No Minister

A VERY GOOD ANALYSIS OF LABOUR’S TAX THE ‘RICH PRICKS’ POLICY

An interesting opinion piece from Geoff Simmons, former Treasury economist and TOP Party leader ….

The real winners of Labour’s tax policy are the wealthy. This might seem counterintuitive, given its plan to raise the top tax rate on those who earn more than $180,000 to 39c in the dollar. Bear with me.

IRD data shows that half of New Zealand’s wealthiest people don’t even pay the top tax rate as it stands. They will be completely unaffected by this new tax rate. In fact, they are likely to benefit from it.

They are unaffected because they can use tax planning – trusts, family foundations and especially property investments – to reduce their taxable income. Labour’s change will worsen that problem, because it increases the gap between income tax rates and trust and company tax rates.

Which brings us to the second set of winners from Wednesday’s announcement: accountants and lawyers. Anyone who can help rich people set up ways to reduce their taxable income is set to board the gravy train.

We saw this the last time we had a 39c tax rate. Under the Clark-Cullen Labour government there was a surprising number of people who earned just below the threshold. This is a clear sign of people gaming the system.

Our tax system generally sticks to the good practice of taxing lots of things a little bit, so that it doesn’t distort behaviour. PAYE earners already pay their fair share of tax. By lifting the top rate far above the company and trust rate, Labour’s change will add a lot of complexity to the tax system without generating much revenue.

But the real winners from Labour’s policy are real estate agents and wealthy people themselves. That is because the tax change is likely to send property prices even higher.

The real problem with our tax system is the different tax treatment of property compared with other investments.

People with money in other forms of investments – KiwiSaver, bank deposits and businesses – pay some of the highest tax rates in the world on the returns from those investments. Meanwhile, property investments – especially the family home – pay some of the lowest taxes in the world.This provides a massive incentive to speculate on property. That is why we put more of our money into property than any other country in the world. That means we put less into businesses (which actually create jobs and exports) than any other country. This is also one reason why we have some of the most unaffordable housing in the world.

Increasing the top tax rate to 39c will make the problem worse. If someone is earning more than $180,000, they would now pay 39c in the dollar on dividends from shares, for example. Whereas they will pay no tax on the returns from owner-occupied property, and only half the returns from rental property. This is an even bigger incentive to pile into property investment.

Again, this happened last time we had a 39c top tax rate. Remember that house price boom in the 2000s? Westpac research suggests house prices rose 17 per cent simply due to that 39c top tax rate. That will happen again.

This is important because leveraged property investors determine house prices. So, perversely, Labour’s tax policy will push house prices even higher – further locking young people out of the market and enriching those who are already wealthy.

When combined with quantitative easing and the Reserve Bank dropping restrictions on loan-to-value ratios, the property market is guaranteed to roll ever upwards under Labour’s next term. New Zealand’s wealthiest citizens will be laughing all the way to the bank.

Let’s keep moving … to another rental.

Written by The Veteran

September 12, 2020 at 11:45 am

41 Responses

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  1. Fair enough summation, as it occurred last time when Cullen and Clark instituted the “rich prick tax”.

    However, given the rate and income at which it kicks in, and the relative chump change they are predicting it will gather (half a billion dollars), it’s just fiddling around the margins. Like the last National Government’s “packet of chewing gum” tax cut. And more proof that while the two main parties talk a big game about their comparative policy differences, in reality they are little different. Indeed most of the election campaign policies they announce are merely “tweaks” virtue signalling to the prospective voters the focus group polling is saying might be susceptible to the nonsense.

    If I wasn’t an incrementalist I’d join Tom Hunter in declaring a pox on both your houses. 🤣

    Kimbo

    September 12, 2020 at 12:03 pm

  2. Kimbo … I’ll go with the analysis that has it the $500m is a pie in the sky figure. This is all about playing to Labour’s traditional base and the politics of envy rather than making economic sense with the top personal tax rate and the company tax rate now out of wack so as to encourage tax avoidance …. and the winners?

    The Veteran

    September 12, 2020 at 12:13 pm

  3. Haha!

    I suspect this is focused more on the politics than the practicalities of such tax. The objective being to hammer some future National-ACT government that reduces or eliminates the tax.

