Capital Gains Tax? Keep related posts in this thread, please.

[Viking]

Didn't bother to read Muriels post did you.
Socialists should be banned from breeding and posting rubbish. We have most of those problems because of this socialist rubbish that you must do for others what they should do for yourself.
Look at the mess Rudd and Obama Messiah and Brown have made or are attempting to make to their countries.
Anyway whats wrong with a profit?
If you want to pay more tax then be our guest, pay everything you earn, otherwise get your sticky fingers out of our pockets.

[Gatekeeper]

And that's part of the issue, they're claiming tax losses while in the background making a tidy untaxed profit every year (typically, not in the current climate). Maybe staying away from CGT and instead changing the tax deductibility may be a better measure. Still, it's a problem that needs addressing.

Exactly, why encourage loss making business?
So many go into it starting with a loss that has little chance of making a profit, banking on capital gains (tax free), yet to be in business is about making profits isn't it? Why should it be tax deductible in that case. Ring fence them and it will make no difference to a profitable enterprise.

[Viking]

On that basis most lifestyle farms, most farms, most public companies would cease to trade. Check out what Bruce Shepherd has to say about our present lot of public companies. Most of which pay 1 cent dividend to $100 of interest paid.

http://www.stuff.co.nz/business/opinion/blogs/stirring-the-pot/2433628/The-Corporate-Debt-issue-Sabre-rattling

[Perry]

It's funny, you accuse me of mis-interpreting what you've written (or haven't written), yet for about the 4th time in a row you haven't been able to understand my position when I state it rather clearly in each post.

I didn't accuse you: your post text confims what you said.
If it's a dumb idea; no matter how many times it's stated, no
matter how many people support it, it remains a dumb idea.
To that category, CGT descends, of its own accord.

[mlkmnz]

Didn't bother to read Muriels post did you.

I read it, and I've read the same argument many, many times. It's overly simplistic and ignores some more widespread realities, but I guess the overall premise is fine if you don't really care about the wellbeing of the society you live in. Plus it is in the United States, a country with a much larger population than here with a less likely tendancy for private enterprise to be monopolised as it is here given our much smaller market.

I was actually a supporter of the hard right from my late teens into my 20s. However, the more I've travelled and the more I read, the more I realise that each country is it's separate case and as such requires it's own approach. While many aspects of our governance is not perfect, and there is no doubt a lot of waste, the core fundamentals of our tax and govt. spend is sound given the context of the country.

The road you'd like to take would result in more expensive health costs for everyone except a very small minority, more expensive education, more crime, an even lower quality of life for our elderly and a greater polarisation of incomes. Our GDP would probably be higher but at a cost. Which is all mint if you are one of the few at the top of the pile, the trouble is it would most likely grow the number at the bottom.

Socialists should be banned from breeding and posting rubbish. We have most of those problems because of this socialist rubbish that you must do for others what they should do for yourself.

No, we've got the issues we have because we're and individualist multicultural society in a small country at the bottom of the pacific. Socialism works well in more collective societies like in Nordic Europe, and Capitalism also works wonders in the same sort of environment - like Japan and South Korea. However, we're a small nation of migrants and everyone places such high importance on themselves over their community - a more hardline socialist OR capitalist system here would result in too much exploitation to be sustainable. "It's all about me" is equally damaging when adopted by those at the top as it is when it's coming from the bottom.

Anyway whats wrong with a profit?

Nothing at all provided it's not made to any severe detriment of someone else.

If you want to pay more tax then be our guest, pay everything you earn, otherwise get your sticky fingers out of our pockets.

I'm already paying close to 6 digits in tax a year. Price you pay to live in paradise. I don't really have a problem with it going up provided it delivers decent value. Financially I am better off adopting your approach, I'm just not sure it would result in the sort of place I'd like my kids to grow up in.

Anyway I'm waffling now and no doubt this is all a bit pointless as you've adopted your views and seem unwilling to entertain the larger realities. As you were.

