Selling assets to pay for tax cuts for richest 1%

Written By: - Date published: 7:50 am, January 28th, 2011 - 166 comments
Categories: privatisation, tax - Tags:

John Key reckons he can raise $10 billion by selling our assets and their future profits. That’s probably very over-optimistic. But I got wondering, how does that one-off $10 billion compare to the cost of the tax cuts that National has given the wealthiest 1% of Kiwis, which they will continue to get year after year? Answer: not well.

Money now is worth more than money later – a bird in the hand is worth two in the bush. To calculate the present value of future money you use a fancy formula (already handily contained in this online calculator) and the discount rate, which is the interest rate. For the government, the interest rate it pays for borrowing is about 5.5%. Which, it turns out, means $10 billion now is worth the same as $550 million each year forever.

Now, how much less tax are the wealthiest 1% of Kiwi taxpayers paying as a result of National’s income tax cuts in 2009 and 2010? IRD’s stats tell us the wealthiest 1% earn over $165,000 of taxable income. They also tell us how many taxpayers are in each band of $5,000 and how much taxable income each band has – allowing us to work out the average income of each band. We can then work out the tax cut for the average income in each band, times it by the number of people in each band, and get a grand total.

Which is $586 million.

The 36,000 people in the top 1% of income earners, with an average income of $289,000 have received, on average, a tax cut of $16,000 from Key’s National Government costing, in total, $586 million a year.

And they’ll keep on getting that $586 million every year. In fact, the size of the tax cut for the top 1% will grow with their incomes – but erring on the low side and just leaving it at $586 million a year, how much is that worth in present value using the government’s discount rate?

$10.6 billion.

In summary:

  • Present value (optimistic) of Key’s plan to sell our assets if he did it today: $10 billion
  • Present value of the tax cuts that Key have given to the wealthiest 1% of NZers: $10.6 billion

And this is an extremely generous calculation because I haven’t counted all the dividends we’ll lose if Key sells our assets. In fact, that alone, according to Bernard Hickey and others, makes the present value of Key’s plan less than zero.

This means that, if debt was really a concern, National could simply restore the taxation for the wealthiest 1% of New Zealander’s that they were able to live with very well before 2009 and raise more money than asset sales might and we get to keep our SOEs’ profits. Only people on incomes over $165,000 would be affected. The other 99% of us get to keep the assets, the profits from them that pay for our schools and hospitals, and our sweet, sweet tax cuts.

Now, some of you are saying ‘yes, Marty, but the government needs the money now, not in $586 million blocks every year forever’. To which there are two answers: 1) we wouldn’t be getting the asset sale money for years anyway because these things take time to organise, indeed the deficit will be all but gone by the time these sales are ready to happen 2) ratings agencies can do the maths too, they know that increasing the government’s revenue by $586 million per year every year is more than getting a one-off of $10 billion.

Why do you think National is determined to sell assets when undoing its own tax cuts for just 1% of the population would be so much easier and more beneficial to the country in the long-run? Could it be that this isn’t about debt at all?

Could it be that debt is just the excuse they came up with so that the rich can keep their enourmous tax cuts and buy our assets cheaply?

The thing I note about this picture: it’s the whole households’ floorboards but only the rich guy in the suit is being kept warm.

166 comments on “Selling assets to pay for tax cuts for richest 1%”

  1. LynW 1

    Thanks for such an excellent rationale and also enjoyed your very insightful comment on the cartoon!

  2. tony 2

    Gota say…Cunliffe (sounding like Cullen) was great on Nat Rad this morning on the subject of Burning the Family’s Floorboards. I reckon he could wipe the smile off Key’s face given half a chance. English wouldn’t have a sh!t show.

    Goff just needs to let him off the leash.

  3. arants 3

    “Could it be that debt is just the excuse they came up with so that the rich can keep their enourmous tax cuts and buy our assets cheaply?”

    Could it be that we’ve lost sight of the big picture. These measures are ‘forced’ on NZ by a strategic deficit representing the culmination of years of work by National & the Treasury. We’ve bought into it.