    A future Labour Party and the rest of the Left will be able to scream to high heaven during elections about how National-ACT are defending “the rich” – all the while knowing how pathetic the tax revenue is from that slice and also enabling no discussion to occur about all those rich, propertied home owners in Mt Albert and other leafy bastions of suburban Labour-Green voters.

    Could be worse: under Cullen-Clark we had 39% on $60,000 per annum. My problems with the NZ MSM started with that campaign when Clark repeatedly got away with saying that it was no big deal because even the USA had a 39.5% rate, without any reporter ever asking her what income had to be earned. Being fresh from the place and still filing my US tax returns I checked and found it was something like $NZ 300,000 equivalent. Most Kiwis had no idea.

    Tom Hunter

    September 12, 2020 at 12:13 pm

    • All correct but you have the timing wrong. It forces Collins in this election to justify her opposition to the emotionally-appealing notion that the “rich” have more money, and they can “afford”, indeed they “should” pay more due to the benefits they derive from the country.

      Hence, as per the Vet and his analysis that Labour’s policy is an appeal to the “envy” of their base, Collins is framed by Labour as appealing to the “greed” of hers.

      Who knows, maybe Labour’s policy might be best for the country, although I doubt it. And as per the Vet they have pulled the number out of their arse and announced a policy that appeals to their base, cuts off the Greens by at least cornering a slice of the “left wing tax hike” voting demographic, while still being relatively innocuous.

      Which is how good evidence-based analysis is in determining fiscal policy is thrown to the wind via populist appeals to “envy/equity”’and “greed/economic prosperity”.

      Kimbo

      September 12, 2020 at 12:29 pm

  4. Very much a political move, but see Bowalley Road for what (some of) the left thinks. Colbert said that the art of taxation is to pluck the goose so as to get the largest amount of feathers with the least amount of hissing. If you extend “hissing” to include scheming to avoid then this is a fail but not a huge one. Is the extra 6% worth a lot of trouble? And by making a landlord’s life miserable perhaps not too much surplus will be steered into housing. But then the rich don’t bother with that end of the market – commercial property much more likely. All
    in all, it’s a token and Labour’s supporters will see it that way if they have any sense. But then they wouldn’t be supported, would they? As far as taxation policy is concerned it’s nonsense. Not enough money, will annoy both ends of the spectrum.

    Max Ritchie

    September 12, 2020 at 12:33 pm

  5. Worst policy I ever saw like this was in Phil Goff’s watch (and remember he had been there in cabinet in the 1980s when Roger Douglas was reforming, so he understood the principle that business confidence and planning benefits from as much certainty and simplicity)

    …was the no-GST in fresh fruit and veges. Highly bureaucratic and complicated For example, peanuts are a legume, therefore a vegetable, but shell it and even though you don’t fry and salt it and it has all the nutrition benefit as when in the shell, it is improved so does that make it fresh…or not?! Just like canned tomatoes that are just as nutritious as fresh and a damned sight cheaper!

    And as fresh fruit and vege are seasonal the price varies largely based on supply, and the 15% GST makes very little difference to the purchasing choice…when there will be other cheaper seasonal options!

    But no, despite knowing the economic and job-wrecking harm it would cause, Goff, for the sake of virtue signalling went chasing the idiots, at the potential cost of extra and complicated bureaucracy for retailers. Sure, Countdown might have the systems to do it, but what about the smaller retailers suffering death-by-a-thousand-cuts via government regulation?!

    I met someone who was actually swayed by the policy to vote Labour at the time. Was a journalist-trained press officer for a University by the way, not some “under informed” working class schleb as per the typical Labour-voter caricature btw. Incredible!

    Kimbo

    September 12, 2020 at 12:46 pm

  6. But who else would be employed by a University as a press officer but an ‘under informed’ working class pleb? Who will do as he is told by the wankerdemics.

    adolffinkensen

    September 12, 2020 at 1:13 pm

    • As per many media these days, she was more a Grey Lynn/Ponsonby luvvie. If not necessarily in location, but in spirit.

      But to be fair, she seemed capable at her job.

