Gareth Morgan is a genius

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Ultimate Geek
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#1685137 9-Dec-2016 10:32

tdgeek:

The renter. The landlord is running a business, so they dont get hit with CGT until they sell. So that should not affect renters

The owner however would be taxed without realising the equity. They are also being taxed on the equity not the capital gain. So, dont buy a house. If you do, interest only, and as the value increases, mortgage that and save, invest, buy stuff. You will then be paying more interest, but you can offset that by investing in shares, rather than you own property.

What CGT? This is an asset tax, so it has a yearly cost for owning it.

And who says that shares aren't taxed at their current value? Just as property would be?

What bothers me most about this, is that it's a tax on unrealised value. Let's say your property is worth a lot due to increasing demand, and you pay high equity tax on it each year. But the demand falls, and then a few years later your property is worth less. Now substitute property for anything, and only the rich and well off like Morgan can afford to own those expensive things when the demand is high. So the asset owner who cannot afford to hold it, has to sell to someone who can, in the name of solving inequality.

rmt38

320 posts

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#1685139 9-Dec-2016 10:38

MikeB4:

services or try and fund a Rest home. They can do neither on their pensions, family cannot due to commitments help so they need to seek help from either charitable homes or heavy government subsidies. Again, circular finance without gain but considerable stress and health issues.

What pension? Don't you know you should save and invest for your retirement, because pensions should be phased out? Lol. There was a thread here about that as well.

tdgeek

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#1685141 9-Dec-2016 10:43

rmt38:

tdgeek:

The renter. The landlord is running a business, so they dont get hit with CGT until they sell. So that should not affect renters

The owner however would be taxed without realising the equity. They are also being taxed on the equity not the capital gain. So, dont buy a house. If you do, interest only, and as the value increases, mortgage that and save, invest, buy stuff. You will then be paying more interest, but you can offset that by investing in shares, rather than you own property.

What CGT? This is an asset tax, so it has a yearly cost for owning it.

And who says that shares aren't taxed at their current value? Just as property would be?

What bothers me most about this, is that it's a tax on unrealised value. Let's say your property is worth a lot due to increasing demand, and you pay high equity tax on it each year. But the demand falls, and then a few years later your property is worth less. Now substitute property for anything, and only the rich and well off like Morgan can afford to own those expensive things when the demand is high. So the asset owner who cannot afford to hold it, has to sell to someone who can, in the name of solving inequality.

CGT. A landlord is not a family home owner, they run a business, if they sell assets belonging to the business they pay tax if the asset realises a gain, or write it off if it realises a loss. Thats fair, make money or lose money there is a tax component. As you say, the homeowner pays tax for not selling, just holding. Bizarre to say the least. Take a car, i dont intend to buy a car then pay "rent" on that car as I own it freehold.

Dulouz

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Ultimate Geek

#1685142 9-Dec-2016 10:46

Well-placed advertisement.

Amanon

rmt38

320 posts

Ultimate Geek
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#1685153 9-Dec-2016 10:48

tdgeek:

CGT. A landlord is not a family home owner, they run a business, if they sell assets belonging to the business they pay tax if the asset realises a gain, or write it off if it realises a loss. Thats fair, make money or lose money there is a tax component. As you say, the homeowner pays tax for not selling, just holding. Bizarre to say the least. Take a car, i dont intend to buy a car then pay "rent" on that car as I own it freehold.

This was addressed on Paul Henry, please read and weep:

1. Cars will be liable for tax, if more than a certain value.

2. Anything Morgan said is not final and details are still to be worked out.

So basically, he's coming forward with this tax, which is undefined in detail and what is defined is not final, won't have exemptions so as to prevent loopholes, ...

At this point, I hope anyone who is for this tax, understands what exactly they are for is undefined and therefore they're basically for whatever Morgan eventually comes up with regardless of how the details change. Not the vague nebulous thing we are presented with at this point, which might loosely appeal to them.