    In using tax cuts as a central theme, Goff’s lame ‘State of the Nation’ address effectively embraced the whole strategic deficit narrative, handicapping those in his team that actually ‘get it’ in the privatisation battle and broader economic analysis. Clark & Cullen resisted tax cuts for a long time before caving in, but now the surrender is complete. While tax cuts remain central to the discourse there’s no way back for Labour and its values. Instead we’re left arguing technical details.

    • ZeeBop 3.1

      We in NZ reward the bookerkeepers and the shopkeepers were happy, the farmers were happy, the house buyers were happy, but the manufacturers and innovators lost out. Good times are over. The Goof Ball years of living easy on cheap high density energy gushing from growing numbers of oil wells is over. Labour is right, it is the tax system stupid, yet Labours policy of how it is the tax system is still hard to work out for good reason. Is Goff a Goof ball?

      NZ’s are glib, they the two second experts on everything, they’re told they can assume that we have to pay for health care, that we have to help the innovators by ignoring the problem that innovators have because innovators are super human and just need better bookkeepers to throw money at them (fiscal controls and so future profits without the risk exposure to bookkeepers), and so innovators problems will go away with the savior bookkeepers around. Unfortuately its not that easy, you see fairness and science are one and the same. When you are being fair you have walked in the shoes of those you talk about, just as a good science tries to mind meld with their subject. NZ is not a fair society, since kiwis don’t think they have to know why (for instance) the UK has a universal free healthcare system that so utterly proves the assumption private is good public is wrong. The basic lack of willness to walk in the shoes of others, the basic undercurrent that being caught without a opinion (cloaked in the rightwing unfair ethos prevading NZ) is too much for most kiwis to bear. To actually do the scientific thing and investigate their own assumptions. Socrete’s put it something like this, the unreflected life is not worth living. Kiwis are breed to be flightless (those that fly do so early and get the hell out of here and aren’t called kiwi anymore). There’s a reason cultural shifts in NZ take 30 years to catch up with ROW, kiwis will point out how when NZ last had a spourt of innovation at the turn of the last century (when some british suffergettes got off the boat) how they as a society have been at the forefront ever since ;-).

      NZ is a great country, NZ is a beautiful country, far less stark than Australia but so much more depth, yet we sell if off in increasely bigger fire sales to feed the bookkeepers demand for more. It cannot go on, it will not go one since the era of cheap oil is over, so do with have to dither for thirty years or are we going to retool our financial system to suit the demands of the coming scarcity. Food price spikes is scarcity. Energy price spikes is scarcity. Unaffordable extreme Weather is scarcity of resilience. Rubbish is scarcity of imagination. Sustainability a scarcity of versatility. NZ is old, tired, all bones and little muscle (lots of bookkeeper muscle).

      NZ has no resilience when we rely on so few industries, and so few products in those industries (bulk commodities). National are the party of the bookkeepers, when Key wins relection which he will because the media will echo Key’s lies (for fairness – sic) even as Key statements are obvious flaws in reason and fact. The under current will be don’t be a loser, vote for the winner – Key. The same old plea to the weak who spend their whole lives being two second experts. A fair society walks in the shoes of its poorest, oh and frak off jesusfoids, NZ is old unfair and a joke.
      Please evolve NZ.

  4. Kevin Welsh 4

    Its the old Strategic Deficit raising its ugly head once again.

    • Jim Nald 4.1

      John Key & mates:
      Manufacturing debt
      Manufacturing deception
      Manufacturing foreign dependence

      Say it simply, manufacturing bullshit

  5. Very good analysis.

    So (looking for the optimal sound bite) if we sell $10b worth of electricity companies we lose at least $10b worth of of future income and all that we are doing is financing the tax cuts John Key gave to the richest 1% of taxpayers.

    Disgusting.

    • Pete 5.1

      Why not look at another income group?

      Someone on $45k earns $865 per week gross – PAYE/EP on that is $150

      If they have two children (quite a common family):
      Family tax credit, $115.00
      In-work tax credit, $60.00
      Total WFF credit $175.00
      So effectively they don’t pay any tax.

      On top of that they may get up to $100 per week housing allowance.
      They may also get childcare subsidies.
      If they are on Kiwisaver they get another $17.31 per week from the government.
      Plus doctor subsidies.
      And all the other things provided by people who do pay tax.