      Kimbo

      September 12, 2020 at 1:21 pm

  7. Geoff’s party lost me last time around with the proposal that our residential property value would be subject to tax. Local Government rates are insult enough and bear no comparison with any demand for essential services supplied or value received from the local authorities making demands. We paid income tax on the funds used to purchase and maintain the property we live in. Plus we pay GST on the high rates we are levied. Being levied a tax on the present value of the property is simply not acceptable to me.

    Pete

    September 12, 2020 at 1:45 pm

  8. I personally think this is an own goal, the people most likely to be effected, and least able to avoid it are employees of the state or local councils.

    It does however indicate just how shallow the Labour policy box is.

    alloytoo

    September 12, 2020 at 2:06 pm

    • Astute.

      adolffinkensen

      September 12, 2020 at 3:18 pm

  9. The Elephant in the Room, to coin a phrase:

    IRD data shows that half of New Zealand’s wealthiest people don’t even pay the top tax rate as it stands. They will be completely unaffected by this new tax rate. In fact, they are likely to benefit from it.

    They are unaffected because they can use tax planning – trusts, family foundations and especially property investments – to reduce their taxable income. Labour’s change will worsen that problem, because it increases the gap between income tax rates and trust and company tax rates.

    There is the real issue that needs to be attacked. Not the rates, not the thresholds, but the various legalized methods of cheating.

    Eliminate the use of trusts to hide income.

    Eliminate the ability to form a company to evade tax.

    Tax all capital gains when realized.

    Return the Inheritance Tax.

    I know, it’s a fantasy, a pure fantasy, because them that makes the rules are the biggest beneficiaries of the rules.

    Anne Tiffa

    September 12, 2020 at 3:56 pm

  10. Thank you AT. The true face of socialism speaking. Buyer beware.

    The Veteran

    September 12, 2020 at 8:21 pm

    • Seem like eminently reasonable suggestions to me.

      Why do you support a system that lets a few people avoid tax?
      
      How much do you benefit from the current regime?
      
      Why should capital gains be given a different treatment to any other form of income?
      
      What is wrong by levelling the playing field by taxing unearned income?
      
      The true face of greed speaking?
      

      Gustavo Frink

      September 12, 2020 at 10:13 pm

  11. I’m sure that Gustavo and Anne pay more tax than they have to, for at least two reasons.

    First, as yet another example of their pure goodness, which shines a light for all the greedy people to look up to, in the hope that such examples will change their mean-spirited ways.

    Second, because it shows their confidence that other people, especially government politicians and bureaucrats, know how to spend their money better than they do.

    Tom Hunter

    September 12, 2020 at 10:50 pm

    • I can’t speak for Anne Tiffa, but I do not use any mechanisms to avoid paying tax. I am quite happy to see the law changed to eliminate the legal structures for tax avoidance and evasion.

      Perhaps my final sentence was in error being addressed to The Veteran. maybe more appropriate for you.

      Gustavo Frink

      September 13, 2020 at 11:25 am

  12. TH 10.50 … droll, very droll.

    The Veteran

    September 13, 2020 at 8:50 am

  13. It’s astonishing that you post criticism of Labour’s tax policy based on the fact that it doesn’t deal with the problem of untaxed wealth, for all the world as though preventing the taxation of wealth weren’t one of the main priorities of the National and ACT parties.

    The criticism of the policy is correct – it hits the wage and salary earners who are already paying the bulk of the country’s income tax, while leaving wealthy bludgers untouched. Which suggests that voting for a party that would tax the wealthy bludgers is the answer, ie people should vote for the Green or TOP parties.

    Psycho Milt

    September 13, 2020 at 12:48 pm

    • And the false premise there is that National don’t want to tax “wealth”…when they support taxing of it, wherever it is found at the same rate for all, be it GST, company tax, or the current four brackets incomes up to $70,000. So what you really mean is they don’t support progressive income and other taxes to the same extent. So as per Max Ritchie, all we are doing is arguing over how long and how much the goose will comply with the feather-plucking process, and throwing the epithets, “Greedy!” or “Envious!” at those with whom we disagree.