[mlkmnz]

I didn't accuse you: your post text confims what you said.
If it's a dumb idea; no matter how many times it's stated, no
matter how many people support it, it remains a dumb idea.
To that category, CGT descends, of its own accord.

And my premise that the government should be steering investment funds towards more active pursuits to grow the economy?

[Perry]

Right - come up with a viable list of businesses, to start
with. Better yet, lead by example and start your own.
That's called putting your money where your mouth is,
rather than asking a government to grab other people's
money to achieve what you see as desirable and which
may not work.

Other posters have made it plain that just having a pool
of available business capital doesn't auto-magically make
profitable businesses happen into existence. Not in NZ,
anyway, given the present business environment.

And you don't want to government to steer, your wish is
that it should use force by using taxation as the proverbial
blunt instrument.

It is not possible to force/legislate equality. The best that
can be done is to provide a socio-economic environment
where there is equality of opportunity.

[mlkmnz]

Better yet, lead by example and start your own.

I have two, attempting to start a 3rd this year.

Other posters have made it plain that just having a pool of available business capital doesn't auto-magically make profitable businesses happen into existence.

Dead right, it takes more than funds. It takes good ideas and the right attitude.

And you don't want to government to steer, your wish is that it should use force by using taxation as the proverbial blunt instrument.

Taxation or SOME OTHER MECHANISM(S).

[Viking]

So I'm Hard right? News to me for I simply believe that people should help them selves and be encouraged to do that and that we should not be helping those that can help themselves. The balance to that in any society is that we should help those that cannot help themselves and unfortunately after many years of socialist govt. we have it the wrong way around. We don't help the mentally ill but we fall all over capable dole bluggers and long term recipients of the DPB.
The Govt. in its infinite wisdom (which of course is a contradiction of terms) is happy to decide what businesses we should pour money into, is happy to control our lives, is happy to control our schools, hospitals and so on and to enable all this control of our lives, has to get us to work harder than ever so they can tax the shit out of us.
Well they could cut all this back one long way and allow us grown up adults to manage our own lives. Its interesting to note that there are so many politicians who simply are unable to manage their own lives and they are responsible for regulating the crap out of us.
If they stopped doing all this Govt. good for so many and stopped thieving so much tax we could all get on and make a lot more money. Seemingly you missed the point both in the article on Muriels blog and in the last 9 years of NZ economy. Higher taxation destroys the economic incentives for those that earn higher incomes and they either move somewhere that it doesn't hurt, stop doing what they earned the money at or find ways to minimize their tax payments.
There is nothing new in that debate. NZers have done exactly that since taxes were introduced, say about 150 years. That's why the American revolution was born, that's why Muldoon failed and its why NZers left last year in droves for Australia, for the second time in the last 20 years.
The opposite is true of places like Hong Kong and Singapore , low taxes and huge economic prosperity. Its also true that we are falling behind many other counties with our penalizing tax rates. Its why our fish and meat are processed overseas,(that and union bullying).
We need an anti tax regime in NZ, and if income is required it should be on spending not earnig. Gross disincentive.
Anyway its not going to happen. Bill says so.

[mlkmnz]

So I'm Hard right?

Never said you were hard right. I'm just saying NZ requires a more centrist approach.

We don't help the mentally ill but we fall all over capable dole bluggers and long term recipients of the DPB.

Do some investigating and you'll find out the idea we've got loads of dole and dpb bludgers is largely a myth. They're there of course, but they're a minority and the bulk of people able to work recieving a benefit are only there temporarily. Remove it, and crime goes up, simple fact.

As for the mental health side of things, seeing as you love anecdotal information, I've a mentally handicapped sister in-law. She's reasonably well looked after, thanks to the taxes I pay. Would hate to have it the other way where her parents would cripple themselves financially caring for her on her own.

The Govt. in its infinite wisdom (which of course is a contradicition of terms) is happy to decide what businesses we should pour money into, is happy to control our lives, is happy to control our schools, hospitals and so on and to enable all this control of our lives, has to get us to work harder than ever so they can tax the shit out of us.

You'll actually find if health and education was in the hands of private enterprise, the average kiwi would fare far worse.

