Christmas at the extremes

Written By: - Date published: 10:24 am, December 13th, 2014 - 65 comments
Categories: capitalism, class war, economy, poverty - Tags: , , ,

Two New Zealands will shortly celebrate Christmas, the poor and the rich. Two recent articles really highlight the differences, the first on food banks:

Mission in action: Christmas rush as tough times bite

Hundreds of families from as far away as Hamilton are queuing at the Auckland City Mission for help to put food on the table this Christmas.

City Missioner Diane Robertson said the queue started at 1am on Monday after word got out on social media that Work and Income staff would be at the mission’s Hobson St offices from this week to process applications for emergency help.

The mission gave out 125 food parcels on Monday, compared with 39 on the first day a similar pre-Christmas Work and Income service opened last year.

It closed when the queue reached 200 families on Tuesday, up from 160 on the second day last year, and expected to feed a further 200 families yesterday. …

…and the second on tax avoidance:

Only half of NZ’s most wealthy paying top tax rate

Figures given to ONE News show many of those worth more than $50 million are only paying tax on around $70,000 dollars of annual income.

When the tax man comes knocking, most of us expect to pay our fair share. But some of us can avoid it. Even millionaire Gareth Morgan admits he’s not paying his. “Ah no, definitely not. But that’s the way the tax regime is,” he says.

Inland Revenue monitors 200 New Zealanders worth more than $50 million each. Yet 46.5% of those multi-millionaires earn less than $70,000 a year, meaning they avoid paying the top income tax rate. “The system is so stupid that it allows people to do this,” Mr Morgan says.

Here’s a crazy thought – why not eliminate tax avoidance and use the proceeds to alleviate poverty? According to the OECD the increased economic activity would make us all better off.

65 comments on “Christmas at the extremes”

  1. vto 1

    The silence of the rich, like Key and the National Party, on issues like this is deafening………..

    Greedy selfish bastards

    • Paul 1.1

      He’s never here for Christmas.
      Too busy getting his orders from Obama in Hawaii.

      • Potato 1.1.1

        Paul, I am going to ask you and the other readers here to stop referring to our PM’s holiday destination as ‘Hawaii’.
        Sure it is geographically correct but it is the mental perception we get of these two men travelling to a pacific island for their holiday.
        Let’s remember instead that Hawaii is the 50th state and say it is the US !
        Our PM doesn’t holiday in Hawaii. He spends time at his property in the US.

  2. Manuka AOR 2

    “many of those worth more than $50 million are only paying tax on around $70,000 dollars of annual income.”

    Meanwhile those in poverty may be paying tax at the higher rate. If someone is working at two low-paying part-time jobs, however low their total income is, they still have to choose one as the “main” income, taxed at the cheaper rate, and the other is taxed at the higher rate. This is one feature of NZ’s Poverty Trap construction.

    • BassGuy 2.1

      Why, if only they worked a little bit harder someone would recognise and reward their hard work. /sarc

  3. Sabine 3

    It is simple, I don’t want to ever hear this Gareth Morgan guy ever say anything about poor people, or social welfare recipients.

    In fact, until the man pays his fair share, he should just go to his mansion and stay there.

    I am sick and tired of these rich government depended f**wits to pretend that they made themselves and are still making themselves.

    Yes. I am angry here.

    • RedLogix 3.1

      Ah right. Here’s a couple who are using their wealth to advocate changing the very system you are so angry about – and you want to silence them.

      Moments like this when I understand why the left is so fucked.

      • BassGuy 3.1.1

        So when one Left person is angry, the whole “Left is so fucked”, but when one Right person says we have a rock star economy (in spite of the evidence otherwise), the economy proves the whole Left are wrong and can suck it?

        • RedLogix 3.1.1.1

          Gareth Morgan has done far more than anyone else in the entire history of this country to argue and promote a much fairer, simpler and effective tax system.