      They get back more than they pay in tax. They may not pay tax for 15 years. Is that fair?

      How much is paid to nil tax payers? ‘The rich” who actually pay a large proportion of the tax.

      • Marty G 5.1.1

        Pete also fails to address the point, which one can only take as conceding it

        Pete: if you took the tax levels for the wealthiest 1% of Kiwis back to where they were just two years ago – when, remember, they were already super-rich – then it would raise more money than asset sales, and we wouldn’t be giving up all those dividends.

        [lprent: pwned arguments aren’t allowed – even for you. ]

        • Pete 5.1.1.1

          You’re avoiding my point (by your definition that means you’re conceding it?) – is it “fair” that a significant number of people don’t pay any tax at all, guaranteed for a decade or two? That taxpayers have to keep paying them?

          It’s only fair that if you want to look at fair tax levels you look across the board and don’t select a narrow band for your convenience?

          • mickysavage 5.1.1.1.1

            Pete

            I would much prefer that my taxes went to lower to middle income working families so their kids can be raised properly than to go to the uber wealthy.

            Answer your question?

            Now about Marty’s post, do you want to address his point?

            • Pete 5.1.1.1.1.1

              No, it doesn’t answer my question. I asked if it is fair to everyone, not just how you feel about it.

              I think those with families deserve some tax leniency. But paying nothing, next to nothing, or actually getting back more than they pay is absurd, and it grots a lot of people off big time.

              Fairness is not someone choosing who gets to pay nothing and who has to cover that. Fairness is about everyone doing their bit, at least paying part of their way.

              • ZeeBop

                People when they buy stuff add value, that’s why marketing companies seek out buying preferences!
                So for fairness sake will you stop ignoring the fact that removing support, reducing redistribution of wealth will make us poorer as a society. Rob peter to pay paul. Nobody want a less wealthy society.
                If we did away with progressive taxes, the lower and middle classes would take you fairness argument and demand they should not support services that the wealthy use routinely every month that they the majority may use once a year (if that)! If a wealthy person gets a subsidy from the tax payer – no GST – on flights to Sydney because they are ‘working’ to enlarge their personal financial portfolio, then why shouldn’t the average kiwi also get some income support???? Why would taxpayers want to support the wealthy to make more wealth for themselves, but the majority not to support themselves to get more wealthy! You see your fairness argument is a crock of sh*t, you not being fair.

          • Marty G 5.1.1.1.2

            Yes. It is fair.the point of the tax and redistribution system is to make the distribution of wealth fairer than naked capitalism would – thereby helping to preserve capitalism, which would otherwise be politically unsustainable.
            If you reduce tax on the rich it can be paid for by increasing tax on those less able to afford it, by cutting the social wage, borrowing, or selling public assets, which just lessens future government revenue.
            Such has been the scale of national’s enrichment of the rich it is doing all four. But that was always the plan.

            • Pete 5.1.1.1.2.1

              “Fairer” is not having some elite choosing who gets everything for nothing, and who has to subsidise that.

              Especially when “those who might vote for the elite choosers” are those who are chosen not to pay anything.

              • jimmy

                I think you will find there aint many libertarians here mate, ‘fair’ on paper doesnt mean squat in the real world.

              • Blighty

                So, Pete is anti-democracy?

                • Bazar

                  Hell i’m anti-democracy, its the worst system out there, except for everything else that has been tried.

                  And he has a fair point. Its NOT FAIR. Everytime i read this blog, its always tax the rich-picks, as they make the most. Its onyl fair they pay a disproportionate amount of tax….

                  “The rich make the most money, therefore they should pay the most tax”.
                  They already pay the most tax, but that doesn’t stop that arguement.

                  Everytime i heard that arguement i have a hard time believing anything said isn’t just a form of low income greed. A more rational debate would be if they pay enough. But greed being what it is, it’ll always be easier to say the rich should pay more when you aren’t rich, more so when you can do it with other like-minded people.

                  Anyway moving on.
                  I actually appreate petes discuession here its been insiteful. But its worth pointing uot that higher tax rates might allow for a fairer tax system.