Its interesting to note that there are so many politicians who simply are unable to manage their own lives and they are responsible for regulating the crap out of us.

People aren't perfect and our politicians are people, and reflective of the rest of us. As for regulating the crap out of us, that's partially because collectively we aren't capable of making all the right decisions. Some of it is rather knee-jerk though, but that's a seperate issue.

Seemingly you missed the point both in the article on Muriels blog and in the last 9 years of NZ economy.

NZs a small country, with a small economy and less opportunities than other nations. You're always going to get paid more elsewhere, same the world over. Ever bothered to look at our migrants? Many are from less regulated economies, but the pay is still less than ours.

Higher taxation destrioys the economic incentives for those that earn higher incomes and they either move somewhere that it doesn't hurt, stop doing what they earned the money at or find ways to minimise their tax payments.

Some, but not all. If I earn an extra $100k, sure I pay $39k tax, but I'm also $61k better off.

The opposite is true of places like Hong Kong and Singapore , low taxes and huge economic prosperity.

Thanks for pointing that out. Have a look out the window though, we are not Hong Kong or Singapore, and given our population and location, can never hope to be. Having been to all 3, I know where I'd rather live.

Its also true that we are falling behind many other counties with our penalising tax rates. Its why our fish and meat are processed overseas,(that and union bullying).

No, it's mainly because people here want to earn more than $1 an hour.

We need an anti tax regime in NZ, and if income is required it should be on spending not earnig. Gross disincentive.

This I will agree with. I'm much more in favour of consumption tax than income tax. At the very least it would mean non-citizens contribute more taxes and it would simplify the taxation system, thus lowering administration costs.

[Gatekeeper]

The opposite is true of places like Hong Kong and Singapore , low taxes and huge economic prosperity. Its also true that we are falling behind many other counties with our penalizing tax rates. Its why our fish and meat are processed overseas,(that and union bullying).

Neville Bennetts (whose article starts this thread) latest article refers to Hong Kong, and their land tax rather than income tax. Are you arguing for the sake of it?

http://www.interest.co.nz/ratesblog/...rom-hong-kong/

The merits of Land Value Tax; lessons from Hong Kong
May 22nd, 2009

By Neville Bennett

We need a more efficient and equitable tax system compatible with economic growth and productivity. In our mobile society it seems reasonable, a priori, to move taxation from relatively mobile bases like income and profits to relatively immobile bases like land, rent and consumption. Such a switch rewards the enterprising. A land tax could be a necessary part of a better system.

My space limitation means that the argument will lack convincing data, and I have had to excise counter-arguments. I also recognize that its implementation would be fraught with difficulty. My purpose is to sketch an idea at a time when Government is reviewing tax.

I saw the merits of the tax while working in Hong Kong and seeing the benefit of free-trade, a small state and low taxation. I taught Japanese economic history and became convinced that Japan’s modern economic growth was founded on a vibrant agriculture and a land tax.

[Perry]

I have two, attempting to start a 3rd this year.

From or in Thailand?

Dead right, it takes more than funds. It takes good ideas and the right attitude.

And a much better employer-friendly environment.

Taxation or SOME OTHER MECHANISM(S).

Like . . . . ? I thought this was mostly about your
enthusiasm for a CGT in NZ?

Have a look out the window though, we are not Hong Kong or Singapore, and given our population and location, can never hope to be. Having been to all 3, I know where I'd rather live.

Like Thailand? (presuming your PT profile is accurate)

No, it's mainly because people here want to earn more than $1 an hour.

Huh? Your problem with that being what, exactly? Do
you want/expect NZrs to work for $NZ1 a day?

Do some investigating and you'll find out the idea we've got loads of dole and dpb bludgers is largely a myth.

What evidence do you have available to adduce
in support of your 'myth' assertion?

[mlkmnz]

From or in Thailand?

In Auckland. I need to change my profile but haven't been bothered.

And a much better employer-friendly environment.