      And no, trying to tax those who earn more (who contrary to what you imply, already DO pay a far larger proportion of the tax take) has been proven to be a failure. Stagflation. Unemployment. Lack of economic growth, the story of the long slow decline of Western economies from the post-war managed economy consensus until the late 1970s, irrespective of National/Liberal Coalition/Conservative/Republican or Labour/Labor/Democrat Governments. Plus those who have the means, wherewithal and incentive to hire the expertise to keep them one step ahead of the play with tax avoidance.

      And why not cut down on tax avoidance, as per Gustavo’s rhetorical question above? Well, in 1984, the year I delivered leaflets for the Labour Party, I remember Anne Hercus, was asked where they were going to get the money to pay for all their social programme promises, and her answer was, “we’ll cut down on tax avoidance” (and ironically Roger Douglas did, although not, I suspect in the way Hercus meant! 😬).

      And in my blind youthful political-tribal folly, I thought “yeah, that must be right. Evil and corrupt Rob Muldoon must be both too stupid and too much in the pocket of the greedy Tories to do a proper job of collecting all the tax he should”. I mean, Rob Muldoon?! If that guy couldn’t design a progressive tax net with accompanying complex business regulations and control to wring every last dollar out of the pockets of “rich pricks”, no one in this country ever could!

      Thirty six years later I’m still waiting to see anyone with anywhere near Muldoon’s talents to implement and administer what you are insisting with insouciance should be easy, but we just lack the will and integrity. Sorry, Milt, but I see no one, especially in the Greens, who could do it…without causing unintended consequences of far greater harm to the most vulnerable low income earners and beneficiaries than the alleged “social injustice” they are seeking to right.

      Kimbo

      September 13, 2020 at 1:47 pm

    • Which suggests that voting for a party that would tax the wealthy bludgers is the answer,…

      Looks like you may get your wish..Labour has not ruled out the Greens tax policy.

      So, not just a CGT but a wealth tax, stamp duty, death duties, etc, etc.

      Tom Hunter

      September 13, 2020 at 3:02 pm

    • The reason that income tax is mostly left to wage and salary earners to pay is right there in the OP:

      IRD data shows that half of New Zealand’s wealthiest people don’t even pay the top tax rate as it stands. They will be completely unaffected by this new tax rate. In fact, they are likely to benefit from it.

      They are unaffected because they can use tax planning – trusts, family foundations and especially property investments – to reduce their taxable income.

      And the reason neither of the major parties ever does anything about that is that their cabinet ministers mostly consist of people benefiting from it. Rob Muldoon didn’t properly collect taxes from those people because he and his cabinet were those people. Helen Clark and her cabinet were those people. John Key and his cabinet were those people. The current cabinet has plenty of them and the next one will too.

      We always get dire warnings about the “unintended consequences” of making rich people actually pay their taxes, but hear very little about the unintended consequences of helping concentrate the world’s wealth into fewer and fewer hands. For once I’d like us to try the ‘make them pay tax’ consequences, rather than the ‘help rich people to get richer’ consequences.

      Psycho Milt

      September 13, 2020 at 3:08 pm

    • For once I’d like us to try the ‘make them pay tax’ consequences, rather than the ‘help rich people to get richer’ consequences.

      You’re raging into the void Milt. I hear the same thing from Bernie Sanders in the USA, who constantly talks about the good old days when the top US income tax rate was 90%. He just doesn’t have a fucking clue about the reality of what that meant in tax revenue…

      If there’s a long-term reluctance across many different Western nations to have ‘make them pay tax’ consequences for “rich people”, perhaps you and Bernie should have a hard think about why that is so, beyond the usual Left-wing cant of “those people” being in power.

      Otherwise you’re going to spend the rest of your days howling into the same void.

      Tom Hunter

      September 13, 2020 at 3:50 pm

    • The top marginal rate is irrelevant when there are so many loopholes in the system.

      It isn’t about the rates, its about the need to have all pay by the same rules.

      Gustavo Frink

      September 13, 2020 at 3:59 pm

    • And the reason neither of the major parties ever does anything about that is that their cabinet ministers mostly consist of people benefiting from it. Rob Muldoon didn’t properly collect taxes from those people because he and his cabinet were those people.

