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GV27
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  #3191590 7-Feb-2024 07:57
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ezbee:

 

Much of Europe has very high marginal tax rates, and CGT, inheritance taxes etc too as new mechanisms to avoid tax evolve.

 

 

...and many places with those taxes also have deductions, offsets or rollover relief that often mitigate or totally nullify the effects of those things on ordinary people. In NZ, the proposals we see don't really take those into account, so the proposed taxes here tend to be levied far more widely, with relatively little on offer in terms of a reduction in personal tax rates to compensate for it.

 

I would be more charitable to a redesign of the tax system but there's too much oxygen given to the "other places have higher rate" or "other places have this tax so we should too" approach which is beyond superficial and I don't have confidence in anyone to have that debate in good faith to the extent I'd base a tax system redesign off their work. The TWG CGT report chaired by Cullen is a classic example of this in action. 

 

There's also the far more concerned aspect of how massively government revenues have grown over the last five years, yet almost every single social service is in crisis mode and it's becoming harder and harder for NZers to access basics that other countries seem to be able to provide without freezing their tax rates for decades at a time. There's a real question to ask as to whether we should be paying more tax at all, and at what point 'more' would be enough, given the state we find ourselves in now.




ockel
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  #3191670 7-Feb-2024 09:23
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tdgeek:

 

Handle9:

 

There’s a CGT in most countries and most developed countries have significant, and growing, house price inflation.

 

 

You are aligning CGT and global house prices. If you are not aligning these two metrics, why mention them in one sentence? And to start this all off, who stated/inferred that there is a relationship between CGT and house prices?

 

 

If you look at Box 3 (page 7) in the TWG discussion paper you'll see there is little empirical evidence regarding CGT and house prices.  There is, however, a very good regression piece by an Australian economist who shows that Sydney house price inflation can be explained by 3 factors (population growth, interest rates and interia/momentum [you can imagine the last one is influenced by real estate agents and the media].  

 

 https://taxworkinggroup.govt.nz/sites/default/files/2018-09/twg-bg-3933713-extending-the-taxation-of-capital-income_1.pdf

 

 

 

So it begs the question what is the purpose of your CGT?  What problem are you trying to solve?  If its horizontal aspects of the taxation system (ie equity) then its important to note it as such.  If you're trying to increase owner-occupier rates then whats the rationale for this given most of our comparable countries were 90% rent 10% OO pre WW2 (and to what benefit or detriment has shifting from rental to OO in that time period had?).  Connor's modelling in 2009 for the introduction of CGT in NZ http://motu-www.motu.org.nz/wpapers/09_13.pdf  predicted downsizing and greater OO but that younger and lower-socio economic groups could be more disadvantaged (and they're pretty disadvantaged already) from such a change (and thats on the basis of GST relief to be revenue neutral so it would be amplified if you had no balancing taxation relief when introducing a CGT).

 

 

 

 





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SaltyNZ
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  #3191674 7-Feb-2024 09:34
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ockel:

 

So it begs the question what is the purpose of your CGT?  What problem are you trying to solve?  If its horizontal aspects of the taxation system (ie equity) then its important to note it as such.  If you're trying to increase owner-occupier rates then whats the rationale

 

 

 

 

It's mainly about equity. It won't single-handedly solve house price issues - nothing will. Treating leveraged borrowing against paper capital gains as de facto realisation (and taxing that) will probably do more to discourage rampant hoarding than a 'normal' CGT would.

 

But mainly it's about making objectively wealthy people who structure their affairs to avoid tax, to pay more anyway. And it's worth noting it has relatively little impact on the mythical mum & dad landlord: if you buy a house to provide passive rental income as your retirement nest-egg, a CGT doesn't really affect you. But if you're a speculator or hoarder, or get a big chunk of your play money from borrowing against your fleet of houses, then you'll pay more of your fair share.





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freitasm

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  #3191700 7-Feb-2024 10:02
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Luxon told the AM show we will probably be seeing him doing the same speech next year.

 

“So people can trust us when we say there will be no change to the Treaty,” Luxon said.

 

“There is a lot of misinformation, a lot of misunderstanding about what our Government thinks about the Treaty.”

 

 

So why bother sending a bill for reading at all? Isn't that a waste of taxpayer's money?

 

How does that make their ACT "partners" happy?





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SaltyNZ
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  #3191703 7-Feb-2024 10:13
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freitasm:

 

So why bother sending a bill for reading at all? Isn't that a waste of taxpayer's money?

 

How does that make their ACT "partners" happy?

 

 

 

 

It's only prudent spending if it comes from the Act region of France, otherwise it's just sparkling tax dollar wastage.





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ockel
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  #3191713 7-Feb-2024 10:34
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SaltyNZ:

 

 

 

It's mainly about equity. It won't single-handedly solve house price issues - nothing will. Treating leveraged borrowing against paper capital gains as de facto realisation (and taxing that) will probably do more to discourage rampant hoarding than a 'normal' CGT would.

 

But mainly it's about making objectively wealthy people who structure their affairs to avoid tax, to pay more anyway. And it's worth noting it has relatively little impact on the mythical mum & dad landlord: if you buy a house to provide passive rental income as your retirement nest-egg, a CGT doesn't really affect you. But if you're a speculator or hoarder, or get a big chunk of your play money from borrowing against your fleet of houses, then you'll pay more of your fair share.