Part but not all of it. As an employer, yes, the law can be an ass but if you bother to learn them properly you can minimise the issues. It's an annoyance but it's not stopping me, I've far bigger problems that forces outside the government bring me.

Like . . . . ? I thought this was mostly about your
enthusiasm for a CGT in NZ?

No, and I'm not quite sure where you pick that up from considering I have said several times possible alternatives and that CGT could be but one mechanism. Regulating banking could also work (and tbh the damage they've cause across the globe says they've been given too much free reign). I'd be more behind CGT if say income taxes were reduced, can't just be stick all the time.

Like Thailand? (presuming your PT profile is accurate)

Thailand is fantastic when you've money. Although in general, the locals don't have much, but because the majority are borderline poor, they don't have the sort of expectations someone in a western society has. But I'd pick Thailand over Singapore and HK any day of the week.

Huh? Your problem with that being what, exactly? Do you want/expect NZrs to work for $NZ1 a day?

No I don't at all. But that's what we're competing with. So remove the taxes and you're still not competitive. I'm not going to go back and count, but that's probably the 4th or so time I've tried to express that. I mean, it's easier just to narrowly pin it on something like govt regulation or taxes, but there's just a bit more to it than that.

What evidence do you have available to adduce
in support of your 'myth' assertion?

Ministry of Social development - I like to go on facts rather than just anecdotal experience. I checked itout myself a while back so as to determine whether or not most of my taxes were subsidising bludgers. The amount of people on a benefit for 3 or more more years is negligible, most are for 6 months or less. And the numbers reduced pretty decently before the economic crisis - and no, they weren't just all shifted over to the SB.

Anyway, this is getting a bit futile. Just keep thinking micro.

[Perry]

Lies, damned lies and statistics. I'd not be sanguine
about relying on government stats. The CPI is one
that's been debated in these forums, with a loose
acceptance that the official figure should be multiplied
by two and add 2, to get the real figure. But, if DSW
stats are as you say, where - I wonder - did the huge
$NZ1.4B* tax-take disappear to? (*Treasury paper
entitled Estimates of Appropriations)

How did you get the stats you refer to? When I looked,
the Social Welfare Benefits and Payments link just
lead to an e-cashiers desk at the stats dept. By that,
I mean they were not available or I couldn't find them.
(Unless I pay for them, I suspect)

My view of the numbers is similar to the CIR's: that -
for general tax purposes - there are no significant
advantages to property over other forms of invest-
ment. You disagree with him.

It matters not that you'll allow other options for, ahhh,
'steering' money into productive business investments,
you have said that you favour CGT, as part of this thread
which is entitled:
Opinion: The case for a capital gains tax and a land tax

My perspective (and a few others on PT) is that there's
no real wealth gain in the change of numbers for buy-
and-holders. The dollar numbers do change, but the
purchasing power doesn't, by much of merit.

I.e. there is no real gain to PI, only a hedge against
inflation. To me, that seems a prudent investment
decision and one that is not especially favoured in
any way, by the present tax system. For example . . . .

If I sold my PPOR today, despite it having gone up in
'value' by a factor of 12.5, I would still only be able to
buy one similar PPOR in the present market, using the
proceeds of that huge (illusory) 'capital gain.' I could
not buy 12 properties, simply because the numbers have
changed. I would not've made a tax-free windfall in
any way at all. (That PPORs may be exempt does not
change that situation)

CGT would simply be a revenue-grab on the wooden
coins of inflation. But it would have to be paid with
real, present-day money.

My PoV is that much inflation is government engendered
by such things as 'printing money.' You're more charitable,
saying that some inflationary things are outside of their
control. If the government can't control it, how can you
or I? Do you think we - the people - actually cause it?
If not, why do we have to be penalised for it?

The problem needs fixing at the cause, but not by a nasty,
opportunistic tax on the effects.

No matter the cause, nor that it is somehow beyond the control
of those elected to a governance role, you (and others who
favour CGT) want the people to pay the price of something
beyond their control and pay it in real money to the govern-
ment in the form of a tax.

That's why I oppose it, futile or not.

