Capital Gains Tax finally on a major party's agenda

[avgas]

It's always disappointing to see otherwise intelligent people resort to the "everything is relative, statistics can be manipulated, other viewpoints exist" mantra - with a healthy dose of ad hom, of course, when the facts don't align with their prejudices.

Me, I prefer truth and open inquiry to ideology, but YMMV.

Ok I gave you the benefit of posting something interesting, and I have to wait for 5 minutes so watch your film you posted.
While it is a nice presentation......oldrider in this instance is actually right.

Where is China and India? I mean if you comparing world data on Wealth would you not include 75% of the worlds population and 50% of the worlds wealth?

Some other interesting points - Japan (which shows equal distribution) runs BUSINESS completely differently from most western societies. Its almost a mafia style basis (forgot the technical term sorry - all my International Business books are walking distance away). The Japanese Govt and taxing has NOTHING to do with this. Yet in your movie Japan is show as the hero statistic. Fact of the matter is if you don't have a Job in Japan - not only are you poor as a beggar. Your family will disown you.
Which is why Japanese workers not only are industrious, but hang onto jobs for dear life.
This would have shown if China was in their data, as I imagine that even while China has horrible child/slave labour laws, the distribution of income would mean that China would look better than us. This is due to business and culture in China......not tax.

Likewise India and China are full of wealth. But if you walked the slums you would not see it. Likewise if you went to some of the richest people in these countries, I suspect you also would not see it. People in these countries don't "waste" as you termed it. However this is changing as generations emulate American culture.

So while I think it was a good presentation, with some good advice. It is only HALF the story.
Simply redistributing the wealth never was going to be a solution - if it didn't work in Russia in the past it wont work now.

Likewise knee-jerk response for taking something off someone is they ask why? The tax payers (in NZ) have never been given an valid reason for this. Resting on the simple concept "Its better for the nation".....
In many situations this this has never been explained HOW.
e.g. we need the money to educate people to have less babies.
Shit I would pay $100 a week to support that.

They need Hans Rosling to setup distribution programs that works

[avgas]

back again.
Can someone explain to me why there is a secondary tax for a second job?

Surely this only hurts those NZ who are finding it hard with just one job (aka the lower workers).
I thought tax rates was to help them? e.g. tax the ones who can afford it.

[Highlander]

So IF Labour are able to acumulate enough votes to get this proposed tax in to play, hypothetically speaking, what is to stop my business from pushing any surplus cash flow into property then selling that property in a few years time, there by diverting Company Profit (30% Tax) into Capital Gains (15% tax) ? Assuming I have drawn enough income to live off in the mean time.

I live on a rural 1.5 hectares (about 4 acres) that grows meat and vege for our family. Not a comercial enterprise at all. Does that class as a family residence (which it is) and therefore exempt or classs as a farm and therefore subject to CGT?

I see Lawyers and Accountants as the real winners from the whole exercise.

[Ocean1]

So lets get back to this CGT question. The rationale is that some people increase their financial strength over time by owning property, allowing inflation to push the value up, and then sell for an untaxed profit. No argument.

I'm very much afraid there is. And it's a ripper.

See, inflation doesn't add value to property. Or anything else for that matter. So that "profit" you suggest they tax doesn't actually exist, all you're doing is using the numerical currency difference as a very poor excuse to add yet another layer of tax, aimed, of course at those who are percieved to be able to "afford" to pay it.

Big black dog up 'em.

[Ocean1]

And as I've been telling you, the income and wealth distribution in NZ is skewed

As well you should expect given the huge disparity in effort expended to achieve it. Duh.

Or we could fix the distribution issues, although that's hard to do unless you use tax as the mechanism.

There you go with the "distribution" thing again. Have the integrity to ditch at least the more obvious euphemisms. "Thieve" is the word you're trying to avoid.

[Winston001]

Indeed, but CGT on the family home is unimplementable, doesn't mean what's on the table is bad. The perfect is the enemy of the good, and all that.

And as I've been telling you, the income and wealth distribution in NZ is skewed, so should tax be, even beyond normal progressivity.

So a new unbalanced tax is good simply because it is politically achievable? The existing unbalanced tax burden is unfair - but not unfair enough?