                  If the rich were taxed more over, but the overall tax rate lowered for lower income famlies, then welfare could be removed for those low income famlies.

                  Then we get a more transparent tax system.
                  Of course thats just theorycrafting, the reality is labour will fight tooth and nail over welfare crutches, and even if such a system was introduced, it’d only be a matter of time before labour started handing out more welfare benifits.

                  I’ve gone off topic far more then i thought, but i’ll actually post this.

                  Oh, talking abuot transparent tax system i liked the tax change, lowering the tax rate for the rich to be in line with trust funds makes avoiding tax harder. Removing the tax expense that was depreceation on buildings is a huge tax bonus.
                  I see it being about even. But i haven’t the figgures to back that up.

                  I wonder why i never hear about the depreciation issue whenever the tax cuts are mentioned….

                  [edit: Too tired to fix my grammer/spelling. Take it as it]

                  • Colonial Viper

                    Hell i’m anti-democracy, its the worst system out there, except for everything else that has been tried.

                    But we don’t have a democracy. We have a plutocracy.

                    Roughly 5,000-10,000 people decide on the economic direction (and therefore the societal conditions) of the entire country at the moment. The other 4,300,000 NZ’ers living here have frak all say in it.

                    The richest 20 NZ’ers personally control assets worth ~$30B. That exceeds the net worth of the bottom 50-60% of NZ’ers put together.

                    Peter Jackson, a half billionaire, can get a law changed on the spot, to suit his companies better. I can’t. And neither can you.

                    This ain’t no democracy, this is a plutocracy. (Or on the way to becoming one).

                    Oh, talking abuot transparent tax system i liked the tax change, lowering the tax rate for the rich to be in line with trust funds makes avoiding tax harder.

                    Yeah? Well increasing the trust tax rate to be in line with the income tax rate for the rich would also have made avoiding tax harder.

          • aj 5.1.1.1.3

            Pete @ 9:16

            They are paying tax. They pay GST, Fuel Tax, ACC levies etc

          • Graham 5.1.1.1.4

            No it’s not fair for nobody to pay tax,
            but it is more fair than to have a significant number of people who are being under-paid for their hard work. We have the resources in New Zealand for everyone to have, at the very least, a simple, but comfortable, fulfilling and healthy lifestyle. It is a fact that many hard workers simply can’t afford this because a small group are taking many times more than their fair share. It is great that some people wish to work their way up the financial ladder but this needs to be regulated so that many others don’t miss out on their basic human rights.

      • Draco T Bastard 5.1.2

        Pete, you do realise that all those subsidies for the rich wouldn’t be necessary if people were actually paid a high enough income don’t you?

        • Pete 5.1.2.1

          You must mean subsidies by the rich?

          It’s fair to quibble about how much the rich should subsidise others. But that is only a small part of the total tax equation. I think it’s also fair to quibble about those that benefit, and how much they should benefit.

          • orange whip? 5.1.2.1.1

            You make it sound as if people have some sort of natural right to hoard the world’s resources for their own benefit at the expense of everybody else, and as if the rest of us are supposed to sit meekly and allow it without compensation.

            Where did you develop this perverse world view, Pete?

            • Pete 5.1.2.1.1.1

              That’s a strange assumption ow, and wrong.

              I don’t think “the rest of us” should sit meekly accepting a free ride. I think that the starting point should be for everyone to do their bit and pay their own way, but allow for some assistance for people in real need.

              • orange whip?

                Disingenuous Pete, and transparent.

                It is the rich who are getting a free ride on the backs of the rest of us.

                • Pete

                  That’s a “perverse worldview” – the people who pay tax are getting a free ride of those who don’t pay tax?

                  • Draco T Bastard

                    No, the people in the top 1% income get a free-ride on the bottom 90% by:
                    1.) Structuring their income so as to not pay tax
                    and
                    2.) not paying enough in wages to cover costs.

                  • orange whip?

                    The people who are hoarding all the resources are getting a free ride on the people who do all the work.

                    Those paying the most tax are doing so because they have most of the money, most of the resources, and most of the power to influence important decisions about how our society functions.

