If this is your first visit, be sure to
check out the FAQ by clicking the
link above. You may have to register
before you can post: click the register link above to proceed. To start viewing messages,
select the forum that you want to visit from the selection below.
Header Ad Module
Collapse
Announcement
Collapse
No announcement yet.
Capital Gains Tax? Keep related posts in this thread, please.
The admin costs of charging people tax and then giving it back to them in the form of assistance, absolutely astounds me.
Just get it right first time through a tax rate that is well thought out.
Seems that a large number of people actually pay no tax and then get subsidies under WFF so a zero tax rate in that case isn't enough.
Certainly where people do have a net payment of tax after WFF etc you would think something could be done at the start.
The principle is to widen the tax base . . . . Taxing the increases in wealth from
capital assets spreads the load further across the whole of society.
It keeps being said, so I'll keep stating:
When is an increase in wealth not an increase? When the purchasing
power of the alleged wealth increase is nullified by inflation. Much of
which inflation is caused by governments, anyway.
I suggest a tax on political promises, paid out of politician's pockets.
The principle is to widen the tax base. Currently the government raises revenue from the population's income (PAYE etc) and spending (GST). Plus a bit from fuel, alcohol, tobacco etc.
But essentially there are no other tax streams.
Widen the tax base?
It's at 100% now.
I pay tax on earnings.
And then pay more when I spend.
I can't see how anyone can avoid paying tax.
What living person doesn't spend money?
If more revenue is required then increase GST.
If the govt is flush with money then reduce GST.
CGT still seems to be an envy tax as proposed by Labour and the media.
Widen the tax base?
It's at 100% now.
I pay tax on earnings.
And then pay more when I spend.
I can't see how anyone can avoid paying tax.
What living person doesn't spend money?
If more revenue is required then increase GST.
If the govt is flush with money then reduce GST.
CGT still seems to be an envy tax as proposed by Labour and the media.
There are two levels to your comment.
Firstly there is the political argument as to what the community will accept. That is where CGT becomes a mess - include homes or not.
Secondy there is the deeper argument - why should capital accumulation be exempt from taxation?
Much cleverer fellows than I have examained this conundrum and the doyen of the modern movement is Capital in the Twenty-First Century a book by French economist Thomas Piketty.
Pikettys thesis - which is deep and 800 pages - is that Capital wins over Wages - 200 years.
And just a reality check - in the late 19th century many governments introduced reform legislation to deliberately break up the Great Estates. A few land owners up to that point held most of the land.
If that had not occurred, you would today own leasehold estates for your rental properties because the underlying land would continue to be held by fortunate weathy colonialist families.
If you think that is unlikely, research land ownership in the UK where some of the great estates survived and today own tracts of central London with billion dollars of rents. Never mind the farms still held if fee tail for Charles and his successors.
Its not wrong but capital ownership through generations accumulates without effort. The French and the Russians revolted against that.
................ Secondy there is the deeper argument - why should capital accumulation be exempt from taxation? Much cleverer fellows than I have examained this conundrum and the doyen of the modern movement is Capital in the Twenty-First Century a book by French economist Thomas Piketty. Pikettys thesis - which is deep and 800 pages - is that Capital wins over Wages - 200 years.
I haven't read it, but would point out that equally clever fellows are divided over this book.
Why should capital accumulation be exempt from taxation?
It keeps being said, so I'll respond afresh:
When is any capital accumulation not an increase in wealth? When the
purchasing power of the alleged capital accumulation is nullified by in-
flation. Much of which inflation is caused by governments, anyway.
Yes, there are some places where economic serfdom is inter-connected
with large holdings of certain asset classes, and history has a few nasty
examples of what happens when the serfs are pushed too far, but is that
the situation in NZ?
Let's face it: capital gains tax was a sacred cow in New Zealand. However, public perceptions about CGT do seem to be changing; people are thinking more deeply about the fairness of such a tax. For a long period any positive noises about CGT tax would have immediately ended the conversation with an embarrassing silence.
At least there is some rational discussion on this. Maybe that can put some myths to bed.
I can see why some people want it and others don't.
I don't really agree that it will achieve much at all, but then that depends on what you are trying to achieve with it.
Certainly won't solve property price woes! But is it really supposed to?
At least there is some rational discussion on this.
That's where the problem lies. (As you have partly identified).
The problem is firstly that the alleged gain is a fiction, in most
cases, and no one's being specific about what a CGT actually
achieves, much less what it was intended to achieve. (Apart
from the obvious tax grab, of course.)
Forumites have posted examples of an assortment of other
countries which have a CGT, as examples, along with the
reason[s] it was introduced, and, generally, how it failed to
do what it was introduced to do. (And by implication, that
as it was not withdrawn after that failure, it demonstrated
that it had a gather-more-tax objective, all along.)
So, given that it's largely failed to achieve its objective[s]
elsewhere, NZ politicians (as they are wont to do) exclaim: we must try it, too! Where's the rationality in that?
.......and no one's being specific about what a CGT actually
achieves, much less what it was intended to achieve. (Apart
from the obvious tax grab, of course.)......
Tsk tsk....silly old yourself.
You need to listen to those clever politicians a bit harder.
CGT will bring the price of houses down.
You see it goes like this
House sells for $500k, seller has to give 15% to govt... $500k - $75k = $425k
$425k is quite clearly less than $500k
Don't try to argue with logic & maths and stuff......as only an idiot would try to claim $425k is more than $500k and our politicians (blessings be upon them) know what is best
And just a reality check - in the late 19th century many governments introduced reform legislation to deliberately break up the Great Estates. A few land owners up to that point held most of the land.
Another reason for CGT is that it can help break up vast land holdings.
I suspect this is where it's appeal is to Labour and several economists.
Only we don't have Great Estates (or a few landowners) owning whole cities in NZ.
So a CGT wouldn't achieve this objective.
And of course, individual homes should be exempt from CGT if this was the reason to introduce it.
Secondy there is the deeper argument - why should capital accumulation be exempt from taxation?
...
Pikettys thesis - which is deep and 800 pages - is that Capital wins over Wages - 200 years.
I feel I wouldn't last through 800 pages but I would be interested in a short paragraph or two.
However, at some stage we need to get practical and remember that the IRD tax system simply can't handle any more changes until they throw $1.5 billion at it (over about 5+ years)
So we need to come up with some easily understood reasons and an easily implemented system of CGT.
I'd suggest no-one has done this so far.
For this reason a CGT should not be introduced.
Let the CGT supporters clearly identify the problems that the CGT will address.
Comment