Chris Hipkins, New Zealand Prime Minister 2023

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Forums › Politics › Chris Hipkins, New Zealand Prime Minister 2023

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2120 posts

Uber Geek

#3070081 1-May-2023 16:12

johno1234:

Right. So you get a job in on the other side of town, or your kids are going to school there. Sell your house for $1M that cost you $500K 10 years ago and pay a fat CGT tax on it. Now you don't have enough money to buy the same value house? How on earth is that fair? You've just lost a chunk of your net worth simply by moving from one side of town to the other? I don't think so.

I would say that they will date it, at the time it came in. Not retrospectively. So if your house is now $1M, and you sell in ten years time for $2M, then yes, you can pay 39% on the $1M.

A. I can't imagine either party actually implementing it

B. It would only ever be set for a current date, not retrospectively.

C. The net worth is interesting, I'm sure Gareth Morgan's book spoke about this, a property increases in price as much as the effort of the community around it as well. So if you have new neighbours that park wrecked old cars etc, the value might drop. Equally, if your neighbours keep everything mown and painted, your value may increase.

DS9

325 posts

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#3070082 1-May-2023 16:12

quickymart:
Yes, but...I only look for jobs in areas that I know I can reach easily by public transport if required.

If I lived on the North Shore, I wouldn't go looking for jobs in Manukau or Papakura (for example) as the commute would take forever. That's a choice I do have control over - if I can't reach a potential job easily from where I live, I simply won't apply.

I envy your position to be able pick and choose your employment opportunities, but as one of many tradesmen in the economy, public transport is and will always be useless.

I aim to misbehave.

johno1234

2814 posts

Uber Geek

#3070084 1-May-2023 16:18

I've never heard any proponent of CGT mention inflation. If your house appreciates 10% but cumulative inflation over the period amounted to 15% will the state take tax on top of your effective loss too?

Will there be a tax loss claimable on houses that depreciate like they are right now? Could be quite a liability on the government there. But only if this is a "fair" tax.

mudguard

2120 posts

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#3070086 1-May-2023 16:19

johno1234:

Imagine if you had a 75% mortgage? Your equity could be decimated in a hot market.

Sorry, this is simply not going to happen, if for no other reason that any party stupid enough to run with it will be wiped out.

It's not going to wipe anyone's genuine equity though is it? If you buy for $500,000, paid off a bit and have 25% equity as you say. Then sell for $600,000 because you need to move, you pay $39K in Capital Gains, pocket the $61K profit, and voila, you now have $186K deposit for the next house.

What I think you're getting at is the unrealised gains through the pandemic, so the $500K house bought four years ago is now magically worth $800K. However that's a paper number. I look at what houses sold for around me as some in the street timed in perfectly. Yep, that was real cash they pocketed, but hard to time these things.

That original example won't have equity issues unless they've subsequently borrowed in the meantime for reno's, new car, or a bach. And borrowed against the 'increased' value.

sen8or

1789 posts

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#3070099 1-May-2023 16:50

But you have to borrow that $ 39k on your new mortgage just to buy a house of the same value. It will eventually either crash the housing market, which will bankrupt the country, or will bring the housing market to a grinding halt, with no one willing to sell

mudguard

2120 posts

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#3070115 1-May-2023 17:23

sen8or:

But you have to borrow that $ 39k on your new mortgage just to buy a house of the same value. It will eventually either crash the housing market, which will bankrupt the country, or will bring the housing market to a grinding halt, with no one willing to sell

Well in that example their mortgage would be $14K higher than it what it was, if they sold their $500K home for $600K and bought another $600K home.

I doubt it will crash anything. Yes, people can stay put and hold out for more money. But some have to move, some to downsize etc. But capital gains probably has less of a profit drop than someone who should have sold a year ago vs now?

tdgeek

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#3070121 1-May-2023 18:07

GV27:

quickymart:

^ property owner right here.

It's a fair question, especially when school zones are a thing, Auckland is a mess for commuting and there are plenty of other reasons that you might move other than to leverage a capital gain. And you can make the argument that if people are creaming it from merely owning a family home, that suggests there is something amiss with land allocation, migration settings, zoning etc.

That's not something you can pin on an individual homeowner, so expecting them to take on a bigger mortgage to cover a CGT shortfall is effectively externalising a failure of the state as a regulator/legislator. And making Crown revenue contingent on it creates agency issues - why would a government meaningfully intervene to bring down house prices if their funding stream requires them to continually increase, presumably at a rate higher than general inflation?

Im creaming it big time. Where is the money???
Ask Labour and National. If house prices doubled tomorrow, I cannot grab that $ free, Id need to borrow, and oddly, Id need to pay it back which is rather annoying.

