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136 posts

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  Reply # 1048684 20-May-2014 11:29
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MikeAqua:
sdav:
k1wi: One point I'll raise is that due to human nature, being in the 'top 1%' increases your happiness very little above someone at the median (or even further 'down' than that).  Basically, above a relatively low threshold of 'comfort' or 'sustenance' more money has bugger all impact on how happy you are (because your expectations and aspirations increase in step with your means).

I'll let people put a bent on it either way, but its an interesting factor of human nature.


I agree with that. My wife and I don't earn massive money but we do ok and we have just started building a new house. It is nothing like I thought I would want when I was younger. We invested in more land and built a much smaller home.

Previously we had lived (rented) in everything from a 7 bedroom house to more recently a small 2 bedroom apartment. When I was growing up I literally lived in 3 rooms in my house, my bedroom, the kitchen and the family room. When we were planning our house we were like do we really need two lounges, 4 bedrooms etc and the simple answer was no.

When it really boiled down to what we needed we realised we would save money and have much more spare to do the things we wanted over the course of our mortgage. It also means our repayments will be less than what we paid in rent and should stay that way for some time.

Bit of an OT spiel but I feel so many houses these days are so big for what people really need. Of course this is all my opinion and my experiences. Everyone values are different... 


They very interesting thing about human nature is that thinking you are earning more than others is a better predictor of happiness than actual earnings.

BTW regarding the lorenz curve the full StatsNZ report (interesting reading) shows this and is discussed - they conclude it is a concave curve, typical of a developed country.  They also go into the personal wealth data by age, family status and ethnicity.  A big chunk of the people with zero or negative equity are in their 20's - maybe just graduated with a big student loan (me at 25), just started work with a car loan.

I would have been interested to see wealth against highest qualification.

For the CGT fans, are you happy to pay CGT every time the funds your kiwisaver is invested in sells property or shares?  Or are we just targeting residential rental properties?


Investiments and Kiwisaver are already taxed, CGT would not change that it would just mean you could catch those things that are not taxed like housing.

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  Reply # 1049957 20-May-2014 17:49
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Lazarui:
MikeAqua:
sdav:
k1wi: One point I'll raise is that due to human nature, being in the 'top 1%' increases your happiness very little above someone at the median (or even further 'down' than that).  Basically, above a relatively low threshold of 'comfort' or 'sustenance' more money has bugger all impact on how happy you are (because your expectations and aspirations increase in step with your means).

I'll let people put a bent on it either way, but its an interesting factor of human nature.


I agree with that. My wife and I don't earn massive money but we do ok and we have just started building a new house. It is nothing like I thought I would want when I was younger. We invested in more land and built a much smaller home.

Previously we had lived (rented) in everything from a 7 bedroom house to more recently a small 2 bedroom apartment. When I was growing up I literally lived in 3 rooms in my house, my bedroom, the kitchen and the family room. When we were planning our house we were like do we really need two lounges, 4 bedrooms etc and the simple answer was no.

When it really boiled down to what we needed we realised we would save money and have much more spare to do the things we wanted over the course of our mortgage. It also means our repayments will be less than what we paid in rent and should stay that way for some time.

Bit of an OT spiel but I feel so many houses these days are so big for what people really need. Of course this is all my opinion and my experiences. Everyone values are different... 


They very interesting thing about human nature is that thinking you are earning more than others is a better predictor of happiness than actual earnings.

BTW regarding the lorenz curve the full StatsNZ report (interesting reading) shows this and is discussed - they conclude it is a concave curve, typical of a developed country.  They also go into the personal wealth data by age, family status and ethnicity.  A big chunk of the people with zero or negative equity are in their 20's - maybe just graduated with a big student loan (me at 25), just started work with a car loan.

I would have been interested to see wealth against highest qualification.

For the CGT fans, are you happy to pay CGT every time the funds your kiwisaver is invested in sells property or shares?  Or are we just targeting residential rental properties?


Investiments and Kiwisaver are already taxed, CGT would not change that it would just mean you could catch those things that are not taxed like housing.


It's the assumption that everything in the world should be taxed that I find most odd I think...





