then a few years later your property is worth less.  Now substitute property for anything, and only the rich and well off like Morgan can afford to own those expensive things when the demand is high.  So the asset owner who cannot afford to hold it, has to sell to someone who can, in the name of solving inequality.



Yes, we'd be paying tax on a 'paper' value. And yes, you'd have to sell if you couldn't afford the tax.

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  Reply # 1685598 10-Dec-2016 09:17
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Fred99:

Gareth Morgan has put together a document detailing trends in inequality in NZ - which he refers to as an "eruption".


http://www.top.org.nz/key_indicators_of_new_zealand_s_inequality_eruption


That's very nicely presented data - I haven't seen things compiled and explained so coherently, usually if you want to find relevant comparative data, then you're digging through RBNZ or OECD reports bit by bit.


It includes data from a research paper "The Signs of Democratic Deconsolidation: Journal of Democracy" which was published recently, which I think (and I'm sure many others do too) combined with the economic data helps explain the disillusionment - particularly the young - with the democratic process itself.


If Morgan is an "idiot", then he's an idiot savant when it comes to explaining economic trends.  That looks closer to genius to me.


 



Being able to show the disparity which I completely agree is there is one thing and being able to come up with a way of fixing it that works is another.

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  Reply # 1685601 10-Dec-2016 09:27
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rmt38:

Fred99:


There is more information on his proposed tax system here:


http://www.top.org.nz/tax_policy_launch_speech_notes


 


Edit: I'm not going to go through posts above where apparent holes have been picked in his proposals, but a quick look through that document suggests that he has thought about it and has some answers.



All you are saying is that he's thought it through and has answers.  These answers are not in the links you gave.  It's vague claims, the same vague notions we've heard here, and vague claims about working the rest out with the majority party.  Lots of mentions of inequality, with vague measures which personally I find questionable.  And it all starts with him standing outside of John Key's house to promote the abundance of inequality, note inequality based on merit is fine, but discrimination and other things not so much.  Why doesn't he stand outside an iwi organisation where they have billions which are not subject to income tax, because they're maori?  Is he saying that John Key did not earn his money based on merit?  I know that a few of us do not begrudge Morgan his money, but being aware of how he got it, merit is hardly a good description - let's say family money.  It's all over the place.


I note that only one of us has read the material, as you note you skimmed it and claim it addresses concerns, yet it doesn't.. because vague and undefined until there's a working party willing to take this on.  Yet, you think he's a genius, given his vagueness, not really knowing what he's promising.  That is a worry.


 



I've read his party web site, excerpts of his book (I don't own a copy) and read some of his articles online because I like a couple of his ideas, like universal basic income. Unfortunately I don't think his tax ideas will work. From the hints about his business tax ideas so far I don't think they will either.

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  Reply # 1685604 10-Dec-2016 09:41
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Paul1977:

I haven't read everything, but what i have read keeps using the word "loophole" over and over.


I save a deposit for a house (while paying income tax on everything I earn). I buy a house and eventually pay off my mortgage (all the while paying income tax on everything I earn, and interest to the bank). I have worked and budgeted hard and now have a freehold house, I am exploiting a loophole by not paying more tax?



Morgan would argue you have an untaxed advantage... you own a dwelling which is giving you in essence free rent. Or another way of looking at it from his perspective you own an asset which if it was banked money would be taxed on the income generated.

Morgan would actually prefer to tax everything you own (and do) but he sees it as impractical because it would cost too much and be too hard.

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  Reply # 1685616 10-Dec-2016 09:49
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MikeB4:

What I need to remember is that these  fringe parties or proposed parties can promise what they like as the chances of them having to implement their promises are next to zero. Should by some miracle they do get elected they can


use the old excuse that they did not know how things really were until they opened the books.


There is on caveat to this, it's 2016 and anything is possible. Crazy year.


 


So with that,  in the words of the immortal Fredd Dagg ESQ....