          But because he doesn’t comfortably come with a left/right wing label attached to him – he’s considered a fair target for the kind of silly spleen that sabine above has indulged in.

          Politics is about building consensus, finding common ground and working towards achievable steps. You are not going to get it all your own way, and alienating people who might otherwise help get you some of what you want is immature and dumb tactics.

          If you want to be taken seriously in politics you have to be seen as able to work with other people, with different ideas. So often the left gets trapped in an impotent ideological fervour which achieves nothing.

          • batweka 3.1.1.1.1

            Very well put Red.

            I’m confused about the Morgan issue. Is he able to pay more tax and isn’t? Or is there no way for him to pay more tax?

            • RedLogix 3.1.1.1.1.1

              I’m not sure myself weka.

              He could always make a donation to the IRD – I’m not sure if they can accept that. But even assuming he did, it would be a one-off event.

              Instead when he uses some of his money towards driving a systemic tax change he might conceivably make a far larger difference. Compare this with the venal behaviour of so many other wealthy people who use their money to covertly disrupt our democracies in order to protect their privilege.

            • Colonial Rawshark 3.1.1.1.1.2

              I’m confused about the Morgan issue. Is he able to pay more tax and isn’t? Or is there no way for him to pay more tax?

              If Morgan accepted a less “tax efficient” structure to his businesses and his affairs, and also declined to claim various deductions etc that he is eligible for, then of course he could pay more tax.

              But why do that when the system is deliberately set up to allow you to operate in a “tax efficient” way.

              Morgan’s son Sam knows the system is utterly unfair – he was able to pocket hundreds of millions from the sale of Trade Me without paying a single cent in tax, and said that the system was wrong to allow him to do so.

              • batweka

                yeah that’s what I figured, he could stop using the tax system to his advantage and therefore pay more tax. Kind of like Brash complaining about Super not being asset tested, but still claiming it even though he didn’t need it and was under no obligation to.

                However I do agree with Red, that Morgan should be supported in what he is doing in pushing tax reform. Rich people are going to take way more notice of him.

                (The comparison with Brash is unfair, and I don’t know if running a business without taking advantage of the tax system is that straightforward).

          • The Al1en 3.1.1.1.2

            He was the first I heard talking about a ubi for NZ a few years back which made sense.
            Cat lovers won’t like him though.

      • greywarshark 3.1.2

        @ sabine
        As Red Logix points out, it is not simple. If you are venting about any rich person but picking on Gareth Morgan as the nearest target, he is not representative of the type. He is thinking and discussing ideas or change and improvement to taxes and welfare that will benefit us all, breaking ranks with the others who don’t want to change anything. It is unfortunate that he wandered into this thread at this time and got the custard pie.

    • Deb Kean 3.2

      I have never understood why people love Gareth Morgan so much.

      • The Al1en 3.2.1

        Do you mean brotherly love or homosexual love?

        • Deb Kean 3.2.1.1

          “Do you mean brotherly love or homosexual love?”
          You are being deliberately stupid – I meant his policies, lackwit.

          • Colonial Rawshark 3.2.1.1.1

            “lackwit” haha that’s actually quite funny

            Sorry nothing personal The Al1en 😛 (brotherly love vs homosexual love was funny too heh)

            • The Al1en 3.2.1.1.1.1

              It’s okay, CV, second place hurts but I’ll survive 😉

              I was just making sure Deb Kean wan’t going to use loving Gareth Morgan as a set up before launching another rabid anti gay rant… Like usual.

              • Deb Kean

                ‘As usual’ not like, sigh…
                Just because you are all about the gay doesn’t mean I am.

                • The Al1en

                  Accepting and protecting homosexual’s human rights from abuse by bigoted pious non entities, interpreting a cave man like civilisations 2000 year old simple minded world view as gospel, isn’t “all about the gay”, it’s about making sure people like you get held to account and ridiculed until you realise what arseholes you are and how your religious teachings of peace and love have you so corrupted.