Yes, both poisons wont want to annoy home owners. Voters. MOST homeowners saved built or bought a home, pay rates, insurance and make a nest. I could have sold our home for a mint, but Id need a mint to buy the house next door, so there isnt a "real" gain. Its paper money. You could possibly target those that sold in AKL and bought further south, better house, more land, better lifestyle? But we are amerce driven economy. So what now?

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tdgeek

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#3070124 1-May-2023 18:19

johno1234:

But only if this is a "fair" tax.

Thats the issue. But "this" doesnt exist. Its a media article from a research event. But skim reading here its major, but its not anything. If I earn 20k, or 40k I pay bugger all tax. If I earnt 353k, I pay more. Thats fair. My PDI is say 300k, whereas the other examples are zero or less than zero. It needs to be fair.

Lets say there are 3 million taxpayers in GodZone. Govt revenue needs to be $X. Apportion it fairly, I feel thats where the research showed. Obviously gains, aka income needs to be realised. But the theme here seems to be tax the rich 90% (my comment.)

GV27

5898 posts

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#3070217 2-May-2023 06:40

tdgeek:

But we are amerce driven economy. So what now?

Well, we could adjust our land allocation mechanisms (Labour promised to abolish the RUB, but didn't), our zoning (huge chunk of Central Auckland somehow exempted from density planning changes because of the Light Rail corridor, still no detail because there's still no Light Rail), our rapid transit (See: Light Rail, North West, etc). All of these things help make it easier to build centrally and to build on the outer of Auckland as we know it. The problem is the building on the outer happens anyway, but because there's not enough of it being fed into the market, prices everywhere stay high. Many houses in Auckland are $200K worth of building on $800K of land because we can't supply it to market, and where we can supply it, we can't service it. If we could, house prices would drop off or slow dramatically. We probably also need a population strategy too - house prices are one thing, but the Auckland lifestyle is becoming less and less appealing by the day. I say that having driven to work before 6am to beat traffic by leaving early.

But realistically, there's no tax reform or land allocation mechanisms that will save you if you decide to tip tens of billions of dollars into a supply constrained economy and remove LVRs and drop interest rates to the absolute floor. For the government to come along now and say "oh, we caused a huge mess, we're still racking up huge amounts of spending as core services unwind, but let's help ourselves to some of the $$$ that we haven't vapourised yet" is really cynical, given that tax changes will hurt most Kiwis (anyone with a Kiwisaver if they revive their CGT) and that some extremely well paid civil servants got to keep their jobs, even though they continue to miss fairly important targets with far-reaching consequences.

It really annoys me sometimes that the default assumption to a problem is that the government needs to tax it to fix it, instead of discussing whether they are the ones causing the problems in the first place. It's almost like a forbidden notion, that maybe trusting the people who got us into this mess to get us out of it is perhaps not such a good idea, especially when it gives them so little incentive to solve problems instead of leveraging them into a new source of revenue.

sen8or

1789 posts

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#3070242 2-May-2023 09:10

mudguard:

sen8or:

But you have to borrow that $ 39k on your new mortgage just to buy a house of the same value. It will eventually either crash the housing market, which will bankrupt the country, or will bring the housing market to a grinding halt, with no one willing to sell

Well in that example their mortgage would be $14K higher than it what it was, if they sold their $500K home for $600K and bought another $600K home.

I doubt it will crash anything. Yes, people can stay put and hold out for more money. But some have to move, some to downsize etc. But capital gains probably has less of a profit drop than someone who should have sold a year ago vs now?

25% equity in a $500k house is $ 125k (therefore mortgage value is $375k)

Add the $61k after tax profit to the equity, $ 186k equity / deposit

New House - $ 600k less deposit $ 186k = $ 414k mortgage

$414-375 = $ 39k

For their mortgage to stay the same, their purchasing power would top out at $ 561k, so they have gone backwards just to keep the mortgage in the same place. Can you foresee too many people voluntarily doing that?

mudguard

2120 posts

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#3070589 2-May-2023 19:15

sen8or:

For their mortgage to stay the same, their purchasing power would top out at $ 561k, so they have gone backwards just to keep the mortgage in the same place. Can you foresee too many people voluntarily doing that?

I think I was basing my maths on their original purchase. So $500k with 20% deposit. So they in essence moved to a $100k nicer home (possibly) for an additional $14K.

I don't want to drag this so far off topic, but the fundamental question is if you make changes, who takes the hit? There's going to be a whole generation coming who at this stage haven't really made themselves known in the polls, that won't have a chance at owning a home. I mean a proper chance, I mean for me personally the increasing prices were seriously outstripping my deposit and it's only got worse.