      See, I was stupid enough when I was 17 to believe that conspiracy theory, but I find it astonishing (your word) that an intelligent man like you believes that about Muldoon.

      I mean, seriously, he was a pragmatist to his finger tips, was always sympathetic to the (admittedly “deserving”) poor from whence he came, and had a general contempt for speculators and the fat cats. Income tax rates were as high as 66% on his watch, and the list of regulations to catch tax avoidance was long and detailed, including and especially against the urban high income who were National’s natural constituency. There was a reason Bob Jones’ NZ Party helped contribute to Muldoon’s downfall.

      Instead, being a man of relatively modest tastes albeit having achieved a level of prosperity as high-tax rate/import-restricted NZ allowed at the time, Muldoon’s sole aim was to preserve, protect and advance the NZ economy to the extent that he could maintain full employment, take care via the welfare state of those battling at the margins, and ensure the continuation of the same relatively modest lifestyle and limited luxuries those of his generation who were brought up in the Depression and fought in World War II had become accustomed.

      Kimbo

      September 13, 2020 at 4:11 pm

    • The top marginal rate is irrelevant when there are so many loopholes in the system.

      Ok, I’m not going to taunt you any further because obviously there’s a mental blockage there that no amount of “Have you thought about this? hints are going to clear.

      So let’s just put it simply: nobody – not even you – is going to be stupid enough to do the work required to make such top-level incomes and then hand over 90 fucking % to the government.

      Nobody.

      And that question repeats all the way down the line: 70%, 50%, …. starting to enter “willingness” territory but only barely when we hit 40%.

      In fact those US total income tax revenue figures as a percentage of income suggest the gag limit is reached at 20%.

      Tom Hunter

      September 13, 2020 at 4:29 pm

    • @ Tom Hunter

      Not so, sir! There is a way to do achieve tax-paying compliance of theoretically any rate, and it’s one the likes of Gustavo and Anne Tiffa seem to advocate on a continual basis: the radical left’s universal solution, good ol’ “power comes from the barrel of a gun”.

      When you have the biggest hammer in town, every problem looks like a nail! 🙂😂

      Kimbo

      September 13, 2020 at 5:03 pm

    • Income tax rates were as high as 66% on his watch…

      And only paid by wage and salary earners, same as usual. Have you read the OP?

      … and the list of regulations to catch tax avoidance was long and detailed

      Yep, and accountants and lawyers were making a mint from it, same as now. Members of the cabinet of the time were their customers, also same as now. This should be regarded as a problem, but somehow isn’t.

      Psycho Milt

      September 13, 2020 at 6:41 pm

    • In fact those US total income tax revenue figures as a percentage of income suggest the gag limit is reached at 20%.

      The US is a bizarre country that shouldn’t be compared with other western democracies. Places for us to look for comparisons are in Europe.

      So let’s just put it simply: nobody – not even you – is going to be stupid enough to do the work required to make such top-level incomes and then hand over 90 fucking % to the government.

      Yeah yeah, they’re not the obnoxious arseholes they appear to be but instead the smartest men in the room etc. Money buys a lot of influence, which is why it’s so hard for political parties to make the people with the money act like decent citizens. At issue here is whether we should regard that as a problem or not. The person The Veteran is so surprisingly endorsing in the OP thinks it is a problem, hence my comment.

      Psycho Milt

      September 13, 2020 at 6:47 pm

    • The US is a bizarre country….

      😁😁

      Tom Hunter

      September 13, 2020 at 7:02 pm

    • “And only paid by wage and salary earners, same as usual.”

      Er, Milt, you do know that passive income be it from rent, interest or dividends is also…taxed?!

      Yep, and accountants and lawyers were making a mint from it, same as now. Members of the cabinet of the time were their customers, also same as now. This should be regarded as a problem, but somehow isn’t.