                  Thanks for enabling, like usual.

          • greywarshark 3.2.1.1.2

            Actually Deb The Allen is often witty. Whereas you come here to tell us how much you don’t understand. Are you being deliberately stupid?

      • RedLogix 3.2.2

        Well for a start I supported for some years to a UNICEF fund Morgan backed dollar for dollar that was targeted at improving village water supplies in various parts of the world. Since then I still continue the autopayment which is going towards similar projects.

        http://en.wikipedia.org/wiki/Gareth_Morgan_(economist)

        http://morganfoundation.org.nz/

        Does this mean I agree with everything he says or does? Nonsense, but I can respect someone who is using their wealth constructively.

        • Colonial Rawshark 3.2.2.1

          Morgan is thinking about NZ’s social issues is a serious way. And he is willing to put his money where his mouth is.

          • Stephanie Rodgers 3.2.2.1.1

            Except into the tax system.

            • RedLogix 3.2.2.1.1.1

              A fact he has recognised and is doing something constructive about.

              Your line is really not a lot different to those who slag climate change activists for flying to conferences or events – when in reality in order to travel the effective option at present is to fly.

              There is no value is attacking individuals for being forced to choose poor options by a system which itself needs changing.

              • batweka

                He’s doing some constructive things, but the question remains why is he not doing the others?

                TIme we stopped flying, even CC activists. Just because it’s the most effective way of doing something doesn’t mean it should be done.

                “There is no value is attacking individuals for being forced to choose poor options by a system which itself needs changing.”

                I think were still unclear what choices Morgan has.

                Asking these questions isn’t attacking Morgan so much as examining how far the ethics go.

                • RedLogix

                  TIme we stopped flying, even CC activists

                  JMG did make that argument a while back. Not for any practical reasons, but purely for its ethical, symbolic power.

                  However while I can appreciate the purity of this thinking; meanwhile people still want to get places.

                  • batweka

                    Wants don’t take precedent over extinction I’m afraid (or at least in a sane world they don’t). People can wait for alternatives to be put in place and fly in the meantime and then they can watch the world burn as they drive around in their electric cars.

                    • Draco T Bastard

                      As it stands we could probably live with the use of aircraft – if we got rid of cars.

                      Aircraft: Total Climate effects:

                      The IPCC has estimated that aviation is responsible for around 3.5% of anthropogenic climate change, a figure which includes both CO2 and non-CO2 induced effects.

                      NASA Says: Automobiles Largest Net Climate Change Culprit

                      Now, in other terms and looking at additional factors, NASA has determined that automobiles are the largest net contributor to climate change pollution.

                      Although I find that NASA research somewhat problematical as it rates industry as causing less climate change because of the other pollution that it emits which causes global dimming.

                    • batweka

                      Maybe, but given that the window of averting catastrophe is shrinking rapidly, we need to be looking at cutting emissions wherever we can as soon as we can.

                      Also, bear in mind that when the CC activist flies to the conference, the flight itself is not the only thing that has emissions.

                      I think doing the maths is important, but I also think we are past the point of having choices about trading this off for that.

                      None of this is a purity of thinking, it’s just plain pragmatics.

                    • Colonial Rawshark

                      I rather think that nation governments aren’t going to take any effective action within the next 15 years, at which point 3 deg C to 4 deg C climate change will be baked in, and the oil depletion cliff will be upon us, which in the decade after that will drastically reduce carbon emissions anyway. Haphazardly, chaotically, painfully.

                    • Draco T Bastard

                      I think doing the maths is important, but I also think we are past the point of having choices about trading this off for that.

                      It’s a question of priorities, practicalities and which will make the most difference. Given those constraints which do we get rid of first?

                      Personally, I think getting rid of cars first is more practical and will achieve more.

                    • batweka

                      @CV, Don’t have to leave it up to them though.

