Tax Cuts

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Forums › Finance and wealth management › Tax Cuts

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1705 posts

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#1791334 29-May-2017 19:19

Lostja:
blackjack17:
MikeAqua:

gsr:

Poor people have existed for a very long time. People were forced out of their lands, some were slaves, some had to pay unfair taxes to kings, the list is very long. That has nothing to do with natural selection and evolution. It's fine if you have a different values, but you are wrong about that.

And poor people persist in so-called progressive, socialist economies. But arguably they suffer less in those countries.

Generally the countries that manage to afford wrap around care have the massive financial benefits of industries that NZ socialists love to hate - oil, mineral, agriculture, big pharma, big food, big alcohol...

Cases in point: Netherlands, Norway, Belgium etc. They also tend to be former colonial powers, or worse.

The countries doing badly by their most unfortunate citizens, tend to be former colonies.

Our % tax take isn't low. It's just from a low revenue economy.

Our challenge is: -

How do we get our per citizen revenue up and capture enough tax at current rates to invest in the services we need?

How do we do this when popular opinion is often anti-business, anti-development, anti-resource-utilisation and anti-investment?

I would argue our tax rate is rather low

https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates

of the countries you mentioned top rates are (I don't know what the pay brackets are)

Netherlands, 52% with up to 20% gst

Norway, 49.6 with up to 25%gst

Belgium 64% with up to 21%gst

compare this with our 33% and 15% gst

Unlike NZ most of these have a tax free first bracket, and in the Netherlands the interest you pay on a mortgage is tax deductible. The Netherlands has different gst for different products. Just comparing the highest bracket doesn't tell you the whole story.

So maybe instead of the tax cuts/bracket change we got a tax free for the first 10000 might have been better. And heres an idea why not make that first 10000 invisible? Meaning it doesn't impact on benefits. Kind of like universal income lite.

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Geektastic

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#1791357 29-May-2017 19:58

BlueShift:

blackjack17:

Wouldn't it make sense to tax those that do make more, more?

I don't know a top tax rate at say 40% for those over $100,000.

This is still below Australia, the US and most European countries.

Yes, but that would involve a bunch of turkeys voting in favour of Christmas...

"You're intelligent, successful and hard working - let's penalise you for that" has never fitted any definition of the word fair with which I am familiar.

Geektastic

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#1791359 29-May-2017 20:05

Lostja:
blackjack17:

MikeAqua:

gsr:

Poor people have existed for a very long time. People were forced out of their lands, some were slaves, some had to pay unfair taxes to kings, the list is very long. That has nothing to do with natural selection and evolution. It's fine if you have a different values, but you are wrong about that.

And poor people persist in so-called progressive, socialist economies. But arguably they suffer less in those countries.

Generally the countries that manage to afford wrap around care have the massive financial benefits of industries that NZ socialists love to hate - oil, mineral, agriculture, big pharma, big food, big alcohol...

Cases in point: Netherlands, Norway, Belgium etc. They also tend to be former colonial powers, or worse.

The countries doing badly by their most unfortunate citizens, tend to be former colonies.

Our % tax take isn't low. It's just from a low revenue economy.

Our challenge is: -

How do we get our per citizen revenue up and capture enough tax at current rates to invest in the services we need?

How do we do this when popular opinion is often anti-business, anti-development, anti-resource-utilisation and anti-investment?

I would argue our tax rate is rather low

https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates

of the countries you mentioned top rates are (I don't know what the pay brackets are)

Netherlands, 52% with up to 20% gst

Norway, 49.6 with up to 25%gst

Belgium 64% with up to 21%gst

compare this with our 33% and 15% gst

Unlike NZ most of these have a tax free first bracket, and in the Netherlands the interest you pay on a mortgage is tax deductible. The Netherlands has different gst for different products. Just comparing the highest bracket doesn't tell you the whole story.

Also most of them probably allow tax free saving for pensions, which tends to complicate things.

To add the UK to that list, you would get your first NZ$25,000 at zero percent tax each year, on the current allowance. VAT is 20%, but it is not charged on most food and is only charged at a much lower rate of 5% on electricity and gas and at 0% on water and sewage.

Aredwood

3885 posts

Uber Geek

#1791373 29-May-2017 20:26

The other thing to consider is housing costs. Do those countries with high tax rates also have high housing costs? And how do costs for things like food and energy compare? (power / gas / petrol / diesel).

As to participate in a modern western economy, at the very least you need an income. (job or a benefit), A place to live, Food, Transport (car or money to use public transport). Access to utilities such as power, water, internet (yes internet is essential nowdays). So consider how much money you have left over after receiving your benefit or wages from working full time in a min wage job. And paying for cheap, basic versions of the above things. What you have left over determines what your quality of like will be to a big extent.

