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10:51 am, September 19th, 2024 - 26 comments
Categories: capital gains, capitalism, Economy, tax, uncategorized -
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It must be tough being really rich.
Imagine having that much spare cash that you could give hundreds of thousands of dollars to right wing parties, just to make sure that your privilege is preserved.
And the attacks by the right on any proposal for an equitable tax system are always the same. “Envy tax” is a favourite. “Driving our best and brightest overseas” is another.
To my mind the most irrational response is that they will sell up and move elsewhere.
Landlords have threatened to sell up and leave the market if they don’t get things their way. This always seemed to me to be a somewhat hollow threat because the houses would still be there and the net effect on the country’s housing stock would be zero.
A recently released Tax Justice Aotearoa study suggests that it may be in their financial interests to stay put in Aotearoa even if a wealth tax is imposed.
Anushka Bradley at Radio New Zealand said this about the study:
The study looked at how much tax someone earning five times the average New Zealand wage – around $330,000 – would pay in nine comparable nations. The countries chosen included English-speaking nations with similar political systems including Australia, Canada, the US, the United Kingdom, and five European countries.
Using 2023 OECD data it found someone on a $330,000 income that was wholly taxed as a conventional salary, would pay income tax of $108,000, or 33 percent. This was the lowest income tax rate of all the comparable nations, which had rates ranging from 37 percent to 55 percent, said Victoria University senior research associate Max Rashbrooke, who carried out the analysis.
New Zealand and Belgium were the only two nations that did not have a capital gains tax, though Belgium had other wealth taxes, which New Zealand did not.
Rashbrooke said he found the results striking.
“It’s no surprise that Denmark and Norway and Germany, places like that, tax high earners much more rigorously than we do. But I was quite taken aback by how much more tax New Zealand high earners would pay in the other English speaking countries, in Australia and Britain and America.”
Using OECD modelling, if a New Zealander made half their $330,000 income from capital gains, they would pay just $45,000 or 14 percent tax in New Zealand, the analysis showed.
In comparison, that same person would pay another $41,000 in Spain; another $50,000 if taxed at Australian rates, or an extra $98,000 in Denmark.
“In other words, this research shows that a well-off New Zealander would pay roughly twice as much tax, or far more than that, if faced with the tax rates that are applied to high earners in other countries,” Barclay said.
Billionaire Rod Duke thinks that increasing tax on the wealthy would cause them to leave. He said:
Look, money seems to navigate to the place that’s easiest to make extra money and so if New Zealand were to introduce an additional or a modified tax system that was prohibitive and made investment more difficult or less lucrative, then the money would disappear.”
Tax Justice Aotearoa’s report suggests that we have nothing to fear. And there is so much need for increased investment. Infrastructure, partucularly power, and Health are areas where the need is clear.
So maybe we should say to the wealthy that we think they should pay more tax. And if they threaten to leave suggest to them that they conduct due diligence just to be sure. Despite their feelings they may actually be better off staying, even if their capital gains are taxed. After all if it is good enough for a worker to pay tax on what they earn, then a wealthy person earning passive wealth should do the same.
Capital flight is a tired old threat indeed. Given that “trickle down” was eventually debunked even by the IMF, World Bank and OECD, nothing needs to be done in 2024 to appease the parasite class.
Instead get them to pay their way, as David Parker, Grant Robertson, Greens and TPM were trying to promote before the last election.
Yep 'capital flight' is a tired old trope. Often cited by folk protecting their own interests thinly camouflaged as concern for the economy.
Here is 5 1/2 mins of a more factual analysis.
https://www.rnz.co.nz/national/programmes/morningreport/audio/2018956195/well-off-kiwis-paying-less-tax-than-peers-overseas
131,000 people left us permanently June 2023 – June 2024.
That's 359 per day. Every day. Abd it's those with the $$$ to move.
Waaay more than during Rogernomics.
Why make it worse?
Is there a statistic of people leaving the country permanently by income band?
Yes, would be interesting to see real data. Anecdotally, many people leave NZ (particularly for Australia) because they actually see no prospects for accumulating significant $$$ here. They have little in assets but something to offer in skills.
Irony is that those 131,000 people left when we had the 'low tax' party in power.
It's got more to do with how the economy is managed so everyone gets a fair go than just tax.
Aspirational working class (want to own a home from mining to building sector) and those who can get a higher salary (and better work conditions) – teachers, medical staff, police, military etc etc etc are going.