                    • batweka

                      Probably, but I wasn’t suggesting getting rid of planes, I was suggesting that people choose to stop flying. It’s those choices and acts that will shift the paradigm. We have to get passed this idea of what can we give up without inconveniencing ourselves too much.

                      Instead of looking at the carbon audit of airplanes, let’s look at the carbon audit of tourism or international holidays, and ask ourselves are these thing really worth the risks?

                    • jcuknz

                      But as I undestand things there is no need to fly anywhere as it is these days posible to hold conferences by linking computers together or however it is done.

            • Colonial Rawshark 3.2.2.1.1.2

              why be friends with the left; they are an ungrateful spiteful jealous bunch who are quick to criticise and impossible to please.

            • Draco T Bastard 3.2.2.1.1.3

              He’s paying what the law demands that he pay and then says that it’s not enough. This is, IMO, an excellent example as he can point to it and say that it’s not enough. On top of that he’s also made suggestions on what to change so that he will be paying enough (according to him).

              The real problem, though, is the fact that no society can afford rich people.

              • Lanthanide

                But no matter what Gareth Morgan says, you still can voluntarily donate money to the IRD and they’ll accept it.

                So he could calculate his own tax using his preferred method and pay the difference to IRD. Put his money where his mouth is.

                On the other hand, he does run a bunch of charities.

                • Draco T Bastard

                  But no matter what Gareth Morgan says, you still can voluntarily donate money to the IRD and they’ll accept it.

                  I keep hearing people say this and yet there’s nothing that I can find on the IRD website about it. So, time to front up and show where and how someone can donate money to the government.

                  • Lanthanide

                    I can’t find any specific page about it. Perhaps I was getting mixed up with the US, which recently passed a law to allow it.

                    But anyway, I’m pretty sure you can pay additional tax to the IRD. Either you can just make additional payments out of the blue, or you can file an income tax return that over-states your actual income, and thus have to pay additional tax on it (or form a company / trust specifically for this purpose and do the same).

                    In either case, tax refunds are not automatic and only occur if you arrange for a tax summary etc.

                    Finally, I think if Gareth Morgan rang up IRD and volunteered to pay several hundred thousand in tax, do you think they’d say “no, sorry, you can’t”, or do you think they would work out some way by which he could do it?

                    Hell, even if he couldn’t give money to the IRD, I’m sure he could give it to Treasury.

                    • Draco T Bastard

                      Either you can just make additional payments out of the blue

                      If you make additional payments it simply sits on your account until they have a reason to reduce your account.

                      or you can file an income tax return that over-states your actual income,

                      And what would the other shareholders think about that or the fact that the competition can now under-cut you and drive you out of business.

                      In either case, tax refunds are not automatic and only occur if you arrange for a tax summary etc.

                      That’s PAYE and I’m pretty sure that you’ll find that Gareth Morgan isn’t on PAYE and someone who isn’t on PAYE has to hand in a tax return every year.

                      Finally, I think if Gareth Morgan rang up IRD and volunteered to pay several hundred thousand in tax, do you think they’d say “no, sorry, you can’t”, or do you think they would work out some way by which he could do it?

                      If they don’t have any processes to allow it then, yep, pretty sure that they’d have to turn him down as they actually have to account for the money.

                      And, after all that, we don’t know what he’s actually doing. He may be maximising his tax already and still thinks it too low.

                    • Lanthanide

                      “If you make additional payments it simply sits on your account until they have a reason to reduce your account.”

                      For 7 years, then any unclaimed amount is written off.

                      “And what would the other shareholders think about that or the fact that the competition can now under-cut you and drive you out of business.”

                      I’m talking purely about individual tax, ie that tax that Gareth Morgan thinks he personally should be paying. So there aren’t any other shareholders to care about.

                      “That’s PAYE and I’m pretty sure that you’ll find that Gareth Morgan isn’t on PAYE and someone who isn’t on PAYE has to hand in a tax return every year”

                      The government cannot force you to take a tax refund. Have you seen the “unclaimed monies” page that lists all the money IRD is holding on to for people (from various sources)?

