The leaders debate

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#2573324 24-Sep-2020 10:52

GV27:

It's even more tragic when you compare what half the average house price gets you somewhere like Queensland, in a country with higher wages and lower living costs. Like you say, we've totally normalised this and there's no politically convenient way to get out of it.

It's disgusting is what it is. But the issues are complex and systemic, and the appetite or strategy to fix it doesn't really seem to be there. The Greens and TOP seem to have some good ideas/moves in that direction.

It's hard though - you don't want to hurt an individual by or the unfortunate recent FHB, nor crash our entire economy with drastic action, but at the same time inaction is hurting entire generations and society as whole.

MikeAqua

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#2573447 24-Sep-2020 12:06

nova:

MikeAqua:

That's inevitable as those are the people paying the most tax.

If you earn under $100k and pay PAYE, you are a net taker of tax.

I think $100k is higher than the truth, but it all depends on how you spin the figures. If you just look purely in terms on income tax, the figures from treasury are here:

https://www.treasury.govt.nz/information-and-services/financial-management-and-advice/revenue-expenditure/revenue-effects-tax-changes/who-pays-income-tax

Based on this, 3.8 million tax payers contribute $36.8 billion in income tax that supports 5 million New Zealanders. If each individual got an equal share of the services, then it would be $7,360 each,and anyone earning more than $48K is a net tax payer.

Now of course there are other taxes (GST, petrol tax etc), but once you consider that then you need to take an individual view. It is entirely possible that someone on 90K with 4 kids at school pays less tax than they get back and someone on 50 K with no kids pays more tax than they get back in services.

I stand corrected ~50k is the break even point, but almost all the net tax is paid by people who earn over $100k.

Mike

Fred99

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#2573460 24-Sep-2020 12:37

That chart is pointless if GST not included, then if it is included it's still pointless because you don't know how much money is "saved", thus GST not paid on purchases.

Then there's the other issue, if you're young with no children and without "family money", you get no "Gross Transfer Received" (ie WFF) just at a time in your life when you might want to save for deposit on a house - by the time you've saved the deposit to buy an average house in Auckland when on a median income of $50k, you can look forward to "owning" maybe 20% of an average house and start to think about having kids when you're in your late 40s. You've probably raided your kiwisaver, have all "investment" tied up in a speculative housing market, the bank's still going to own half your house when you're 67 and now eligible for what's left of "National Super", your kids are teenagers, need orthodontic work , your knees/hips/back have given up the ghost and there's still a 2 year wait list to get a bone doctor to ram in some titanium and stainless steel parts to keep the old machine that's "you" - "productive".
Meanwhile, some economist tells you that you should have pulled yourself up harder - by your own bootstraps decades ago - so tough luck - it's a jungle out there, and you just became prey.

Economists who produce charts like that to make political statements deserve the title "The Dismal Science". You can use data like that to justify on economic grounds the benefits of absolute slavery, whatever.

Lost is the point that the purpose of money is to exchange goods and services to make lives better. If it only makes a few lives better (some ridiculously so) and the others inadequate / worse, then the system has failed.

MikeAqua

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#2573488 24-Sep-2020 13:22

Fred99:

That chart is pointless if GST not included, then if it is included it's still pointless because you don't know how much money is "saved", thus GST not paid on purchases.

The point of the chart is to demonstrate the relative net PAYE contribution difference between income brackets. It does that well.

The treasury chart posted earlier makes the same point. 3% of earners are paying 24% the gross tax, that's roughly an order of magnitude of 'overpayment' (I can't think of a better term).

The problem we have is not a lack of redistribution. It's a lack of well-paying jobs. That's a function of the types of jobs we have. For example tourism and hospitality pay poorly. Incidentally, those are examples of 'downhill' jobs in trickle-down, which is why it doesn't work very well.

We would be much better off having more well paying jobs than redistributing wealth via the inefficient machinery of govt or relying on trickle-down.

Taxation doesn't create wealth or opportunity.

Mike

Fred99

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#2573540 24-Sep-2020 14:54

MikeAqua:

Fred99:

That chart is pointless if GST not included, then if it is included it's still pointless because you don't know how much money is "saved", thus GST not paid on purchases.

The point of the chart is to demonstrate the relative net PAYE contribution difference between income brackets. It does that well.

Except it presents those figures as a total, with no way to calculate anything other than an average when in those income groups able to "claw back" via WFF etc, many get nothing at all (low paid which include the young, also probably childless, some no doubt also paying off student debt etc).

Then there's this:

Handle9

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#2573553 24-Sep-2020 15:06

MikeAqua:
nova:

I think $100k is higher than the truth, but it all depends on how you spin the figures. If you just look purely in terms on income tax, the figures from treasury are here:

https://www.treasury.govt.nz/information-and-services/financial-management-and-advice/revenue-expenditure/revenue-effects-tax-changes/who-pays-income-tax

Based on this, 3.8 million tax payers contribute $36.8 billion in income tax that supports 5 million New Zealanders. If each individual got an equal share of the services, then it would be $7,360 each,and anyone earning more than $48K is a net tax payer.

Now of course there are other taxes (GST, petrol tax etc), but once you consider that then you need to take an individual view. It is entirely possible that someone on 90K with 4 kids at school pays less tax than they get back and someone on 50 K with no kids pays more tax than they get back in services.