                    You’re allowed, in this society, to become rich. To take more than your share. To take more than you need. To take from the rest of us.

                    But you pay a bit of it back to the rest of us in taxes, and not much considering the grossly disproportionate amount of money, land, resources and power controlled by a few percent of the population.

                    Most of society are living on a tiny amount of money with very little power and not much hope that things will improve. Meanwhile you, Pete, are voicing the concerns of the <5% of society who own almost everything. Why is that?

                    • Pete

                      I don’t think I’m just voicing the concerns of “the <5% of society who own almost everything". I'm not one of them.

                      There wil always be a few people who get rich, and quite a few more that will be very poor. That always happens, even in so-called communist countries.

                      The poor should be helped to an extent. The moderately well off have opportunities for getting better off, but even if they don't manage it or don't want to, they should still be prepared to earn their own way through life and not expect and try to force richer people to hand over what they have.

                      Phil Goff and David Cunliffe must feel that they deserve their salaries, or else they would redistribute most of what they earn to poorer people. Or do they just want to redistribute other people's money?

                    • orange whip?

                      I never said you were one of the richest in our society, Pete. I said you’re voicing their concerns. As you seem to have trouble with what this means I’ll spell it out for you:

                      There are many, many people in our society who work hard all week and are not paid enough even to rent a house and feed a family.

                      The reason they aren’t paid enough to live is that the people they work for are taking many, many times their share.

                      It really is that simple, Pete. There’s no shame in being on the side of the ruling class but you should have the dignity to admit it to yourself. Your duplicity in this regard is embarrassing.

                    • Pete

                      It really isn’t that simple. Maybe one day you will have experienced enough of the world to see that.

                      I voice my concerns and opinions. I know employers who work bloody hard for bugger all. Some make more than is fair, but within our system they can do that, and it would be less fair to arbitrarily take it off them because someone else deems it too much.

                      The starting position for any adult should be to earn at least enough to cover their expenses, not to expect that a “decent wage” is automatically owed to them.

                      Many poor people are not helped as much as they should be – partly because other “poor” people abuse and overuse the assistance of others.

                    • Pascal's bookie

                      “Some make more than is fair, but within our system they can do that, and it would be less fair to arbitrarily take it off them because someone else deems it too much.”

                      If some make more than is ‘fair’, and the system allows this, how can it not be ‘fair’ to make adjustments to the system?

                      Many poor people are not helped as much as they should be – partly because other “poor” people abuse and overuse the assistance of others.

                      Does the system allow this abuse? I don’t think you are being consistent here.

                      But in any case, if people should be helped, then why shouldn’t they be helped again? Is it their fault that others abuse the assistance of others? How is it relevant? Or if it is relevant, then surely the ‘abuses’ by the wealthy of the system are relevant in the same way.

                    • Colonial Viper

                      I know employers who work bloody hard for bugger all.

                      And that is because we are in a low wage economy and people with low wages have no discretionary income to spend money in shops or buy other services.

                      That’s a “perverse worldview” – the people who pay tax are getting a free ride of those who don’t pay tax?

                      And why do they have more tax to pay Pete?

                      Could it be because they are the ones making shitloads of money?

                      The only perverse world view here is yours: protecting the interests of the top 5% of income and wealth earners who surely do not need your help.

                      Phil Goff and David Cunliffe must feel that they deserve their salaries, or else they would redistribute most of what they earn to poorer people. Or do they just want to redistribute other people’s money?

                      Don’t be a dick.

                      A higher earner income tax threshold and a CGT will affect their salaries and their investment properties like everyone else.

                      Maybe one day you will have experienced enough of the world to see that.

                      You condescending loser. Who are you? Papa Smurf?

                      Stop championing for those on over $90K p.a. and think of the 50% of NZ’ers who earn less than $27500 p.a.

                    • orange whip?

                      The starting position for any adult should be to earn at least enough to cover their expenses, not to expect that a “decent wage” is automatically owed to them.

                      Finally you get to the point. A person deserves to be paid at least as much as it costs to live in the society in which they work to earn that pay. Anything less is servitude at best.