                      “If they don’t have any processes to allow it then, yep, pretty sure that they’d have to turn him down as they actually have to account for the money.”

                      Again, they may not have a formally published page that says “he’s how to pay extra tax”, just because it so seldom happens. But that doesn’t mean they wouldn’t have a mechanism they could use; or again, I’m sure Treasury would accept it, even if IRD couldn’t.

                  • The Al1en

                    “So, time to front up and show where and how someone can donate money to the government.”

                    I have a feeling a plain brown paper bag stuffed with cash will do the trick with this lot.
                    No emails, no texts and no paper trail to have a brain fade over when questioned should the poo ever hit the fan is how it works.

    • Murray Rawshark 3.3

      Yeah, it annoys me too, but that’s life. Whatever we achieve in the end, it’ll be because we’ve done it for ourselves as a class, not because of some rich blokes being charitable.

  4. Paul 4

    This article made the Guardian today.

    http://www.theguardian.com/commentisfree/2014/dec/12/how-new-zealands-rich-poor-divide-killed-its-egalitarian-paradise

    ‘In the 1940s, New Zealanders hated inequality so much that one visiting academic suggested they should erect a statue of equality in Auckland harbour, as a counterpart to the United States’s celebrated sculpture. And that image lingers: many people still think of New Zealand as an egalitarian paradise, a friendly and accommodating country where “a fair go” is the national phrase.’

    ‘Those observers, and indeed many New Zealanders, might have got a shock this week when the OECD published a landmark report, showing that economies the world over are being hamstrung by growing inequality – and that New Zealand was the worst affected. A stark rich-poor divide, the OECD argued, had taken over a third off the country’s economic growth rate in the last 20 years.’

    ‘The simple answer is that in the two decades from 1985 onwards, New Zealand had the biggest increase in income gaps of any developed country. Incomes for the richest Kiwis doubled, while those of the poorest stagnated. Middle income earners didn’t do too well, either.’

    ‘Because New Zealand had previously been so egalitarian, that world-beating increase still wasn’t enough to rocket the country right to the top of the inequality league table, but it is now doing just as badly on some measures as Britain. In both countries, the top fifth get about 40% of after-tax income; the bottom fifth get just 8%. New Zealand is now just as divided as the country that many of its citizens’ ancestors left in order to find a more equal society.’

    ‘Outrage over New Zealand’s widening gaps has been muted, partly because much of the extremes are hidden: poverty tends to be In recent years, after that explosive 20-year rise, income gaps have been steady, leading some to dismiss the issue. But as the OECD report shows, the key learning is the long-term impact. What started in the 1980s continues to hold back New Zealanders – and their economy – today.’

    ‘Alarm bells are finally beginning to sound. Recent polling shows three-quarters of New Zealanders think theirs is no longer an egalitarian country, and that this is a bad thing. Part of the unease stems from a realisation that big income gaps aren’t compatible with the idea that there should be an equal chance for all.’

  5. Ad 5

    From that same Guardian article:
    “In very unequal countries like the United States, half an adult’s income can be predicted from what their parents earned. New Zealand isn’t there yet …”

    Great to see The Guardian holding up a clear mirror. The Listener this week covers the same territory in more detail.

    What chills me most is how very hard it is now in New Zealand for those children and young people who start off with little, to gain stability and mobility upwards. I want this to be Labour’s principle task. I don’t know what the answers are.

    • Paul 5.1

      Look at how parts of South America disentangled themselves from neoliberalism.

      • Colonial Rawshark 5.1.1

        And watch how western financial systems act to try and destabilise and crush them.

        • Draco T Bastard 5.1.1.1

          +1

          The Western financial system can’t stand to have a good example of a system that actually works for the benefit of the country.

    • RedLogix 5.2

      Well part of the answer is to get those parts of the system that we have some common ground with onside.