 
 
 
 


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  Reply # 1049960 20-May-2014 17:51
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Geektastic:  It's the assumption that everything in the world should be taxed that I find most odd I think...


Why should profits of any kind not be reasonably taxed?




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  Reply # 1049963 20-May-2014 17:53
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ajobbins: CGT in NZ is urgently needed and I strongly support it.

I don't have an opinion if it should also apply to the family home (simply because I don't know much about the merits for/against).

I will look favorable upon any party that supports the introduction of CGT.


What do you think it will actually do? It's been around for decades in the UK and certainly does nothing to reduce housing costs. It seems to be quite good for enriching accountants and lawyers though.





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  Reply # 1049965 20-May-2014 17:54
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KiwiNZ:
ajobbins: CGT in NZ is urgently needed and I strongly support it.

I don't have an opinion if it should also apply to the family home (simply because I don't know much about the merits for/against).

I will look favorable upon any party that supports the introduction of CGT.


A capital gains tax is a bad idea, it will stifle investment something NZ needs lots of.


Agreed. 





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  Reply # 1049968 20-May-2014 17:57
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Geektastic: What do you think it will actually do? It's been around for decades in the UK and certainly does nothing to reduce housing costs. It seems to be quite good for enriching accountants and lawyers though.


How do you know it doesn't reduce housing costs? Just because they are high, doesn't mean they couldn't be higher. Even if it had no effect on demand (and therefore prices), which seems extremely unlikely, it's still a fairer way of ensuring that people are paying appropriate tax for the gains they are making.




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  Reply # 1049973 20-May-2014 18:06
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alasta: It would be really interesting to know what proportion of national wealth is controlled by the top 1% in NZ.

When people talk about the 'rich getting richer' they really need to clarify who they consider to be rich. I personally don't know anyone who I would consider to be rich, or even well off. I earn enough money to pay the bills and have a few simple luxuries like owning a car and occasional travel, and most people I know are either in the same position or struggling. It seems to me that NZ has a general standard of living problem rather than a distribution of wealth problem.


I certainly know some pretty wealthy people here. I would say that our nearest half dozen or so neighbours are worth well in excess of $5 million each (we are very much the poor kids on the block - no Aston Martins on our drive!). I'm sure they are getting richer but that is more or less an inevitability once you reach a certain point. If your investments return $500,000 a year and you only need half that to live on, you're getting richer every year.

It really depends on what you do. Immigrants come here often because they can earn more money than they do in (say) the UK and Kiwis move to the UK because they can earn more money than they do here. It's odd.





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  Reply # 1049975 20-May-2014 18:10
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Geektastic:
KiwiNZ: A capital gains tax is a bad idea, it will stifle investment something NZ needs lots of.


Agreed. 


Your feelpinions are nice and all, but the actual statistics and data do not support this at all




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Reply # 1049983 20-May-2014 18:30
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ajobbins:
Geektastic:
KiwiNZ: A capital gains tax is a bad idea, it will stifle investment something NZ needs lots of.


Agreed. 


Your feelpinions are nice and all, but the actual statistics and data do not support this at all


Don't go coming into this here political discussion with your facts and statistics. You know they only belong if they prove my opinion......

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  Reply # 1049992 20-May-2014 18:33
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ajobbins:
Geektastic: What do you think it will actually do? It's been around for decades in the UK and certainly does nothing to reduce housing costs. It seems to be quite good for enriching accountants and lawyers though.


How do you know it doesn't reduce housing costs? Just because they are high, doesn't mean they couldn't be higher. Even if it had no effect on demand (and therefore prices), which seems extremely unlikely, it's still a fairer way of ensuring that people are paying appropriate tax for the gains they are making.


1.  Because, as far as I am aware, there is no evidence that it has been a successful instrument to reduce house prices anywhere. Also, there are jurisdictions that have capital gains taxes and stamp duties (Aus, UK etc) that seem to have many of the same issues we do.