                      The fact that they aren’t is the elephant you’re so careful to avert your eyes from.

          • Draco T Bastard 5.1.2.1.2

            No, I most definitely meant subsidies for the rich. GST went up which, due to it being a regressive tax, mostly falls upon the poor.

  6. Gina 6

    Could it be the tax cuts were intended to put NZ in this position in the first place. Could it be that the Nats allways intended to use an increasing deficit to push state assett sales and welfare reform.
    Could it be that Key’s Banker mates in “Standard and Poors” will threaten NZ’s credit rating to force the sale of NZ assetts.

    I suspected this was what they were up to before the last election with their tax cuts. They actually allways wanted cuts for the wealthy but to get elected they had to pretend those cuts were for everyone.

    I’m sure many of you suspected this but are too pollite to say it. Its just so corrupt that a party would engineer a deficit or a crisis to bring in reform.

    I have feared since before the last election that the Nats would rigg the 2011 election because they know NZ will never accept what they really want to do. I still think that is a possibility. And we know if they do rig it the media will not report it.
    Under the guise of saving money they have combined what used ot be 3 departments that used to administer elections into 1 department. much easier for Natinal to corrupt one department. With the combinig and so called reform it’ll be much easier to make sure their people are in.

    Be on your guard NZ.

    • As Kevin Welsh said strategic deficit

      Be afraid NZ, be very afraid …

      • arants 6.1.1

        Be even more afraid as Labour assumes the patsy role in this scam.

        To borrow from Anrig’s ‘strategic deficit redux’, apparently Labour still haven’t learned even in the midst of an economic crisis that prioritizing deficit reduction is a game for suckers. Somewhere Ruth Richardson is having yet another laugh.

    • Marty G 6.2

      “Could it be the tax cuts were intended to put NZ in this position in the first place”

      definitely. Eddie hit on it last year:

      “Let’s face it. A government doesn’t accidentally spend $15 billion more than its revenue while cutting billions in taxes. The unsustainably high deficit is intentional policy, not happenstance.

      In good times and bad, National’s answer is always to cut taxes:

      Economic good times and record surpluses? ‘Hardworking Kiwis are being overtaxed by that greedy Michael Cullen’

      Recession and record deficits? ‘We need tax cuts to boost the economy’

      It doesn’t seem to make sense that your answer to two diametrically opposite situations would be the same. Unless, of course, your objectives aren’t those stated.”

      Starve the beast

  7. Colonial Viper 7

    Marty, your framing on the front page was succinct, to the point, and punched hard. Perfect, dude.

    Damn, LAB could use more of this approach, much more.

  8. big bruv 8

    Sigh…..The Standard, a truth free zone.

    [lprent: big bruv – a fact free zone. *sigh* But I suppose even the mindless should have their say if it is within the behavior guidelines.. ]

    • Big bruv is up early today and has set out on his morning troll.

      • big bruv 8.1.1

        Morning Micky

        This is not early, I have already done a days work.

        An interesting concept work, you socialists should try it for a living.

    • Marty G 8.2

      so, bug bruv has shown he has no rebuttal. Thanks for conceding the argument, BB.

      I mean, come on dude, with a comment like that you might as well have written: ‘you’re right but I can’t bear to admit it’

      • big bruv 8.2.1

        Marty G

        Labour (and its sycophants) have got nothing right since 1984 apart from the seabed and foreshore legislation.

        See, that is the difference between me and you guys, you blindly support Labour irrespective of the lies, irrespective of the corruption and irrespective of the appalling legislation they have passed or want to pass.

        Partially selling off SOE’s is a great idea, it would not kill you guys to admit it.

        • mickysavage 8.2.1.1

          And you Big Bruv blindly oppose Labour irrespective of National’s lies that you have fallen for and irrespective of the damage that has occurred to this country over the past two years.

          Admit it BB things were way better a few years ago.

          BTW paid your debt yet?

          • big bruv 8.2.1.1.1

            Micky

            “And you Big Bruv blindly oppose Labour”

            Given that you think 9.30am is early I will let that slide, I take it you missed the bit where I said that I supported Labour’s seabed and foreshore legislation.