"So if things are looking really bad and you're thinking of givin' it away
Remember New Zealand's a cracker.
and I reckon come what may,


If things get appallingly bad and we all get atrociously poor
If we stand in the queue with our hats on  we can borrow a few million more."



I'm worried about Morgan because if Trump can get elected anything can happen!

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  Reply # 1685622 10-Dec-2016 10:12
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JayADee:

I'm worried about Morgan because if Trump can get elected anything can happen!

 

 

 

I think Morgan's worried about "the Trump effect" - and the root causes (disillusionment and loss of interest/participation by many in the democratic process), hence he's throwing out some ideas.

 

I don't think he's expecting to be elected, he hasn't registered the party, and probably won't unless there's enough interest to suggest that TOP might get somewhere near the threshold.  That's pretty unlikely IMO.  One reason for that is that his tax proposal is so just whacky and easily condemned, the discussion won't get through to the very people who might benefit most from an overhaul of the taxation system.

 

I don't think we'll be seeing protest marches of the low paid disenfranchised and homeless waving banners demanding "Equity Tax Now!".

 

Meanwhile, unless there is some change, it appears that social democracy is on the the path to decay into something that historically has been resolved with a lot of bloodshed.


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  Reply # 1685624 10-Dec-2016 10:16
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Fred99:One reason for that is that his tax proposal is so just whacky and easily condemned, the discussion won't get through to the very people who might benefit most from an overhaul of the taxation system.

 

 

Could you clarify who you think those people are?


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  Reply # 1685651 10-Dec-2016 10:28
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JayADee:

Morgan would argue you have an untaxed advantage... you own a dwelling which is giving you in essence free rent.

 

 

That's the whole point... the economy *should* be providing advantages to people. So, when people get benefits from the economy, we should be trying to increase those, not tax them to "improve" the economy. The economy is big enough to provide everything that we Kiwis need, but its outputs are not distributed equitably. Growing this unfair economy (which seems to be what GM is focused on) is not the answer.

 

 


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  Reply # 1685652 10-Dec-2016 10:37
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Fred99:

 

I think Morgan's worried about "the Trump effect" - and the root causes (disillusionment and loss of interest/participation by many in the democratic process), hence he's throwing out some ideas.

 

 

I think it's the opposite... GM is *hoping* that "the Trump effect" will catapult him into political power. Hence he's throwing out some ideas.

 

 

 One reason for that is that his tax proposal is so just whacky and easily condemned, the discussion won't get through to the very people who might benefit most from an overhaul of the taxation system.

 

 

Whilst there are many people who would benefit from a taxation system overhaul, the "Equity Tax" (a) isn't an overhaul, and (b) it won't help the people who need help.

 

 

Meanwhile, unless there is some change, it appears that social democracy is on the the path to decay into something that historically has been resolved with a lot of bloodshed.

 

 

Yup!

 

 


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  Reply # 1685653 10-Dec-2016 10:43
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frankv:

 

Geektastic:

 

Death Duties were responsible for the loss of so many wonderful country houses - it was criminal. The unfortunate owners who were faced with the taxes sometimes ended up demolishing the houses because after paying the tax they had nothing left to run them. Britain lost a significant chunk of it's built heritage.

 

 

Was it Death Duties? Or was it that a wealthy man built an ostentatious country house that was unsustainable long-term, being dependent on (a) an enormous ongoing income from tea or cotton or slaves or raiding Spanish galleons, and/or (b) an endless supply of cheap labour for servants, farm workers, gardeners, and house maintainers/repairers, and/or (c) the owners having skills to manage the house and servants and income, and/or (d) no owner ever doing stupid stuff like gambling/wenching/boozing/ostentation/getting scammed/supporting a treasonous plot.

 

 

 

 

 

 

Not that this leftist rant especially needs dignifying with a response, but no, it was death duties. It was a working farm, not a vast estate.






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