It is not "legalised theft" to avoid tax. It is evading tax that is illegal.

I guess he's raised a point that National under Key have avoided, that something needs to be done about the way we generate income as a society. Everybody knows NZ Super cannot be sustained, and with house prices increasing much faster than wage growth, what choices will someone have who is say 18 now? No superannuation, potentially very high personal tax rates (to pay for those still getting super), pay off a student loan and presumably have no chance of owning a home where they work. 

If there is any kind of correction, then it will hurt someone, the tricky part is working out who. 

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.

 

Ok - Direct quote from that:

Assets affected will include (but not be restricted to) property, equipment, structures, brands, goodwill and Intellectual Property. Land and homes...

So under this proposal, all businesses will be taxed on "a minimum rate of return" on the combined value of all their assets, plant & machinery, properties, IP, Brand, etc.  As well as on net profit?

Discussion so far has been focused on homeowners and individuals, but the application of this model to Industry in NZ would be catastrophic. 

(and how would it work for the likes of Google New Zealand Limited, Apple Incorporated Limited and McDonalds Restaurants (New Zealand) Limited with combined global brand and IP asset values approaching a trillion dollars coming in to play?)  For context, NZ's entire GDP is roughly equivalent to the "minimum rate of return" on a trillion dollars ;-)

I am not an economist and I have avoided this discussion because I am not qualified to participate other than at the most superficial level, but several years ago in Europe there was a lot of talk about taxing spending according to its environmental consequence and not taxing income at all. So you get  to keep all you earn but if you want to drive a car instead of ride a bike, you pay a penalty and if you want to drive a SUV you pay a bigger penalty. I have no idea how this would work in practice, or if it even could, but on the surface it sounds attractive. Taxing income seems a bit arbitrary, another case of doing it that way because it is easiest, while taxing irresponsible spending would seem to be more fair. If someone can afford it and simply must have a fume-spewing diesel or gas-gulping V8, they are allowed to do so, but at a significant price. Plastic bags and non-recyclable containers also remain a choice, but are expensive. But basics like food and shelter are cheap and untaxed so the poorest can afford them and can have a decent life without descending into absolute poverty. But if they want anything more than the basics they have to be able to work to afford them, and if they make poor choices, like tobacco and fast food, they have to work hard because those are very expensive. Of course the details would be much more complicated. This is just an idea.

Rikkitic:

 

I am not an economist and I have avoided this discussion because I am not qualified to participate other than at the most superficial level, but several years ago in Europe there was a lot of talk about taxing spending according to its environmental consequence and not taxing income at all. So you get  to keep all you earn but if you want to drive a car instead of ride a bike, you pay a penalty and if you want to drive a SUV you pay a bigger penalty. I have no idea how this would work in practice, or if it even could, but on the surface it sounds attractive. Taxing income seems a bit arbitrary, another case of doing it that way because it is easiest, while taxing irresponsible spending would seem to be more fair. If someone can afford it and simply must have a fume-spewing diesel or gas-gulping V8, they are allowed to do so, but at a significant price.

 

Dealing in environmental consequences is on the same level of arbitrary as dealing in unspecified and confusingly specified inequalities, IMO.

Does someone believe in global warming?  If someone does not believe in global warming and is convinced by arguments that it is a natural cycle or whatever, do you then browbeat them into silence like the proverbial Trump voter in the clutch of wither-ed Hillary voters? Is the environmental cost of a vehicle negligible compared to those of farm animals?  Etc..  Should all airplane flights and passengers bear the cost of any conceivable harm?  What about manufacturing?  The cost of coltan  being mined from the Amazon in your iPhone/tesla/gadget and other components? How many iPhone users consider themselves environmentally conscious yet fly often?

In the long run, would the tax go to dealing with the proven consequences of the thing being taxed, or would it be swallowed by election bribes like benefits for whoever..

To me, it's on the same level with Morgan's envy tax.

I haven't read everything, but what i have read keeps using the word "loophole" over and over.

I save a deposit for a house (while paying income tax on everything I earn). I buy a house and eventually pay off my mortgage (all the while paying income tax on everything I earn, and interest to the bank). I have worked and budgeted hard and now have a freehold house, I am exploiting a loophole by not paying more tax?