With respect, that is hardy a principled position. Take what we can from the few because they get outvoted? Tyranny of the minority by the majority - that runs counter to any social democratic theory I can think of. The Treaty settlements wouldn't exist.

[rainman]

e.g. we need the money to educate people to have less babies.
Shit I would pay $100 a week to support that.

I agree, that would be a worthy goal indeed.

With regard to China or India, are you saying their high levels of inequality would not contribute to higher levels of the social ills that Wilkinson and Pickett describe? Of course there are multiple factors that drive societies and their performance, but ceteris paribus their argument seems to be quite sound. The correlations are robust for the nations under study. I'm sure they aren't claiming a universal truth, but for the countries under study, higher inequality correlates well with higher levels of social ills. If you think other factors would negate their thesis, feel free to research and publish a counter. You'd be famous.

As well you should expect given the huge disparity in effort expended to achieve it. Duh.

There you go with the "distribution" thing again. Have the integrity to ditch at least the more obvious euphemisms. "Thieve" is the word you're trying to avoid.

I''ve repeatedly explained that I don't mind higher reward for higher effort, within reason. If you persist in believing the only cause for income disparity is effort (with the handy corollary "beneficiaries are just lazy"), I'm afraid it will be very hard for me to take you even slightly seriously.

And as I've said before, "thieve" is a loaded term that ignores the way the wealth was generated in the first place. Taxing people to build assets, then selling them and installing your mates to preside over the sale is thieving plain and simple. Stealing from the commons (destroying the climate for private gain, for example) likewise. Bailing out bankers who sold crooked mortgages to people they knew could not pay, and sticking the consequences to the public - that's theft, too. And that's excluding plain old common-or-garden fraud, which we've had our share of along the way here in NZ.

So yeah, I'm cool with stealing from the obscenely wealthy and rebalancing distribution.

Even some on the right are figuring things out.

The rich run a global system that allows them to accumulate capital and pay the lowest possible price for labour. The freedom that results applies only to them. The many simply have to work harder, in conditions that grow ever more insecure, to enrich the few
...
hen the banks that look after our money take it away, lose it and then, because of government guarantee, are not punished themselves, something much worse happens. It turns out – as the Left always claims – that a system purporting to advance the many has been perverted in order to enrich the few. The global banking system is an adventure playground for the participants, complete with spongy, health-and-safety approved flooring so that they bounce when they fall off. The role of the rest of us is simply to pay.

[Ocean1]

I''ve repeatedly explained that I don't mind higher reward for higher effort, within reason. If you persist in believing the only cause for income disparity is effort (with the handy corollary "beneficiaries are just lazy"), I'm afraid it will be very hard for me to take you even slightly seriously.

Very generous of you I’m sure, most kind. The very next million I earn I’ll try to remember to thank you for allowing me to keep it.

Of course it’s more than just effort, intelligence plays a big part. It’s just that some people aren’t well endowed in that department.

And you don’t dare take me seriously, it’d involve some serious reigning in on that wonderful imagination of yours.

And as I've said before, "thieve" is a loaded term that ignores the way the wealth was generated in the first place. Taxing people to build assets, then selling them and installing your mates to preside over the sale is thieving plain and simple. Stealing from the commons (destroying the climate for private gain, for example) likewise. Bailing out bankers who sold crooked mortgages to people they knew could not pay, and sticking the consequences to the public - that's theft, too. And that's excluding plain old common-or-garden fraud, which we've had our share of along the way here in NZ.

So yeah, I'm cool with stealing from the obscenely wealthy and rebalancing distribution.

So all wealthy people are thieves, now. And that makes it OK to steal yourself. Do you have any idea how unattractive envy is?

I have no problem “redistributing” the proceeds of crime. Great idea. Thing is, the vast majority of wealthy people aren’t wealthy because they ripped someone else off or broke a bunch of laws, that’s your imagination at work again. They’re wealthy for one very simply reason: they spend less than they earn.

I approve of your crusade to lock up the crooks, just don’t let your imagination convince you that wealthy is synonymous with criminal.

[rainman]

So a new unbalanced tax is good simply because it is politically achievable? The existing unbalanced tax burden is unfair - but not unfair enough?