I stand corrected ~50k is the break even point, but almost all the net tax is paid by people who earn over $100k.

Ok so it's the same one, or a variation of, Bill English was peddling to justify income tax cuts. It was being used in a very specific way to justify income tax cuts without any consideration of the overall tax take. It's not quite worthless but it certainly can't sensibly be read without lots of disclaimers and justification.

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Handle9

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#2573700 24-Sep-2020 18:37

GV27:

Handle9: That's a fairly slanted article. It totally ignores GST. The implications of basically spending 100% of your income to survive, and returning 15% as tax, are ignored and then saying that untaxed capital gains are modest is really poor.

Do you mean this bit:

For those in that group already paying material personal tax while deriving relatively modest untaxed capital gains, they are already the highest taxed on their economic income. For those whose untaxed capital gains are material, then it's accepted that some of their economic income remains untaxed. But capital gains tax has been fought and lost many times in New Zealand, and taxing their (and everyone else's) personal income more as a substitute is so untargeted as to be no more than a soundbite.

I'm not seeing him say untaxed capital gains are modest as a whole - he's saying that if you are mostly incurring PAYE on a higher salary/wage then your income is being mostly captured at a higher rate, as opposed to someone with a lower salary but who is benefiting from a higher amount of untaxed gain. I'm not seeing how that is hugely controversial.

It's an opinion piece so it's presenting a certain point of view. It's certainly not presented as reporting, which is good.

Saying that the way that it is consistently presented is high income earners pay a lot of take but make small capital gains and so it goes. Basically it plays up the tax paid while underplaying the wealth that is accumulated. I don't have a problem with the nature of the article per se however it is a slanted view.

GV27

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#2573941 25-Sep-2020 08:30

Handle9:

Saying that the way that it is consistently presented is high income earners pay a lot of take but make small capital gains and so it goes. Basically it plays up the tax paid while underplaying the wealth that is accumulated. I don't have a problem with the nature of the article per se however it is a slanted view.

I thought his argument was the opposite - that higher earners have more wealth, so more chance to accrue untaxed capital gains, but that higher earners who don't invest in things that make large capital gains (i.e. just through salary) actually have a relatively high tax burden in comparison.

Either way, I would prefer to see property targeted with the extended Brightline (per the dissenting TWG report) or even a Stamp Duty - the CGT proposed was too clumsy and I'd suggest more politically motivated than other more pressing concerns we should be thinking about when it comes to the tax system. I'd also like to see Kiwisaver treated differently for tax purposes, which would benefit lower income earners as well.

MikeAqua

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#2574148 25-Sep-2020 12:04

GV27:

I would prefer to see property targeted with the extended Brightline (per the dissenting TWG report) or even a Stamp Duty - the CGT proposed was too clumsy and I'd suggest more politically motivated than other more pressing concerns we should be thinking about when it comes to the tax system. I'd also like to see Kiwisaver treated differently for tax purposes, which would benefit lower income earners as well.

If you buy property today, the brightline period is five years. How long would you want it to be?

IIRC individuals and companies only have to keep tax records for seven years - would this be an absolute maximum period for CGT then?

Could be worse though, the green want to impose a wealth holding tax on unrealised capital gains.

Mike

MikeAqua

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#2574187 25-Sep-2020 12:50

Fred99:

Except it presents those figures as a total, with no way to calculate anything other than an average when in those income groups able to "claw back" via WFF etc, many get nothing at all (low paid which include the young, also probably childless, some no doubt also paying off student debt etc).

I agree, it relies heavily on totalling, averages and general-generalisation.

My point still stands: The PAYE system is highly redistributive already. We need to find ways of generating more well-paying jobs, not tax small groups of people harder (PAYE is the only tax lever labour proposes pulling).

No-one appears willing to address the economic growth side.

Mike

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#2577858 2-Oct-2020 11:21

National has been getting hammered for sloppy financial figures in some of its election promises. So an RNZ fact-check item on the leaders' debate caught my attention. Judith Collins claimed that the border shut-down cost $21 billion in lost export income from tourism and foreign students. But according to the fact-check, this is only half right. She simply took the income from 2019 and used that as her missing money figure, but Stats NZ figures for June show that tourists and students still in the country are continuing to spend about 50% of the 2019 amount. Collins is either being intentionally misleading, or misunderstanding the figures. Neither possibility contributes much to the myth about National being better at financial matters.

Plesse igmore amd axxept applogies in adbance fir anu typos

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GV27

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#2577953 2-Oct-2020 12:40

MikeAqua:

GV27:

I would prefer to see property targeted with the extended Brightline (per the dissenting TWG report) or even a Stamp Duty - the CGT proposed was too clumsy and I'd suggest more politically motivated than other more pressing concerns we should be thinking about when it comes to the tax system. I'd also like to see Kiwisaver treated differently for tax purposes, which would benefit lower income earners as well.

If you buy property today, the brightline period is five years. How long would you want it to be?

IIRC individuals and companies only have to keep tax records for seven years - would this be an absolute maximum period for CGT then?

Could be worse though, the green want to impose a wealth holding tax on unrealised capital gains.

The dissenting TWG report suggested 10 years, from memory, would achieve most of the outcomes you would be seeking by imposing CGT on property transactions.

There are current income tax provisions around disposals of land acquired within the last ten years so it's not unheard of.