Perhaps in a generation or two when the current homeowners start to dwindle in the demographics and some party proposes something really radical, ALA TOP's tax on property. Then you may have a large swathe of voters who say, sounds good!

tdgeek

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#3070597 2-May-2023 19:43

GV27:

It really annoys me sometimes that the default assumption to a problem is that the government needs to tax it to fix it, instead of discussing whether they are the ones causing the problems in the first place. It's almost like a forbidden notion, that maybe trusting the people who got us into this mess to get us out of it is perhaps not such a good idea, especially when it gives them so little incentive to solve problems instead of leveraging them into a new source of revenue.

Who got us into this mess? Decades of successive Governments. Maybe Covid, so they should have stood firm and not spent a dime on support? Bye businesses and the employees who work for them, thats ok, new businesses will start up. Ukraine, but hey, wheat, fertiliser and rampant oil prices in a war is not that bad.

GV27

5898 posts

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#3070684 3-May-2023 06:24

tdgeek:

Who got us into this mess? Decades of successive Governments. Maybe Covid, so they should have stood firm and not spent a dime on support? Bye businesses and the employees who work for them, thats ok, new businesses will start up. Ukraine, but hey, wheat, fertiliser and rampant oil prices in a war is not that bad.

Why do people think the alternative was either what we did or literally nothing?

Why is the idea we could have done things slightly better such a polarising concept? Inflation took off before Vlad rolled into Ukraine, that has very little to do with it, other than providing a scapegoat people who don't want to look at the inflation in prior quarters RBNZ argued was 'transitory' (e.g. towing the Fed line) which has proven to be massively massively wrong.

As for 'how do you fix decades of successive government failure' you probably can't at this point, not within our MMP system - parties have just segmented the portion of the population they think will vote for them, spew out the most populist or unrealistic crap and lock in the same voters who never actually weigh up policy or whether it's even feasible (e.g. Labour in 2017). I don't think any of us appreciated how the 'post-truth' world would look in modern democratic elections but that's what we've got. The actual capability to make things happen or execute something is now no longer relevant, it seems. Not exactly good enough given the increasing amount of tax the government is collecting from the electorate.

GV27

5898 posts

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#3070686 3-May-2023 06:45

In other news, it's (supposedly) a good old fashioned Labour > Maori Party defection!

https://www.nzherald.co.nz/nz/politics/labour-cabinet-minister-meka-whaitiri-jumps-to-maori-party-in-shock-move/VNGU7FAZTRHCRAS6YDYEEJU3TQ/

Labour Cabinet minister Meka Whaitiri is expected to resign and stand as a candidate for the Māori Party in the upcoming election.

Te Ao Māori News has been told Whaitiri will make a formal announcement Wednesday at Waipatu Marae in Hastings.

A spokesperson for Acting Prime Minister Carmel Sepuloni said: “We’re aware of the media speculation. We have nothing further to add at this point.”

tdgeek

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#3070687 3-May-2023 06:51

GV27:

Why do people think the alternative was either what we did or literally nothing?

Why is the idea we could have done things slightly better such a polarising concept? Inflation took off before Vlad rolled into Ukraine, that has very little to do with it, other than providing a scapegoat people who don't want to look at the inflation in prior quarters RBNZ argued was 'transitory' (e.g. towing the Fed line) which has proven to be massively massively wrong.

As for 'how do you fix decades of successive government failure' you probably can't at this point, not within our MMP system - parties have just segmented the portion of the population they think will vote for them, spew out the most populist or unrealistic crap and lock in the same voters who never actually weigh up policy or whether it's even feasible (e.g. Labour in 2017). I don't think any of us appreciated how the 'post-truth' world would look in modern democratic elections but that's what we've got. The actual capability to make things happen or execute something is now no longer relevant, it seems. Not exactly good enough given the increasing amount of tax the government is collecting from the electorate.

Hindsight is great, that other countries did the same is very relevant. Its easy to say later we could have done it differently. What is that differently, that would avoid QE and the inflation that followed? Inflation took off as there was a massive imbalance between production and demand. That still continued when the world opened up, as that created even more demand with not enough production, then we had waves and sick leave adding to lower production, let alone the pent up funds that people then wanted to spend. The only way to avoid that was zero lockdowns. MMP isnt relevant that just allows a fair choice for voters, if it was still FPP the main parties would still do what they have always done

Look, you are commenting about the end result, you need to comment on what the globe should have done, in hindsight. Even that is unrealistic when the future was unknown, but it adds value to the next pandemic. Which will be sooner than later, given that todays world is a mix of millions going to and from countries continually. This will happen again and regularly.

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