With respect, that is hardy a principled position. Take what we can from the few because they get outvoted? Tyranny of the minority by the majority - that runs counter to any social democratic theory I can think of. The Treaty settlements wouldn't exist.

That's a remarkably simplistic argument and adds nothing to the debate. Let's use it against the alternative to CGT (plus borrowing), which is asset sales (plus borrowing), more or less. Assume National get in, then is it OK to take from the few (who oppose National and asset sales) just because we are outvoted? (Yes I realise that the majority of us seem to oppose asset sales when polled, but many still support National. Or is that oppose Labour? But work with me here). This is how democracy works. And a bit of tax is hardly tyranny, don't be so melodramatic.

I don't have a problem with higher taxes for the very wealthy. I already pay tax in the highest bracket, doesn't worry me a bit. And although I appreciate the services my taxes buy, I'm under no illusion that I'm only paying for what I use. I'm happy to pay a disproportionate share, again within reason.

As I've said before, I'd put a higher tax bracket above the current top level. Gotta pay for those boomers somehow, and the kids are all buggering off to Aussie, so they aren't gonna. Not a single silver bullet, of course, needs to be a package of measures.

[rainman]

Of course it’s more than just effort, intelligence plays a big part. It’s just that some people aren’t well endowed in that department.

Indeed, kindly see below.

So all wealthy people are thieves, now. And that makes it OK to steal yourself. Do you have any idea how unattractive envy is?

I don't believe I said all, just that many business models have a measure of theft in them. And to be honest, I don't mind at all if you find me unattractive.

Actually, I have no envy for the wealthy: I don't particularly even want to be wealthy, it ain't all it's cracked up to be. Not what I'm on Earth for, anyway. I have not succeeded in making millions, but if I did I'd be happy to give most of it away. There is a long list of things I want ahead of money.

They’re wealthy for one very simply reason: they spend less than they earn.

You are confusing solvency with wealth.

Compare two not entirely hypothetical people:
Person A is from a poor background in rural NZ, parents have drug/alcohol/domestic issues, but thanks to a good education system A gets a good basic training. He's not exposed to any good role models though - his family only serve to inspire him to get out of Dodge as soon as he can. He's not particularly intelligent either, and keen to strike out on his own, so doesn't go to uni, but rather leaves school as soon as he can and gets a job working in a warehouse in a regional town. He works hard and spends carefully, so despite low wages manages to build up a modest savings balance for a rainy day. He gets some supervisory responsibilities, gets married, puts down a small deposit and buys a modest house, has two kids. His wife works part-time as well.

Some rich bankers far away get found out to be fraudsters and the GFC rolls in. The company he works for gets smacked by this and lays off most of their staff, including him. His wife manages to get a second job/some extra hours but try as he might there is no work in the town he lives in. His savings are rapidly eroding. He looks at moving to the nearest big city but life there is much more expensive, and he doesn't have the money to pay for a rental there while he tries to sell his house. WINZ won't help much because his wife is earning. After months of being unemployed he finally gets a part-time contract job with no benefits paying somewhat less than what he used to earn. For the rest of his working life he is permanently in and out of work as he moves from fixed term contract to fixed term contract. His wife moves to a new company in the hope of better wages/fewer hours but the new boss makes a pass at her which she rejects, and is dismissed under the 90 day fire at will provisions. She eventually finds more part-time work. They have no savings and are not wealthy, and struggle through until they get state super.

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Person B is the son of wealthy professionals, mum's a lawyer, dad a CEO. They live in a multi-story house in the posh end of Auckland's North Shore, and he lacks for nothing while growing up. He attends a private school and has extra tuition when he encounters any difficulty with his studies. When he's a teenager he works student jobs in his parents companies and in those of their peers, which the parents help to arrange. He's well paid relative to Person A, but works hard and diligently. His parents pay for him to go to uni, where he studies law. When he is qualified he continues to live at home as there is plenty of space. His dad gives him a new car as a graduation present. Building on his and his mum's network of contacts he gets a junior job in a law firm, and works hard, making rapid progress and good money.

He has a few overseas holidays and buys some toys, but puts most of the money he earns into investments, buying first one flat, then another, which he rents out. In his late twenties he meets a young woman from a similar background who is a successful accountant also making good money. They marry a few years later and move into a nice house with a sea view. They increase their property portfolio as prices rise, making good profits with each sale. Rentals go up as well, but they write off some of their income against the rental losses and avoid some of their tax bill.

