Christopher Luxon, New Zealand Prime Minister 2023

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#3373034 14-May-2025 13:09

GV27:

Help me out here, are people earning $120K a year plutocrats all of a sudden?

They aren't. If you rely on a paycheck to eat, you're not rich. You're just as much a wage slave as someone who earns half of that. You might live in a nicer house, but that just means your mortgage or rent is higher too.

And this budget isn't really about that. When they say "Wealth Tax" they mean taxing passive income or income-alike (e.g. borrowing against your mansion and spending the cash), which is what actually wealthy people have.

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#3373037 14-May-2025 13:16

FWIW, those taxes will hit me too. Hec, they'll hit all the Green Party MPs. But it's not like I'm getting an extra overseas holiday from my $20 a fortnight National tax cut either, is it?

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#3373042 14-May-2025 13:36

SaltyNZ:

And this budget isn't really about that.

If it isn't about that, why is it in there?

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#3373044 14-May-2025 13:47

Would be interesting to know how they do their costings,

The big income raiser in the plan is the wealth tax, which would raise $72.4b over the four years.

The wealth tax would be a 2.5% tax on net assets, such as property and shares, over an individual threshold of $2m (or $4m for couples).

When previous Govt wealth tax recommendations were considered this was the expected revenue raised. Thereshold is lower (edit % is higher), and there is a inheiritance tax element, but they are expecting to get $17bn a year.

They also expect to increase debt by 44 billion for the rest of the shortfall.

(Found the full report here: https://assets.nationbuilder.com/beachheroes/pages/39988/attachments/original/1747172451/Budget_ONLINE.pdf?1747172451)

Anyway interested in how it will be received and the effect on poles.

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#3373052 14-May-2025 15:06

GV27:

SaltyNZ:

And this budget isn't really about that.

If it isn't about that, why is it in there?

Of course it's in there, it's not the focus, that's all.

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#3373389 14-May-2025 23:04

lachlanw:
https://www.nzherald.co.nz/nz/politics/greens-promise-88b-taxes-including-33-inheritance-tax-for-massive-social-safety-net-expansion/W23VKAKZ5VBJLCIQTNIYAB2JDU/

The usual thing that might trip them up is applying inheritance tax to family homes and things like that. The value of a simple house being what it is today and rising means remaining family may need to apply for a substantial mortgage to pay the tax and remain in the home. I have not read the detail of the policy and that might already be exempted. Like most of these things it's essentially a starting point for coalition negotiations and finding some areas of agreement.

SaltyNZ

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#3373398 15-May-2025 06:16

gzt:
lachlanw:

https://www.nzherald.co.nz/nz/politics/greens-promise-88b-taxes-including-33-inheritance-tax-for-massive-social-safety-net-expansion/W23VKAKZ5VBJLCIQTNIYAB2JDU/

The usual thing that might trip them up is applying inheritance tax to family homes and things like that. The value of a simple house being what it is today and rising means remaining family may need to apply for a substantial mortgage to pay the tax and remain in the home. I have not read the detail of the policy and that might already be exempted. Like most of these things it's essentially a starting point for coalition negotiations and finding some areas of agreement.

It only kicks in after you've inherited a cumulative >$1M. So in the somewhat normal case of a house worth, say, $1.5M, and 2-3 kids to inherit, none of them get a share over the threshold, and they pay no tax. Or at least that's my reading of it. I should have asked that last night on the call...

That said, this is not an unsolved problem. NZ is pretty unusual in not having inheritance taxes. The rest of the world hasn't fallen down because of them.

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GV27

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#3373400 15-May-2025 07:25

SaltyNZ:

It only kicks in after you've inherited a cumulative >$1M. So in the somewhat normal case of a house worth, say, $1.5M, and 2-3 kids to inherit, none of them get a share over the threshold, and they pay no tax. Or at least that's my reading of it. I should have asked that last night on the call...

...which is still absurdly below Auckland's average house price. So I guess having a house within 70% of the average house price in NZ makes you a plutocrat now too, in addition to earning $120K+.