 

 

But it wont have the effect you intend.  Those objectively wealthy people, who generally employ someone to structure their affairs, will use those same people to find another way of minimising their tax.  And those that will get affected will be the people that cant afford to employ those people and structures - the unintended consequence of your envy tax (cos if its about equity as youve stated then its those without envious of those with and trying to take from such a group),





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  #3191719 7-Feb-2024 10:54
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ockel:

 

 your envy tax

 

 

 

 

This is very unhelpful framing. From now on I will refer to income tax as the poor penalty tax. 

 

The people who can most afford it pay proportionately less than than those who can least. The desire to address this inequity is not 'envy'. It is basic fairness.

 

But as to 'envy' - the end result of the very rich refusing to pay their fair share invariably ends violently. Things aren't going to get better for the 99.9% of the population who are not enviously wealthy this century as climate change really bites, and those millions of people are going to want someone other than themselves to pay for their misery. Such as the people who pollute 100x as much as any normal person, and hoard 1000x the wealth to themselves. I'm not being some sort of commie radical about this. I just remember my high school history.





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freitasm

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  #3191736 7-Feb-2024 11:26
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ockel:

 

your envy tax (cos if its about equity as youve stated then its those without envious of those with and trying to take from such a group),

 

 

Whoa. I am not sure if this shows entitlement, disregard, disdain or hate of an entire group of people. Or all of the above.

 

It demonstrates a lack of social awareness.





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ockel
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  #3191753 7-Feb-2024 11:46
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SaltyNZ:

 

 

 

This is very unhelpful framing. From now on I will refer to income tax as the poor penalty tax. 

 

The people who can most afford it pay proportionately less than than those who can least. The desire to address this inequity is not 'envy'. It is basic fairness.

 

But as to 'envy' - the end result of the very rich refusing to pay their fair share invariably ends violently. Things aren't going to get better for the 99.9% of the population who are not enviously wealthy this century as climate change really bites, and those millions of people are going to want someone other than themselves to pay for their misery. Such as the people who pollute 100x as much as any normal person, and hoard 1000x the wealth to themselves. I'm not being some sort of commie radical about this. I just remember my high school history.

 

 

But I think you're barking up the wrong tree.  The IRD report into HWI showed that 50% of the income derived by the 311 families that contributed data was from business entities - not property (either direct, trust based property or land-rich property).  And their ETR of base income (on the same taxable basis as all other quintiles in NZ) was 32%. One would have to measure the economic income of all household quintiles and calculate their ETR's to reach any conclusion about proprotion of tax paid.

 

The IRD report is significantly more robust than that of Treasury (which, like all things Treasury, was woeful) which was a micro simulation with a number of novel assumptions and specifically excluded company and trustee tax which would have a broad approach of reducing ETR's for anyone in NZ owning a business or receiving any distributions from a trust asset base.  The big driver for the HWI was...... owning businesses (which Treasury excludes for their population analysis)

 

So imposing a CGT on property to capture HWI's that derive a significant amount of economic income from businesses is spurious.





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sen8or
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  #3191755 7-Feb-2024 11:51
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It seems socially acceptable to group all "rich people" together as tax dodgers who are out for themselves and care nothing for anything around them, but the reverse of that is "socially unaware"?

 

I don't think either label / grouping is helpful or constructive.

 

What exactly is "their fair share" anyway, this phrase gets bandied about regularly, but seems impossible to define. As I identified in a previous post, someone earning $96k is paying 3x more than someone earning $48k, seems to me that there are numerous who are paying more than there fair share (by whatever measure that is).

 

The previous Govt has also proven that no matter how big the pot of gold is to draw from, its never enough, whether this "good spending" or "wasteful spending" is very much open to interpretation. Is more money really going to fix a problem?

 

 


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  #3191756 7-Feb-2024 11:51
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ockel:

 

But I think you're barking up the wrong tree. 

 

 

 

 

And I think your insistence that we should never do anything until we discover the one single change that will magically fix everything at once perpetuates the situation we find ourselves in.





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freitasm

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  #3191790 7-Feb-2024 12:48
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sen8or:

 

It seems socially acceptable to group all "rich people" together as tax dodgers who are out for themselves and care nothing for anything around them, but the reverse of that is "socially unaware"?

 

I don't think either label / grouping is helpful or constructive.

 

 

You are right that generalisations are bad. That's why a fair tax policy that equally tax everyone to levels that allow those who can afford more pay more, those who afford less pay less is needed, so everyone contributes to their capability.

 

The idea of tax is not to feed the government machine. It's to provide services that the whole population can benefit from - including visitors (who are paying GST when they buy products and services while here).

 

Mindlessly defending one group that could afford to pay more is what I think is being socially unaware.

 

Alongside of "The greatest trick the Devil ever pulled was convincing the world he didn’t exist" is political operatives convincing the poorest sectors of the population that a tax that would in no way affect them - indeed would benefit them - is bad.





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freitasm

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  #3191795 7-Feb-2024 12:55
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freitasm:

 

Alongside of "The greatest trick the Devil ever pulled was convincing the world he didn’t exist" is political operatives convincing the poorest sectors of the population that a tax that would in no way affect them - indeed would benefit them - is bad.

 

 

Here is a cartoon that, while talking about xenophobia (which is not the case here), explains my line above. One small group holds all the interest and convinces a larger group that the problem lies somewhere else:

 





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SaltyNZ
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  #3191799 7-Feb-2024 12:57
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freitasm:

 

Alongside of "The greatest trick the Devil ever pulled was convincing the world he didn’t exist" is political operatives convincing the poorest sectors of the population that a tax that would in no way affect them - indeed would benefit them - is bad.

 

 

 

 

I almost used that exact line myself!





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