You think others would leave because of a CGT to a land that already has one (on everything not just land and buildings) and would charge them stamp duty when they buy property and land tax on any land banking? Where every estate with a rental property ends with CGT paid by those who inherit from it?
If I was in Labour I would elbow to elbow a plan with Oz to introduce a new tax at the same time.
It would be a wealth/estate tax. The wealth tax would be paid annually and credited against future estate tax liability. Front loading receipts before boomers depart.
Your like a wet bus ticket sometimes Ad, soft, pointless and no spine.
I worked in four of those countries (self-employed):
and New Zealand always had the lowest income tax (for high income earner). It's also by far the easiest country to start a business.
According to this table:
Who pays income tax… and how much? | The Treasury New Zealand
The top 8% or so are already paying 42% of all income tax in NZ.
Out of curiosity, in your opinion, how much more should that top 10% pay?
E Burke, a rough answer to your loaded question.
9% of 10 000 000 is 900 000. 30% is 2700 000. So this top 10 member is paying @ 9% for one dollar to a worker's 33% for one dollar in tax.
The answer is at least 18% more.
If you were in Australia the top rate of tax is 45% if you earn more than 190 000 from any sources.
If the ‘top’ 8% don't want to pay more tax, then they could always restructure their financial affairs. Or simply bugger off to Australia. [snap Patricia]
https://www.superguide.com.au/how-super-works/income-tax-rates-brackets
https://thespinoff.co.nz/society/16-08-2022/the-side-eyes-two-new-zealands-the-table
The top 10 percent of New Zealand households continues to hold approximately 50 percent of New Zealand’s total household net worth.
The reason the top 8% pay that total value in tax is because they are earning such high incomes compared to the rest.
https://www.stats.govt.nz/news/distribution-of-wealth-across-new-zealand-households-remains-unchanged-between-2015-and-2021
You are asking the wrong question. The correct question is: how did the top 8% get to accumulate such a disproportionate* share of the nation's wealth that they end up paying 42% of all income tax?
…and another important question is how the top 10%% make their income.
If they run NZ owned corporations, employing people in numbers proportionate to their wealth the country would care if they went overseas.
But if the wealth is invested in speculative investments, or in being residential landlords by virtue of being able to outbid the people who are forced to become their tenants, then their threats to leave might not be the bogeymen they first seem to be.
Who really believes the Labour Party will ever bring in wealth taxes or make the rich pay their fair share?
First you need to define "rich" and then determine what you mean by "fair". I think all these people asking for Capital Gains taxes and Wealth taxes would be in for a rather unpleasant surprise when they suddenly find themselves over whatever threshold is set.
Have a go at it. For example, how many times earning the living wage do you consider ‘rich’.
State your case for lower or higher thresholds supported by robust arguments unless you comment here simply to troll the site.
A CGT will exclude the family home, it is most peoples only major asset.
A wealth tax has a range of start points Green (above $2M, the GR/DP higher still).
Over 90% would not be impacted by such a wealth tax.
And the numbers owning rentals and baches/cribs is not that high (and they have to be selling at a CG to pay a tax on that realised income).
CGT on shareholdings and or business/farm sales may be more common – the right approach in this area is a more complex area of debate. Given we need to encourage productivity and investment in the real, rather than speculative, “economy”.
Imagine having that much spare cash that you could give hundreds of thousands of dollars to right wing parties, just to make sure that your privilege is preserved…
…I think you've hit the nail on the head. Those are the 'taxes' some pay. They just don't pay them to the public purse.
I read somewhere not long ago (but I think it was US based) that money can only buy more privilege until you have around $100m. At that point, the return on your investments will buy whatever you want.
So, beyond $100m, the only value money has is to purchase power and influence.
I'm sure there are exceptions, and the number might be out of date a bit, but it did make sense when I read it.
So Look! I work bloody hard for my
wealthchocolate fish. By that I mean more than 8 hours a week! So keep your paws off my fishy. /sarcIt all goes with the political right's sense of entitlement.
Only the entitled class are worthy.
The natural party of government.
This is focused on wealthy individuals and rightly so.
We may be selling ourselves a tad short as the 4 or so foreign owned banks appear to be 'undertaxed' IMO.
Then there are the other activities, related to banks ie currency speculation that sits outside the tax umbrella.
All I want for Christmas is a Financial Transaction/Tobin/Hone Tax .
Why don't we ditch out own tax system altogether and adopt Australia's so there is a single Trans Tasman tax system for both countries.
It might even allow us to match pay rates in their health and education sector.
we are a nation of grovellers and lickspittles and we get what we pay for.