Long term housing prices need to come down. (both to purchase and to rent) Or we need higher inflation with stagnant or very slowly rising housing prices, so prices in inflation adjusted terms will go down. And also long term exchange rates also need to be far lower. NZ$1 should not be worth any more than around US50c. As NZ productivity levels just don't support higher values long term. Just look at the current account deficit figures. And how the long term figures have almost always been a deficit. That deficit has to be made up from either loans or selling NZ assets to overseas buyers. Of course you can't keep doing either of those forever.

Lower exchange rates will mean much better returns for farmers, tourists will spend more money while they are here, And industries such as call centres will be more likely to relocate here. As wages in US$ terms will be much lower. Also the government should encourage electricity intensive industries to setup here. More data centrers would be the best example. As their load profile suits renewable generation perfectly. And of course they use lots of power, plus the need for data services will be forever increasing. So more need for data centrers. The big selling point to overseas customers will be - Run your data centre on almost 100% renewable energy. Instead of coal or nuclear energy.

Wholesale power is also cheap on average, and could be cheaper if the government reformed the silly low user regulations. So the lines companies could better target load to generation capacity. And would also allow off peak plans with very low pricing to be offered.

JimmyH

2886 posts

Uber Geek

#1791374 29-May-2017 20:29

I think they have lots of deductibles and don't tax income below a certain level as well, whereas we tend to have lower rates, but also less scope to make deductions and otherwise reduce tax and no tax-free zone.

Personally, I think broad base and low rate, rather than high rate and narrow base, is the way to go. It's less distortionary and reduces the scope and incentive for avoidance.

There is also a pretty good argument for not having a top rate of income tax that is too far above the company/trust rate as well. Otherwise it opens up massive opportunities for higher income earners to avoid tax (eg by putting their investments into a trust/company).

shk292

2856 posts

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#1791375 29-May-2017 20:29

It's hard to argue we're over-taxed in NZ. And the simplicity of GST is its main strength - it would be a shame to introduce different tax bands.

If people really feel strongly that their tax reduction would be better spent on schools, hospitals etc then there are plenty of great charities to donate it to. But then, socialism has always been about spending other people's money.

Fred99

13684 posts

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#1791419 29-May-2017 22:05

Charity is a bit like "tipping" - pretty waitresses do ok, others - not so much.

The dreaded "socialism" doesn't discriminate based on such foibles - but based on need.

When they had a charity food bin and a charity pet food bin at my local supermarket, the pet food bin was the clear winner.

That's because the right wing zealots have been successful in creating an impression that the poor and needy are undeserving - people seem to have more sympathy for neglected cats.

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Fred99

13684 posts

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#1791424 29-May-2017 22:15

Geektastic:

BlueShift:

blackjack17:

Wouldn't it make sense to tax those that do make more, more?

I don't know a top tax rate at say 40% for those over $100,000.

This is still below Australia, the US and most European countries.

Yes, but that would involve a bunch of turkeys voting in favour of Christmas...

"You're intelligent, successful and hard working - let's penalise you for that" has never fitted any definition of the word fair with which I am familiar.

Absolute balderdash.

Most intelligent, successful, hard-working people do very nicely indeed in NZ, reaping the rewards of living in / exploiting the benefits of a relatively peaceful egalitarian society (compared to Brazil etc).

They also did very well when marginal tax rates were much higher than they are now.

frankv

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#1791472 30-May-2017 07:01

Geektastic:

"You're intelligent, successful and hard working - let's penalise you for that" has never fitted any definition of the word fair with which I am familiar.

You're also only one good mishap from becoming a beneficiary yourself. Think of it as insurance.

Wiggum

1199 posts

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#1791497 30-May-2017 08:15

frankv:

Geektastic:

"You're intelligent, successful and hard working - let's penalise you for that" has never fitted any definition of the word fair with which I am familiar.

You're also only one good mishap from becoming a beneficiary yourself. Think of it as insurance.

Not really. Becoming a beneficiary means losing a lot first.

A good example I have is a friend, with family, house (mortgage), boat, a nice paid for car. A hardworking Kiwi who worked hard his life to get somewhere, a tax payer for about 20 years.

To cut a long story short, wife passed away. He lost his job and slowly started down the spiral of depression, and losing it all.

Do you think WINS would help? Nope. To them he was not "poor"enough. He had to sell off his stuff first. They would not even help him out with covering his mortgage while he was trying to piece his life back together. Over a course of six month he lost nearly everything, and his life almost fell apart. He got it back together in the end, new job. No help from WINS.

So no, not everyone is only one good mishap away from becoming a beneficiary.

Rather get Life insurance cover.

MikeAqua

7785 posts

Uber Geek

#1791546 30-May-2017 09:47

blackjack17:

Wouldn't it make sense to tax those that do make more, more?