Fred99

13684 posts

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#1685183 9-Dec-2016 11:18

Gareth Morgan has put together a document detailing trends in inequality in NZ - which he refers to as an "eruption".

http://www.top.org.nz/key_indicators_of_new_zealand_s_inequality_eruption

That's very nicely presented data - I haven't seen things compiled and explained so coherently, usually if you want to find relevant comparative data, then you're digging through RBNZ or OECD reports bit by bit.

It includes data from a research paper "The Signs of Democratic Deconsolidation: Journal of Democracy" which was published recently, which I think (and I'm sure many others do too) combined with the economic data helps explain the disillusionment - particularly the young - with the democratic process itself.

If Morgan is an "idiot", then he's an idiot savant when it comes to explaining economic trends. That looks closer to genius to me.

frankv

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#1685184 9-Dec-2016 11:22

rmt38:

What bothers me most about this, is that it's a tax on unrealised value. [snip] Now substitute property for anything, and only the rich and well off like Morgan can afford to own those expensive things when the demand is high. So the asset owner who cannot afford to hold it, has to sell to someone who can, in the name of solving inequality.

I think it's worse than that. It's a tax on unrealised potential income. A homeowner pays this tax. A landlord doesn't... he pays tax (as he does now) on actual income, less expenses. So this makes it *more* difficult for a NZer to own their own home, whilst not affecting landlords at all. As such, it will force more NZers into renting. And, of course, make landlords richer. This crazy tax would transfer wealth from the poor to the rich, the exact opposite of what GM says he wants.

Now, let's imagine I own a bach at the beach as well as my house. Sensibly, under GM's regime I would run this bach as a business, renting it out to make money. So long as it makes enough to cover expenses (plus a bit to keep IRD happy), I'll pay minimal tax on the *actual* rental income, and I'll be able to have it available for my own use whenever I want. Substitute yacht/plane/whatever BBT for bach and it still works. The only people hit by this will be people living in their own homes.

I also see this as an easy way to squeeze money out of the middle class. No matter how low the initial tax rate is, no Govt will be able to keep their hands off this golden goose; rates will inevitably increase (just like GST and petrol taxes and alcohol tax and tobacco tax).

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Fred99

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#1685185 9-Dec-2016 11:23

There is more information on his proposed tax system here:

http://www.top.org.nz/tax_policy_launch_speech_notes

Edit: I'm not going to go through posts above where apparent holes have been picked in his proposals, but a quick look through that document suggests that he has thought about it and has some answers.

MikeB4

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#1685198 9-Dec-2016 11:44

Dulouz:

Well-placed advertisement.

huh,cool. I don't see the Adverts as a subscriber. Cleaver little google.

Fred99

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#1685199 9-Dec-2016 11:46

frankv:

I also see this as an easy way to squeeze money out of the middle class.

I really don't think so. I expect that GM is very aware of the plight of the "middle class" in NZ (and elsewhere) and the consequences of what's happened over the past few decades.

One very clear indicator of how much of an abject failure to the middle class the change has wrought is evidenced by the introduction of special tax breaks - effectively a new welfare system - with "Working For Families" - which came complete with the usual possibility of exploiting loopholes to minimise income, so that some better-off folk could rort the system.

WFF is nothing more than than a band-aid patch-up to address the reality that many "middle class" workers with families were being gradually dragged down to become the "working poor".

rmt38

320 posts

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#1685215 9-Dec-2016 12:09

Fred99:

WFF is nothing more than than a band-aid patch-up to address the reality that many "middle class" workers with families were being gradually dragged down to become the "working poor".

You say that, I say it's an election bribe like interest free student loans, which is an albatross around the neck of the taxpayers who are ultimately funding someone else's lifestyle - whether 10 kids dancing for Jesus, 10 kids from 10 different fathers, or some useless degree which will never pay back with a real use in the world, or some useful degree which will earn the student big bucks at the taxpayer's expense while they go overseas or whatever.