            As for NZ being better now than it was two years ago, I do agree, while we have a gutless government who refuses to do anything about the parasites on benefits it is at least a government free of rampant corruption.

            • Frank Macskasy 8.2.1.1.1.1

              Big Bruv, let me see if I can connect the dots…

              During a recession and a blow-out in government spending, the government gives a billion-dollars tax cut to the highest income earners in this country.

              To fund this, Key’s government borrows $300 million-plus each week to make up the balance. Essentially funding tax-cuts through borrowing.

              To pay for the interest on the borrowings that funded tax-cuts for the high-income earners, John Key is now stating that his government will partially-privatise our state assets.

              Does that about sum it up?

              • big bruv

                Frank

                So far you are failing miserably to connect the dots, let me help you.

                The tax cuts were long overdue, they offered relief to the vast majority of Kiwis, you also continue to overlook that the vast majority of Kiwis pay 17c in the dollar.

                The real issue you have is the left wing hatred of those who you consider to be “rich pricks”, it is a uniquely Kiwi disease, you would rather see the “rich” hammered than see everybody earn more.

                I happen to agree with you that it is madness to borrow $300 million a week, these borrowings are needed because Key refuses to do away with the 2005 criminal election bribes offered by Clark and Cullen (WFF and Interest free student loans).

                We would be far better off if Key did away with those and kept the tax cuts.

                Tell me Frank, why do you persist with the blatant lie that the tax cuts were only for the rich?

                • Colonial Viper

                  The tax cuts were long overdue,

                  Bull shit. Cullen was saving for a rainy day – which poured down with the GFC – while Bill and John only cared about being spendthrift with our finances for their rich mates.

                  Taxes are to be spent on all the people of the country, not just the wealthiest 1%. Who I am pretty sure laugh at serfs like you leaping to their defence.

                  • big bruv

                    That is bollocks Viper.

                    Cullen was/is an evil little man who refused to give tax cuts on idealogical grounds, there was no other reason.
                    Cullen is also an economic illiterate, why on earth would you pay 1.2 Billion for a broken train set or make thousands of comfortable middle class Kiwis welfare beneficiaries, Cullen and Clark squandered the best economic conditions in living memory.

                    Of course you will also refuse to admit that those economic conditions came about due to the reforms of Richardson and Douglas.

                    About the only thing you did get right was the statement that tax’s are spent on everybody, what you fail to appreciate is that the wealthy already pay far more than their share of tax, in other words they have more money stolen from them than is fair.

                    • orange whip?

                      And they should pay far, far more seeing as how they own almost everything.

                    • Colonial Viper

                      Cullen was/is an evil little man who refused to give tax cuts on idealogical grounds, there was no other reason.

                      Oh apart from saving for a rainy day, and of course John Key’s banking mates made sure it rained real hard.

                    • arants

                      So ideology is evil and not a reason for doing things…? An ideology of preserving public assets for the public good seems a hell of a lot better than relying on expediency, cynicism and corruption for rationale.

              • Sanctuary

                You missed one thing: We have a finance minister who genuinely believes that if he just wishes hard enough, magic will come true.

            • Draco T Bastard 8.2.1.1.1.2

              while we have a gutless government who refuses to do anything about the parasites on benefits it is at least a government free of rampant corruption.

              There aren’t any parasites on benefits but there’s plenty that vote NACT and have multi-million dollar incomes for doing nothing whatsoever.

              This government is the most corrupt I’ve ever seen. The Blinglish housing rort, Worth using his ministerial position to promote his business and whatever else he did to get fired, Wong promoting her business with taxpayer funds, John Key lying about his shares, the firing of ECan because the farmers wanted the water and lots more I can’t remember ATM.

              Denying reality won’t make it go away.

              • big bruv

                “This government is the most corrupt I’ve ever seen”

                Amazing!…Draco admits to spending nine years with his eyes closed.

                • Draco T Bastard

                  Ah, no, fact is that the previous government had little to no corruption in it. This one, well, it appears that every single minister is corrupt.

                  • big bruv

                    Draco

                    Just because you keep telling lies about the Clark government does not make it true.

                    Plenty of commentators have gone on record as saying that the Clark government was the most corrupt in this nations history.