2.  If more comprehensive capital gains taxes come in, they seem certain (for political reasons) to exempt "the family home". If anything that could make the problem worse as people will then be encouraged to invest more into their house rather than more highly taxed investments (constructing rental dwellings, farms, businesses, shares etc). Might as well add a pool and tennis court (to get a tax free gain) to the property I have just bought, rather than subdivide for a rental (which now attracts CG tax), would be a perfectly logical conclusion for a wealthy person.

The fundamental driver of prices seems to me to be an imbalance between demand and supply, with constraints on supply meaning that demand pushes prices ever higher. There does seem to be some merit in what the Govt claims to be doing to tackle the supply-side of the housing market (land supply, cost of building materials, cost and time taken to consent etc). On the demand side of the probl;em there seems to be less they can do, unless they are willing to tighten immigration rules.

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  Reply # 1050156 20-May-2014 22:12
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A CCT won't make any real difference to house prices. Why? Because it won't affect those landlords who buy houses, rent them out, but never sell any houses. And when house prises rise, the amount of equity a landlord has (value of houses they own minus amount owing on mortgages on those house) increases with those values. This means the more houses you have, the easier it is to borrow money to buy more houses.

What needs to be done is introducing "Ring Fencing" This means no longer allowing losses on a rental property to be offset against personal income. It will hit all of those who own 1 or 2 properties just for tax reasons. But it won't affect owner occupied properties or first home buyers. But it also won't affect large landlords who actually make profits off property. But those landlords won't be affected by a capital gains tax anyway.


Also ring fencing won't have the big compliance costs and loopholes that a CGT would.


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  Reply # 1050182 20-May-2014 23:41
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Markovnikov's rule - the rich gets richer.
Whatever you do, the rich always get richer - look at Kim Jong Un - that's 100% communist, and doesn't seem to make anyone any better.

If you give the rich no money, they make money. Give them some money, they make more.
Give lotto to some random person, within a year they've spent it all, and worse, get in debt.

Maybe education is the answer?

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  Reply # 1050341 21-May-2014 11:11
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People who accumulate wealth have a certain set of skills/thought processes/attitudes.  You can't stop them making money unless you take very extreme measures.

They pass these talents and behaviours onto their kids.  Those kids will typically make money too.  Above all the 'rich' generally value education and education is the key to almost everything.  The people in our society who place the highest value on education succeed.  I'm not just talking about academic education either - professional athletes, tradies, professional musicians, artists all have to learn their field. 

If your parents value education, you are very likely to succeed, in whatever field you choose.  If you parents don't value education, you have an uphill struggle.  It's not fair but biology isn't, and ultimately society is a sort of an ecosystem.


joker97: Markovnikov's rule - the rich gets richer.
Whatever you do, the rich always get richer - look at Kim Jong Un - that's 100% communist, and doesn't seem to make anyone any better.

If you give the rich no money, they make money. Give them some money, they make more.
Give lotto to some random person, within a year they've spent it all, and worse, get in debt.

Maybe education is the answer?




Mike

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  Reply # 1050375 21-May-2014 11:38
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joker97: Markovnikov's rule - the rich gets richer.
Whatever you do, the rich always get richer - look at Kim Jong Un - that's 100% communist, and doesn't seem to make anyone any better.


Hah! It's nothing of the sort - that is 100% insane despot. North Korea is so far out there it isn't even on the left-right spectrum.

I agree with you though: without sufficient checks in place, society will naturally drift in the direction of the rich getting richer and the poor getting poorer.



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  Reply # 1050567 21-May-2014 17:13
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JimmyH: The fundamental driver of prices seems to me to be an imbalance between demand and supply, with constraints on supply meaning that demand pushes prices ever higher. There does seem to be some merit in what the Govt claims to be doing to tackle the supply-side of the housing market (land supply, cost of building materials, cost and time taken to consent etc). On the demand side of the probl;em there seems to be less they can do, unless they are willing to tighten immigration rules.


As you say immigration is the key.

Personally I am as much concerned by our system that allows NZ people to have duel passports.
i.e. once a kiwi, always a kiwi not matter how long you have abroad.
So whats to stop the vast hoards that have left this country coming back here to retire, driving up house costs and being a drain on our health services???
With the Aust economy about to go through real rough patch, is this something we should be concerned about?


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