Rikkitic:

 

I am not an economist and I have avoided this discussion because I am not qualified to participate other than at the most superficial level, but several years ago in Europe there was a lot of talk about taxing spending according to its environmental consequence and not taxing income at all. So you get  to keep all you earn but if you want to drive a car instead of ride a bike, you pay a penalty and if you want to drive a SUV you pay a bigger penalty. I have no idea how this would work in practice, or if it even could, but on the surface it sounds attractive. Taxing income seems a bit arbitrary, another case of doing it that way because it is easiest, while taxing irresponsible spending would seem to be more fair. If someone can afford it and simply must have a fume-spewing diesel or gas-gulping V8, they are allowed to do so, but at a significant price. Plastic bags and non-recyclable containers also remain a choice, but are expensive. But basics like food and shelter are cheap and untaxed so the poorest can afford them and can have a decent life without descending into absolute poverty. But if they want anything more than the basics they have to be able to work to afford them, and if they make poor choices, like tobacco and fast food, they have to work hard because those are very expensive. Of course the details would be much more complicated. This is just an idea.

 

 

 

 

 

 

 

The regime you are proposing here would be a nightmare to administer and would probably cost more than it yields. It harks back to the old school sales taxes where nails were say 10%, screws 12.5%, car 13.75%, tap 21.3% and so on .

Flat taxation be it consumption tax across all products, Income tax, corporate tax is far more efficient and mean we do not need diplomas in accounting just to do the house hold budget.

They pay tax on everything they buy ..its called GST.

Any other tax avoidance isnt tax avoidance as it is legal. Loopholes are legal.

JK didnt inherit his millions he earned it and paid tax along the way. These guys pay tax under the same rules we do. 

Seems to me the people who pay the most in this country are employees, whereas employers have lots of things they can use to create tax losses. But that is legal.

I would imagine JK has paid way more tax on his income than GM. After all GM got most of his virtually gifted to him from the sale of Trademe.

Hammerer:

 

It is not "legalised theft" to avoid tax. It is evading tax that is illegal.

 

Evading tax is theft. Avoiding tax is legalised theft... if it means you are paying less than your share. "Paying your share" is an ethical decision, not a legal one.

frankv:

 

Hammerer:

 

It is not "legalised theft" to avoid tax. It is evading tax that is illegal.

 

 

Evading tax is theft. Avoiding tax is legalised theft... if it means you are paying less than your share. "Paying your share" is an ethical decision, not a legal one.

 

 

 

If companies and or individuals make deductions against their tax liability that have been sanctioned by parliament then it is not legalised theft. They are doing precisely what they have been authorised

to do. Now if one wants those deductions stopped one needs to lobby parliament for change in legislation. 

What I need to remember is that these  fringe parties or proposed parties can promise what they like as the chances of them having to implement their promises are next to zero. Should by some miracle they do get elected they can

use the old excuse that they did not know how things really were until they opened the books.

There is on caveat to this, it's 2016 and anything is possible. Crazy year.

So with that,  in the words of the immortal Fredd Dagg ESQ....

"So if things are looking really bad and you're thinking of givin' it away
Remember New Zealand's a cracker.
and I reckon come what may,

If things get appallingly bad and we all get atrociously poor
If we stand in the queue with our hats on  we can borrow a few million more."

This article is interesting on the subject of who pays into the tax system v who takes out of the tax system

"By comparison, the top 3 per cent of individual income earners, earning more than $150,000 a year, pay 24 per cent of all tax received."

So why there is such a downer on the well paid in NZ I have no idea.

All the ideas from Gareth Morgan have been ridiculous. the 5% tax/ tariff on houses is nuts. Some people would end up spending more on this 5% than they earn in a year. 

And the idea that people making higher incomes should be paying even more tax. Taxing people on owning luxury cars is also ridiculous. Already paying 33% income tax before paying GST or FBT on the car, anything more than this is just cruel.

These people making the higher incomes are less likely to be putting a larger burden on the government. Less likely to be on any benefits and any other government provided services.

Geektastic:

 

"By comparison, the top 3 per cent of individual income earners, earning more than $150,000 a year, pay 24 per cent of all tax received."

 

So why there is such a downer on the well paid in NZ I have no idea.

 

I don't think anyone begrudges the amount of tax high salaried earners pay. It's those that are self employed (farmers, builders etc) who may not pay their fair share. The PAYE employee cannot really avoid their tax obligation, but the under the table cash work, new 'work' vehicles etc that self employed perhaps can manipulate is another issue. I'm not really sure how that additional income can be gathered. Unless you removed income tax altogether and just found another method. 

Geektastic:

 

This article is interesting on the subject of who pays into the tax system v who takes out of the tax system

 

"By comparison, the top 3 per cent of individual income earners, earning more than $150,000 a year, pay 24 per cent of all tax received."

 

So why there is such a downer on the well paid in NZ I have no idea.

 

I think that's a good example of the inequality in this country that the left are always going on about