      And yet Muldoon went as far as to introduce retrospective legislation (usually, and rightly considered an affront to good democracy) in the form of the Income Tax Amendment (No. 2) bill in 1982 to tax…passive income.

      https://teara.govt.nz/en/taxes/page-6

      Kimbo

      September 13, 2020 at 7:09 pm

    • @ Milt

      But ok, I can see the case for a CGT for example, if for nothing else but to restore some fiscal balance. After all, low income people pay proportionally more of their income via GST and you can argue they are being “double taxed” having already paid income tax on the gross, so why not those funnelling their income into tax-free capital gains?

      But the thing won’t be a magic bullet, will raise nowhere near what the Greens expect including and especially from those they are targeting for wealth redistribution, and the costs are usually passed on to buyer…thus driving up house prices. Whether it dampens the demand of speculators and property investors? Maybe, but under-supply and growing population still seem the primary drivers of house prices.

      Maybe death duties are the primary solution for what you are seeking. Ok, has been done before, and it puts the onus on each generation to “earn its way in the world”.

      Kimbo

      September 13, 2020 at 7:54 pm

    • Er, Milt, you do know that passive income be it from rent, interest or dividends is also…taxed?!

      It’s funny how, when political parties propose raising the top income tax rate the cry is “Don’t you know people who aren’t on wages and salaries will just structure their financial affairs to look like they have little income?”, and when someone proposes doing something about the ability to structure finances so it looks like there’s little income, the cry becomes “Don’t you know that non-wage/salary income is already taxed?”

      Psycho Milt

      September 14, 2020 at 6:23 am

    • Maybe death duties are the primary solution for what you are seeking

      I’m amazed that one lasted as long as it did. The ruling class are usually very strongly against restrictions on inherited wealth, for obvious reasons, so it’s a surprise that death duties can be implemented at all. We certainly need them, but I can’t see them surviving a change of government.

      Psycho Milt

      September 14, 2020 at 6:26 am

  14. The other aspect that the Always Tax More brigade like to ignore is how often all this increased revenue that was supposedly going to fix problems, simply gets pissed away by governments for any number of reasons, but primarily because its not their money to start with so they care less.

    Prime example of such a state is California. One of the highest-taxed states in the Union it has an income tax of 13.5%. Despite this the place has the 9th worst K12 school system (based on abysmal math and reading scores, dropout rate, safety, etc), probably the worst roading system in the entire nation, and about 34% of the entire nation’s welfare beneficiaries. And that’s before we get to their Illegal Alien problems.

    Naturally they’re in deficit and debt up to their eyeballs and the State Pension systems are in almost as much shit as Illinois.

    And what’s their Lefty, Lefty, Lefty state government’s answer?

    You guessed it. Higher and new taxes. Reports have mentioned a figure of 16.5% income tax rate (and it’s a flat tax).

    Won’t solve a single one of those problems of course. In fact the additional cash could well make things worse because it’ll just feed the beast. And of course that assumes that the expected revenue will appear, not a sure thing given the exodus from the state.

    Tom Hunter

    September 13, 2020 at 2:50 pm

  15. Looks like Trotter has given up on such ideas…Why The Traditional Left Will Just Have To Live With Rainy-Day Robertson’s Disappointing Tax Policy.

    Is Labour’s tax policy a disappointment? Of course it is! But it’s the best the Traditional Left is going to get. Why? because Labour’s pollsters are telling them that upwards of 200,000 women over the age of 45 years have shifted their allegiance from National to Labour. (Where else, FFS, does the Traditional Left think Labour’s projected 50 percent-plus of the Party Vote has come from?!)

    A great many of these women will be well-heeled matrons of the middle-class who think Jacinda’s just so wonderful! Still more will be the wives, sisters and daughters of “Waitakere Men” – upwardly-mobile members of the skilled working-class. (The SUV-driving relations of those small-business-owning “tradies” who made the introduction of Labour’s Capital Gains Tax politically impossible.) These voters (and that’s the key factor in this whole electoral equation, isn’t it, these Kiwis actually vote) are doing well, but not so well that they’re going to be caught by a tax which only kicks-in when your salary tops $180,000.

    I’ve also come across any number of Labour voters over the years who would say of a tax on inheritance: “Well if I can’t pass it on to my kids then what’s the bloody point?”

    But then I understand the point that those like Milt have long made; that these working people also constitute “The Ruling Class”, rather than just the barons of the National Party.