I don't know a top tax rate at say 40% for those over $100,000.

There is an argument that those who are making more are getting more benefit from society and should pay more tax.

There is also an (uncharitable) argument that those making less cost the government more money in services - health, justice, corrections, CYFS etc etc

There is also a level at which increasing upper tax rates reduces consumption and this impacts employment. It may also reduce saving level, which is something NZ is trying to lift. It may also motivate landlords to increase rent.

It may also motivate behaviours like negotiating more annual leave in return for a lower salary.

I'm glad I'm not responsible for that balancing act.

Mike

MikeAqua

7785 posts

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#1791549 30-May-2017 09:57

Wiggum:

Not really. Becoming a beneficiary means losing a lot first.

A good example I have is a friend, with family, house (mortgage), boat, a nice paid for car. A hardworking Kiwi who worked hard his life to get somewhere, a tax payer for about 20 years.

To cut a long story short, wife passed away. He lost his job and slowly started down the spiral of depression, and losing it all.

Do you think WINS would help? Nope. To them he was not "poor"enough. He had to sell off his stuff first. They would not even help him out with covering his mortgage while he was trying to piece his life back together. Over a course of six month he lost nearly everything, and his life almost fell apart. He got it back together in the end, new job. No help from WINS.

So no, not everyone is only one good mishap away from becoming a beneficiary.

Rather get Life insurance cover.

Unfortunately welfare is the ambulance in NZ not the fence. They don't see value in early intervention when someone encounters misfortune to stop them losing everything. Some people would never bounce back from your friend's ordeal, they would be beneficiaries for life.

Mike

Geektastic

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#1791607 30-May-2017 11:06

Wiggum:

frankv:

Geektastic:

"You're intelligent, successful and hard working - let's penalise you for that" has never fitted any definition of the word fair with which I am familiar.

You're also only one good mishap from becoming a beneficiary yourself. Think of it as insurance.

Not really. Becoming a beneficiary means losing a lot first.

A good example I have is a friend, with family, house (mortgage), boat, a nice paid for car. A hardworking Kiwi who worked hard his life to get somewhere, a tax payer for about 20 years.

To cut a long story short, wife passed away. He lost his job and slowly started down the spiral of depression, and losing it all.

Do you think WINS would help? Nope. To them he was not "poor"enough. He had to sell off his stuff first. They would not even help him out with covering his mortgage while he was trying to piece his life back together. Over a course of six month he lost nearly everything, and his life almost fell apart. He got it back together in the end, new job. No help from WINS.

So no, not everyone is only one good mishap away from becoming a beneficiary.

Rather get Life insurance cover.

Very true. They also alter what they will pay for your mortgage depending on where you live, not your circumstances. In the Wairarapa I read a few years ago that it was around $400/month. That would be not a lot more use than zero dollars a month to most people I know here who would be covering mortgages needing at least 10 times that every month.

The self employed are worse off again as they get no sick leave or paid holiday. So if you earn say $15,000 a month gross as an IT contractor and then decide to take a cruise for a month that cost $5000, your actual holiday cost is $20,000!

You absolutely cannot rely on benefits to cover anything, except possibly emergency medical needs. Even ACC has a maximum income limit it will cover so if you need more than that you must get extra from the market.

Jas777

838 posts

Ultimate Geek

#1791611 30-May-2017 11:14

MikeAqua:

I don't want those tax cuts to extend to me. I don't need/want a tax cut. I would like people on lower incomes to pay less tax.

But I don't want to pay more tax.

I would like to see companies pay more tax ... I have never understood why companies are taxed on profit - it enables complex tax dodging behaviour. PAYE earners are taxed on revenue, whether they make a loss or profit for the year.

I suppose GST could be considered a tax on business revenue, but ultimately it's paid by the end consumer.

what if company tax was abolished and we transitioned to a point where every company paid tax on every single dollar of revenue (at a low rate)?

The cost would be transferred if possible and if not then the business would close.

Jas777

838 posts

Ultimate Geek

#1791615 30-May-2017 11:21

old3eyes:

frankv:

tdgeek:

The only real benefit is if you need elective surgery and its not life threatening, your in, and not on a a waiting list.

By definition, elective surgery is something you don't need and is not life threatening.

I would disputer the "don't need" piece of your statement. There are plenty of people on waiting list that "Need " these surgeries but as they can't afford health insurance they on the bottom of the heap and waiting lists. I bet there's not a politician out there who doesn't have tax payer funded insurance..

If more people had private insurance the amount of public operations would decrease or at best stay static. There is only a finite amount of Surgeons and they just do more private as long as there isn't any chance of mishap or death then it can be their problem not the hospitals.

More insurance will just results in extra for the surgeons and owners of private hospitals and have no real affect on public care.

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