She starts her own accounting firm and over time hires a number of staff, making a good margin on their hourly billing. They move to an even bigger house, and buy a modern bach at the seaside. They lack for nothing but continue to accumulate wealth and investments. They retire worth millions and have a comfortable retirement with excellent private medical care and frequent overseas holidays.
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Nothing wrong with either case, right? No overt fraud or even exploitation of the environment at the expense of the public good, no crony capitalist cushy government contracts through knowing the right people, no P lab running, gang affiliation, dole bludging either... can't fault either one. Both hard working, spend less than they earn, no nasty habits or criminal behaviour. Both people to be emulated. Yet quite different outcomes.

Accordingly, I submit you are incorrect: wealth is not simply the matter of spending less than you earn, or even just being intelligent. There are a whole bunch of factors, chief among which are luck and existing privilege. And this is just how things are, don't get me wrong.

One of these cases would likely scream blue bloody murder at the prospect of a CGT, even though he has more than enough money for everything he needs. The other wouldn't care, except in so far that he might see it as an alternative to asset sales, which would probably only make him finding work for decent wages even harder. Guess which way he's gonna vote?

[Winston001]

Compare two not entirely hypothetical people:

Person A is from a poor background in rural NZ...

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Person B is the son of wealthy professionals...
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Wealth is not simply the matter of spending less than you earn, or even just being intelligent. There are a whole bunch of factors, chief among which are luck and existing privilege. And this is just how things are, don't get me wrong.

One of these cases would likely scream blue bloody murder at the prospect of a CGT, even though he has more than enough money for everything he needs. The other wouldn't care, except in so far that he might see it as an alternative to asset sales...

Your above (highlighted) line is the essence of a free society. Life isn't fair. Social democracy aims at introducing a degree of fairness by the rule of law and taxation. Without moving to a communist model, that is the best we can do. Imposing a new tax on the savings of people is an impost on their efforts to be secure. Goodness knows we are told to provide for our retirement but now that will be taxed as well.

Your examples are unbalanced by the way. Person A appears to have ill fortune but Person B leads a charmed life. In the real world both face cancer, alcoholism, heart problems, dishonesty by other people. Some of the Bs don't make it to 60.

As an aside - lawyers/accountants/doctors etc are not interested in becoming landlords. They have enough stress and intensity during the working day. Plus their effort is far better rewarded doing what they are trained for.

[Ocean1]

Compare two not entirely hypothetical people:

Loverly story. More atypical than otherwise, of course, but if you feel the need to base your ethical outlook around them go for it. Far be it from me etc.

I'll observe, however, that most high performing people are at least partly the result of stress and appropriate feedback. Your sheltered, mollycoddled "B" dude didn't get that, so I'd expect him to fuck up fairly routinely TBH.

Amongst the real life stories I've known the primary driver of quality of life, (as defined by the achievment of self-imposed goals) is simply the result of choices made. Your "A" dude may have had fewer choices initially, but in my experience making good decisions and then making them work is far more effective than any possible head start wealth might bestow.

[rainman]

Life isn't fair.

I do believe I said that. My point was just that real life is a bit more complex than Ocean understands it to be, and the examples illustrate that.

Loverly story. More atypical than otherwise, of course
...
Your "A" dude may have had fewer choices initially, but in my experience making good decisions and then making them work is far more effective than any possible head start wealth might bestow.

Yet they are loosely based on (and extrapolated from) real world examples.

And, crap. Sorry, but it just ain't so, other than in a very narrow range of cases - at least for unequal countries like NZ.

[Ocean1]

Yet they are loosely based on (and extrapolated from) real world examples.

I don't doubt it, but that doesn't make them typical.

And, crap. Sorry, but it just ain't so, other than in a very narrow range of cases - at least for unequal countries like NZ.

Like I said, my experience indicates otherwise. Go find how many lottery winners remain wealthy. How many wealthy people who lose everything and do it again, sometimes several times.

It ain't the money, dude, it's the man behind it. And "redistributing" it is just treating the symptom.

[Winston001]

It ain't the money, dude, it's the man behind it.

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