      For instance; the graphs in the OP clearly show that total growth in NZ has gone backwards because of inequality. It’s bad for everyone (except perhaps the very top 0.1% who can afford to insulate themselves from it’s effects). There is the entry point – that reducing inequality is not a zero sum game, rather it creates opportunities at all parts of the economic, social and environmental spaces to deliver better lives for everyone.

      We have to make it safe for people to actually talk about it in their families, workplaces and communities. People need to be able to say “I don’t want to live in a shitty, stressed-out, alienated and sneering society of snobs and scramblers. I want to live in a community where I can feel safe and belong, where I can contribute and make a difference.”

      Once people can articulate that it is the extremes of wealth and poverty which form a large element of the barriers holding them back from actually enjoying their lives – then the discussion will become normalised and action will inevitably, irresistably follow.

      • greywarshark 5.2.1

        @ Red Logix
        I like that – sizes up the present situation – ‘snobs and scramblers’. But the pity of it
        is that many of the proud scramblers feel it is their fault, they just have to be stoic and work their way out of it.

        Our trouble is that we have never been taught how economies and politics work and how they can work against the people who are working hard, obeying laws, trying to be good citizens, in other words exemplary citizens. Yet the government takes from them who have little, takes their weekends where once they had time to be people and build a life and place in the community, impose unstable working hours insufficient for stability and controlled planning, limit wages severely, use erroneous measures for measuring inflation (ie leaving out soaring house prices) and people can’t get their head around what’s happening.

        Mask the poverty with lots of credit so neighbours look better than their income allows, and people can’t get a clear picture of their and their peers’ position any more, the focus is always blurry. So they blame themselves and their inability or bad luck to get that upwards mobility that we used to pride ourselves on.

  6. Telepathy 6

    Just dropped a food parcel off today at the Mission with my family, with some goodies for the kids! Best to drop the parcels off at the back entrance.

    A time of great joy yet so many people are scared, frightened, weak and incapable, a time of great sadness.

    You wonder in these times if there really is a God who will “protect you” when people are frozen with fear. If only God could talk into the mind of these frightened individuals and give them some comfort when facing such scary futures.

    God only protects those who are truly scared!

    God Bless this Christmas!

  7. what we need is a big Xmas charity ball….lets have it at Sky City and invite all the rich folks and celebrities and the newly arrived Russian oligarchs….and John Key and Owen Glenn.. and make the tickets $5000….and have a big charity auction…and sell donated items like art from sycophantic artists and All Blacks underwear and Bronas shoes and get some funny host from TV….and televise it so all the rest of us can watch and just wish we were there…and the Herald can do a big feature with lots of photos of well fed and watered people hugging each other…and give all the$$$$$ to the City Mission so they can give the poor some cans of Watties………and then the ball goers can go home feeling really good about themselves,knowing that overcoming poverty is not a task of justice,its an act of charity…….merry bloody Xmas

    • Colonial Rawshark 7.1

      We are living in perverse times, of that there is no doubt.

    • greywarshark 7.2

      They do that sort of charity do in Sydney and all the wannabe celebs have their photos taken and get in the paper or wherever. The women in their nice outfits, three-quarter face to the photographer to show off their best side, the men looking bluff and sleek at the same time. The Herald would love it. That’s fun charity – there should be more of it.

      Then again we used to have telethons that raised a lot of money from all and artists appeared and endorsed the aims and performed and they went for 24 hours and so on.
      I don’t know if that style would work now.

  8. Naki man 8

    “Hundreds of families from as far away as Hamilton are queuing at the Auckland City Mission for help to put food on the table this Christmas’

    What a joke, some bludgers have enough money for petrol to drive there car from Hamilton to Auckland to get a free feed. More money than brains.

  9. Realblue 9

    Surely there are more christamases than just rich and poor. What about the not rich and not poor, which is the vast majority of New Zealanders. To talk in binary absolutes is a fallacy.

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