[mlkmnz]

What the hell, slow afternoon and I'll go against my mum's advice not to feed the animals

Lies, damned lies and statistics.

Yeah. Any hard stats that contradict one's anecdotal preconceptions must be looked upon with extreme scepticism. It's not like the MoSD's figures would be accurate, as if they'd know exactly how many people were receiving a benefit and for how long or anything. Best we create some sort of arbitrary formula so as to make it fit closer with our opinion. I'd go for multiplying it by 4, carrying the two and adding a million.

How did you get the stats you refer to?

As I said, straight from the horses mouth. To help you out though, here's a link to the section cleverly hidden in plain view on the front page of their website entitled "publications and resources":

http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/index.html

But to summarise key points of interest for you:
-In the last 10 years, the total number of all beneficiaries has dropped over 30%, or some 114,000 individuals. Although we did see a rise in SB and IB (sickness and invalid's beneficiaries) we saw 125,000 less people on the unemployment benefit (and less on the DPB too).
-Half of the unemployment beneficiaries have been receiving their unemployment benefit for 6 months or less, less than 10% have been doing so for more than 4 years. The statistics for the sickness benefit follow similar trends, although people are on it for longer periods 65% are on it for less than two years. Most of these shorter term beneficiaries also have not received any other benefit for the last 4 years or more.
-Half of all beneficiaries are between the ages of 40-64

My view of the numbers is similar to the CIR's: that -
for general tax purposes - there are no significant advantages to property over other forms of invest-ment. You disagree with him.

Taxation wise I won't disagree, I'm not an expert on all forms of taxation. I'm talking about the overall attractiveness of property over other investment types, taxation being just a small part of it.

It matters not that you'll allow other options for, ahhh,'steering' money into productive business investments,
you have said that you favour CGT, as part of this thread which is entitled:
Opinion: The case for a capital gains tax and a land tax

Yeah, and the OP proposes this concept, one which I think needs serious consideration:

Taxation is a very powerful tool for reshaping society. It works through incentives and disincentives. A useful start would be Treasury’s own idea of moving taxation away from internationally mobile bases like income and profits towards immobile bases like land, rent and consumption.

The issue is not "more taxes for the bloody government to waste" but a larger debate on how we foster economic growth and the possible inadequacies in the current taxation system.

If I sold my PPOR today, despite it having gone up in
'value' by a factor of 12.5, I would still only be able to buy one similar PPOR in the present market, using the proceeds of that huge (illusory) 'capital gain.' I could not buy 12 properties, simply because the numbers have
changed. I would not've made a tax-free windfall in any way at all. (That PPORs may be exempt does not change that situation)

That's true if you're talking about replacing like with like, you'd have to be delusional to think a property you'd bought 20 years ago would in some way be worth any more than another comparable property you could buy 20 years later. What you're ignoring in your logic is that housing has been one of the key inflationary pressures. So while houses keep going up and up, the cost of buying a car and many household goods is relatively cheaper today than it was 3 decades ago.

CGT would simply be a revenue-grab on the wooden
coins of inflation. But it would have to be paid with
real, present-day money.

Again, learn to read in context with the wider subject at hand - not just a tax for taxes sake.

My PoV is that much inflation is government engendered by such things as 'printing money.' You're more charitable,
saying that some inflationary things are outside of their control. If the government can't control it, how can you or I? Do you think we - the people - actually cause it? If not, why do we have to be penalised for it?

Some of it is within their control, you are correct, a lot is not. Rising commodity prices for instance is something our government can do little to counter, that is just the realities of a capitalist economy. Same with housing, it's been key to inflation as of late, driven up in value over and above inflation and the normal basics of supply and demand.

The problem needs fixing at the cause, but not by a nasty, opportunistic tax on the effects.

A lack of sustainable economic growth is one of the causes. If the economy grew in the right way, so too would people's incomes, thus diminishing the impact of inflation. The PI model long term is flawed in that it requires real economic growth to be sustainable - this is if the current investment trends are followed, it'd be a lot different if it was a lot less popular.