And like clockwork, the "other places have these taxes" argument. Other places also have them kick in at stupidly high amounts, or offer some form of relief if you move into a family-held home upon a family member's death. I note no such nuance here, as is par for the course when it comes to tax debates in NZ.

Wild how I could have multiple holiday homes as part of my estate not captured by this tax, but leaving our family home (well below Auckland's average value) could trigger a tax issue for him in the event of my death. And if I were to put it in a trust with a view of protecting it as an asset for him, I'd have to pay a wealth tax on it from dollar one.

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#3373404 15-May-2025 08:12

GV27:

...which is still absurdly below Auckland's average house price.

That's not what QV tells me.

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#3373499 15-May-2025 11:34

I'll hand it to the greens, its a brave budget to put out, announcing that they want to rake in and spend an additional $130 odd billion over 4 years. If they can sell that to the average NZer, then there are a few more global tasks that should be a breeze, peace in the middle east, peace in Ukraine and getting the US president to show humility and empathy.

I doubt many would argue against education and health desperately needing more of pretty much everything (money, infrastructure and personnel), but the raft of additional taxes and debt that are put forward is a very big number for many to swallow.

GV27

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#3373502 15-May-2025 11:43

SaltyNZ:

GV27:

...which is still absurdly below Auckland's average house price.

That's not what QV tells me.

QV is telling you the threshold is below the average price, which is the point I'm not making very clearly - apologies.

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#3373509 15-May-2025 11:51

GV27:

QV is telling you the threshold is below the average price, which is the point I'm not making very clearly - apologies.

Oh, I see. Right, but if that's split 2 or 3 ways then each person is inheriting an amount below the threshold, and doesn't pay tax. If it all went to one person, yeah, they would have to pay tax on it. They're trying to make sure it doesn't really hit normal families - income tax increases notwithstanding.

I did ask Marama Davidson about that last night. The answer is to simply remember what it gets you. For example, my wife and I would pay more income tax ... but also her $6000 root canal would be free, our daughter's GP visits and prescriptions would be free, and our son would receive more while studying than he currently earns cleaning out the deep fryers at 1am at McDonalds. So overall, it's a net win.

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#3373512 15-May-2025 12:12

SaltyNZ:

Oh, I see. Right, but if that's split 2 or 3 ways then each person is inheriting an amount below the threshold, and doesn't pay tax. If it all went to one person, yeah, they would have to pay tax on it. They're trying to make sure it doesn't really hit normal families - income tax increases notwithstanding.

If they're trying to make sure it doesn't hit normal families then setting it below the average house price in Auckland is a really strange way to go about it.

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#3373569 15-May-2025 12:51

SaltyNZ: I did ask Marama Davidson about that last night. The answer is to simply remember what it gets you. For example, my wife and I would pay more income tax ... but also her $6000 root canal would be free, our daughter's GP visits and prescriptions would be free, and our son would receive more while studying than he currently earns cleaning out the deep fryers at 1am at McDonalds. So overall, it's a net win.

That is entirely true and correct in the case where one bit of land one house is entirely identical to another and interchangeable.

In cases of death where the government requires a large payment or alternatively the loss of a home which may have served a family for a few generations, that is emotionally a harder thing and the place where you're going to see various objections arise.

Random stats from Googling with no warranty: 33% of homes in NZ are freehold no debt, and dropping. 66% of households 'own' their home.

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#3373573 15-May-2025 13:05

gzt:

In cases of death where the government requires a large payment or alternatively the loss of a home which may have served a family for a few generations, that is emotionally a harder thing and the place where you're going to see various objections arise.

Yes, that will happen. But again - NZ is unusual here in being one of the few where it doesn't have any sort of inheritance or capital gains tax. My father and I were having very similar conversations only a couple of weeks ago about their house in Penrith (Aus). The right thing for my parents to do is probably to downsize, but they'll take a hit in CGT if they do, potentially putting them back into debt after only having paid off their mortgage probably less than 10 years ago. (Also, he doesn't want to, which is reason enough even if I happen to disagree).

Just like any other tax, it's a trade off for much wider societal benefits that even those who might pay a once-in-a-lifetime inheritance tax bill will enjoy.

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