Saturday, July 9, 2011

Andrei It's enough to drive you to despair

Envy politics from Dr Russel Norman
Rich people benefit disproportionately from not having to pay a capital gains tax, Green co-leader Russel Norman says.
Question: Do poor people benefit in anyway, shape or form by the Government finding new and novel ways to soak the rich?

Does anybody benefit apart perhaps from a few office drones who would have to be employed to process the bits of paper needed to administer such a scheme?

Read it and weep: 'Rich gain most' from no capital tax

Update: Actually thinking about it I'm probably wrong about who would benefit the most from such a scheme.

The biggest beneficiaries would most likely be high income, lawyers and accountants who would find new opportunities in developing novel instruments to avoid or a least minimize the amount that would be required to be paid in tax under such a regime.

12 comment(s):

ZenTiger said...

This legislation is long overdue. Even though rich pay tax on asset sales (such as houses) that's not as good as establishing a convoluted CGT scheme.

The only problem is that CGT will probably be exempted on the family home.

The trick is to combine it with Death Taxes and to support voluntary euthanasia to get better churn on the houses that could be freed up for more productive uses by convincing the old and infirm that life is not worth living now they are pushing 31.

John Key is on to it:

Prime Minister John Key has indicated he supports looking at the legislation surrounding euthanasia.

'That's because I think, while it's a sensitive issue that you would have to make sure was properly covered, I think there have also been some tragic cases where we have seen people before the courts where they have [assisted in euthanasia] at the will of the person they have ended their lives for,'' he told a Family First forum in Auckland today.

ZenTiger said...

PS: On the subject of CGT - I don't think there's a single problem the Greens cannot overcome by using some kind of tax instrument or quota system.

FAIRFACTS MEDIA said...

Are you being serious Zen? :)
I think Andrei is onto it.
Let us imagine a few years from now.
Cactus Kate has returned home from Hong Kong and is seeking extra work in New Zealand.
She is also an ACT Party MP.
But when National finally loses office and Cactus is no longer part of the government, she might be rushed off her feet devising plans to help her clients.
As you say, and I have said at my place, the accountants and lawyers will do well under a CGT.
Indeed, the old Gift Duty and how to avoid that had been a nice little earner too.

Psycho Milt said...

In what sense is Norman's statement wrong, Andrei? The poor don't get tax-free income from capital gains - the rich do. Leaving income from property investment untaxed while the rest of us pay tax on everything we earn is not only unfair from the taxpayer's point of view, it's unfair on productive industries trying to attract investment. In the long run that may be more important for the country than the fact that it's unfair to the poor, but that doesn't make Norman wrong.

Andrei said...

There's a question in my post PM, and that is how will taking money from the "rich" help improve the lot of the poor?

The Government misspends a lot of money it takes in, wastes it on the most appalling rubbish, some of that wasted money taken from those on minimum wage in fact.

T'would be better for all if the government spent less rather than taking more don't you think.

ZenTiger said...

Except there are taxes on property sales PM. The moment a property investor looks like a reseller of property for the sake of making more money than from renting (income of which is taxable) the IRD will tax them.

A CGT will just add additional rules and regulations around an existing tax. It remains to be seen if the various loopholes that seem to appear irrespective of whether Labour or National win an election kick in.

while the rest of us pay tax on everything we earn

Except for those that get so many tax breaks they pay very little tax on what they earn.

And "the rich" in this country start paying the top tax rate at around 70K which is not "rich" in the sense that the mega rich are attacked, whilst tax policy targets the middle class.

Labour after 9 years in power now think they need to sort out CGT to stop the rorts? Amazing that they figured all this out in opposition. Maybe they should stay there another few years and gain even more insight.

Like the stupidity of GST exemptions. Not only that, they want to put the top tax rate back up the rates were adjusted in exchange for an increase in GST. Yet the overall GST rate stays up too. Madness, as the differentials then create the loopholes in effective tax rates only the rich can take advantage of.

Psycho Milt said...

Zen: other issues with the tax system and what Labour might or might not have done about it 9 years ago aren't relevant to the question of whether an income stream available only to the already well-off should be tax-free.

Andrei: your question is answered by even the most cursory comparison of what being poor means today cf what it meant 150 years ago.

Andrei said...

You think more taxes and bigger Government have raised the standard of living?

Astonishing

I think the standard of living has risen because advances in the way we can exploit energy mean that farmers can produce much much more food with far less labour and that a modern coal miner can dig as much coal in a day as his forbears could dig in a month and so forth.

Psycho Milt said...

Your question was whether progressive taxation "helps the poor," not whether it raises the standard of living. I've no idea whether it raises the standard of living (although the fact that the developed countries overwhelmingly have progressive taxation is a pretty suggestive correlation), but that it has helped the poor isn't really open to dispute.

ZenTiger said...

PM, you said:

other issues with the tax system and what Labour might or might not have done about it 9 years ago

Not exactly the facts of the matter. Labour were in power for 9 years, and as recent as 3 years ago didn't see fit to sort out CGT.

CGT is neither here nor there to me, of more import is that the GST exemption of fruit and veg will have the impact of raising compliance costs overall, so prices of food will go up as a consequence.

Secondly, to put the top rate up to 39% AFTER it was lowered in exchange for an increase of GST is a betrayal by politicians in general to the NZ public. The GST was put in place at 10% to have a top tax rate of 33%. Now, after all these years, the top tax rate goes up and the GST goes up. A pox on all politicians who ultimately conspire to increase government income by making the middle class pay for it.

The only mildly interesting thing Labour have done is move the "rich prick" threshold from 60K to 150K. It's still a pathetic attack on the middle class, and it isn't even inflation adjusted, and I have a feeling politician salaries will have some new tax free allowances pushed through after this legislation, but it makes a nice change to be beaten by a cricket bat instead of an iron bar.

leftrightout said...

Then NZ must have the smallest middle class of any developed nation if $150k a year is middle class!

David Winter said...

Yeah. About 1% of kiwis make more than 150K so I think we can ignore "middle class" there

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