This equity tax won't stop more special case bribes, as someone pointed out in a reply before yours.

rmt38

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#1685219 9-Dec-2016 12:19

Fred99:

There is more information on his proposed tax system here:

http://www.top.org.nz/tax_policy_launch_speech_notes

Edit: I'm not going to go through posts above where apparent holes have been picked in his proposals, but a quick look through that document suggests that he has thought about it and has some answers.

All you are saying is that he's thought it through and has answers. These answers are not in the links you gave. It's vague claims, the same vague notions we've heard here, and vague claims about working the rest out with the majority party. Lots of mentions of inequality, with vague measures which personally I find questionable. And it all starts with him standing outside of John Key's house to promote the abundance of inequality, note inequality based on merit is fine, but discrimination and other things not so much. Why doesn't he stand outside an iwi organisation where they have billions which are not subject to income tax, because they're maori? Is he saying that John Key did not earn his money based on merit? I know that a few of us do not begrudge Morgan his money, but being aware of how he got it, merit is hardly a good description - let's say family money. It's all over the place.

I note that only one of us has read the material, as you note you skimmed it and claim it addresses concerns, yet it doesn't.. because vague and undefined until there's a working party willing to take this on. Yet, you think he's a genius, given his vagueness, not really knowing what he's promising. That is a worry.

Fred99

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#1685236 9-Dec-2016 12:46

rmt38:

I note that only one of us has read the material, as you note you skimmed it and claim it addresses concerns, yet it doesn't.. because vague and undefined until there's a working party willing to take this on. Yet, you think he's a genius, given his vagueness, not really knowing what he's promising. That is a worry.

I actually said about his presentation on inequality:

"If Morgan is an "idiot", then he's an idiot savant when it comes to explaining economic trends. That looks closer to genius to me."

I'm happy with that - it's a very well presented document.

I also said:

"a quick look through that document suggests that he has thought about it and has some answers."

It does have some answers, one being that "Financial assets (deposits, bonds, shares) are excluded, as unlike the assets above they are already fully subject to income tax." I certainly couldn't deduce things like that from the awful Hosking interview.

I presume that Morgan is aware that as part of the entire policy - with objective to replace (partially or fully) income tax with "asset tax" that there's an immediately obvious problem with that, once his policy was "fully working" then ultimately there wouldn't be tax on those financial assets at all. Should there be? I don't know.

You seem to be suggesting that I'm a great fan of his proposed asset tax system. It appeals to me as Morgan expected - like a cup of cold sick.

rmt38

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#1685238 9-Dec-2016 12:51

Fred99:

You seem to be suggesting that I'm a great fan of his proposed asset tax system. It appeals to me as Morgan expected - like a cup of cold sick.

That genius comment did worry me, but mainly I meant by that's a worry, the aspect where this is undefined and vague and if he does gain seats which the majority party need, anyone who does vote for him won't know what they're actually voting for or getting (with problem situations and so forth) until he and that party reach an agreement. So, all he has to do is appeal to enough people who envy people who have saved and scrimped and studied and worked away and so forth, and who knows what we'll get. Much like Winston rules out the Greens, I can only hope that National and Labour will rule out Morgan - but I expect Labour would sell out their grandmother to get a chance of being back in.

frankv

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#1685243 9-Dec-2016 13:06

I couldn't read beyond this:

John Key and I are both wealthy people, but we don't pay our fair share of tax, only because we don't have to.

This bit of disingenuous sophistry sticks in my craw.

There is NO requirement to arrange your finances to avoid paying your fair share of tax. It is a choice. Both JK and GM *choose* to not pay whatever they pay.

We can perhaps give JK the benefit of the (considerable) doubt; perhaps he believes that what he is paying is his fair share. But GM knows what he's doing is unfair, but he's choosing to do it anyway. He *chooses* to suck like a leech on those of us who *do* pay our fair share, and indeed therefore forces the rest of us to pay *more* than our fair share.

On top of this legalised theft, he has the effrontery to promote himself as a man who wants to bring *fairness* back to NZ.

The hypocrisy is breath-taking. And stomach-churning. And enraging.

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