    Tom Hunter

    September 14, 2020 at 8:17 am

    • I’ve also come across any number of Labour voters over the years who would of tax on inheritance: “Well if I can’t pass it on to my kids then what’s the bloody point?”

      It’s a sad truth that half the population is of below-average intelligence, which makes them easy prey for propaganda suggesting that death duties means they “can’t pass it on to their kids.” That tells us nothing about the merits or otherwise of death duties, but it does tell us something about propaganda and the motives behind it.

      And inherited wealth, ie not the propaganda ‘wealth’ of leaving behind a house your kids can sell and a few tens of thousands in savings, but actual wealth, is how society gets ruling classes in the first place. The fantasy of meritocracy is more propaganda.

      Psycho Milt

      September 14, 2020 at 8:50 am

  16. … but it does tell us something about propaganda and the motives behind it.

    I think it is less propaganda and more that the Left have been useless in “explaining” how such taxes will benefit people. Arguments that such taxes would still allow people to pass on accumulated wealth to their kids, just in smaller amounts, for example.

    I can’t recall any such argument being made even by the Greens beyond the generic one that more money for the State means better things for all of us, and that argument fell apart of its own accord a long time ago, long before the mid-1980’s.

    I also can’t help thinking that people don’t accept the argument because in many cases they see that the parent’s plans didn’t work out, with divorces, idiot business decisons, uselessness and sheer numbers among their kids and grandkids doing the wealth re-distrubution anyway.

    Tom Hunter

    September 14, 2020 at 9:02 am

    • Never sure if I’ll make it out of Tom’s “moderation queue”, but here goes.

      OECD simple average of inheritance taxes is 15%. The avowedly “We’re not Socialist’s USA has a 40% rate. Guess you didn’t notice that by choosing not to die in America.

      https://taxfoundation.org/estate-and-inheritance-taxes-around-world

      I’ve also come across any number of Labour voters over the years who would say of a tax on inheritance: “Well if I can’t pass it on to my kids then what’s the bloody point?”

      The art of plucking the goose here is to set a moderately high level of assets before the tax kicks in. In other words, we have a selective tax targeting the largest intergenerational wealth transfers. This would preserve items such as an ordinary “family home”, Kiwi Saver accounts and the such like. It would capture the million dollar mansions, the vast share portfolios, art collections, etc.

      Not hard when one applies some thought to the proposition.

      Gustavo Frink

      September 14, 2020 at 9:58 am

    • The avowedly “We’re not Socialist’s USA has a 40% rate. Guess you didn’t notice that by choosing not to die in America.

      Perhaps you should know more about the US tax system than just reading about the headline rates. Nobody pays 40%. In fact people pay little of that tax at all thanks to all the loopholes that are always found with such schemes. Just like the good old 1950’s when the top income tax rate was supposedly 90%.

      Not hard when one applies some thought to the proposition.

      Chuckle! Greater minds than yours – much greater in fact – have tried and failed in this area over many decades. You should probably stick with The Ruling Class conspiracy theory as the explanation for their failure rather than the implication that all that is needed is the application of the Giant Gustavo Brain.

      Tom Hunter

      September 14, 2020 at 10:04 am

    • In fact people pay little of that tax at all thanks to all the loopholes that are always found with such schemes.

      Which brings us very neatly back to the point of the OP – the loopholes that are written into the laws that benefit writers of the laws.

      My main goal for tax reform is the elimination of the loopholes. Ones that you, no doubt, also find benefit in.

      Next, land reform.

      Gustavo Frink

      September 14, 2020 at 10:23 am

  17. Which brings us very neatly back to the point of the OP – the loopholes that are written into the laws that benefit writers of the laws.

    No, it brings us back to the point of why all these exemptions and loopholes continue to exist; ordinary voters – not “The Ruling Class” – simply will not stand for handing over to the State ever greater amounts of their own money.

    But the Far Left – here so well represented by yourself – simply refuse to accept that fact, hence the wailing and gnashing of teeth every time a centrist Left party like Labour refuses to implement such tax schemes.

    Tom Hunter

    September 14, 2020 at 10:29 am


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