                    That is a statement of fact.

                    • Colonial Viper

                      That is a statement of fact.

                      No, saying that aliens from deep space have been watching human kind for thousands of years is a statement of fact.

                      In comparison, yours is just fan fiction.

                      Yes I know peeps, DNFTT…

                    • A typical post on the Standard goes like this:

                      “[Post content with detailed analysis backed by statistics, implications for New Zealand and suggested proposals for change]

                      Big Bruv

                      The Klark government was the most corrupt in the history of the world

                      Exasperated leftie1

                      No it was not because of

                      a.
                      b.
                      c.
                      d.

                      And how about Key’s behaviour in doing

                      e.
                      f.
                      g.
                      h.

                      Big Bruv

                      It was the most corrupt

                      Exasperated leftie2

                      No it was not. Address the post bb

                      What about StandardAuthor1’s points

                      i.
                      j.
                      k.
                      l.

                      Big Bruv

                      It was the most corrupt

                      Exasperated leftie3

                      No it wasn’t.

                      Big Bruv

                      Yes it was.”

                      I think we should avoid commenting on BB’s comments at least until he pays his debt to Blip.

                    • big bruv

                      Micky is feeling trapped, he knows that he cannot defend the corrupt Clark government so he is trying to shut down debate on the issue.

                      Come on Micky, you know I am right about her rotten government, cleanse yourself mate, wash away the dirt that surrounded her nine disastrous years.

                    • Stop digging BB, stop digging …

                  • jbanks

                    The Man himself, John Key, sums up the incompetency of the previous Govt. quite nicely.

                    The Government’s books had been left in a mess, with Treasury projecting no end to budget deficits and government debt spiraling out of control.

                    Can’t argue with those facts.

    • big bruv 8.3

      Always the truth Iprent, always.

      Give it a crack some time, it is fun 🙂

      • lprent 8.3.1

        Looks more like your unsubstantiated opinions to me. But because they are opinions or the vague even if you’re daft enough to consider them to be ‘facts’ they aren’t something I need to concern myself with when moderating.

  9. Pete 9

    Selling assets to pay for tax cuts for richest 1%

    That’s weird logic – asset sales and borrowing are required to cover those that don’t pay any tax and those who pay little tax and aren’t subsidised enough by those who do pay tax.

    • Blighty 9.1

      If the tax cuts for the richest 1% didn’t exist, there woudl be no need to raise the $10 billion (not that theres’ actually any good reason anyway).

      Simple.

  10. HC 10

    Let us feel compassionate for those poor sods representing the 1 % at the top! They are ruled by thoughts and feelings of greed, materialism, selfishness and the ones of them that work will do so 60 and more hours a week, not knowing what a balanced, private life is. We selfish poor and beneficiaries should feel good by sharing with them and give them a little compensation for all those personality ills they suffer from. I do not mind tightening the belt more down to the bones under my skin. Jonkey and Blinglish are such great thinkers of economic reason, they will go into the history books for selling the last bits of table silver that NZ’ers have. In Hades they will keep themselves warm around the fire together with Roger Dodger Douglas, Ruth the Euthanasian, Jenny Shapely and all the leaders of the Business Roundtable. Do not forget Fay and Richwhite, Brierley and others that so compassionately lightened us off the burdon of too much money to carry as a nation. They will all end up in the nice, warm and “cosy” Netherworld while we are freezing in the cold, because we will be without homes, clothes and food – due to having to pay the debts left behind. Amen!

    • Colonial Viper 10.1

      Yeah with you on your sentiments.

      Its like the frakkin muscle for the gangs or the yakuza. They get treated like dirt and most of them get extincted on the way while still grovelling on their knees.

      But they think if they can last long enough and do enough wet work for the bosses, that they too will one day get a shot to sit at the top table.

  11. PC Brigadier 11

    Good write up. AM I THE ONLY ONE WHO IS GETTING REALLY, REALLY ANGRY?

    • Colonial Viper 11.1

      Nah dude, its definitely time to man the barricades.

      • patriot_nz 11.1.1

        I am absolutely furious. This is f***ing treason. John Key and every other politician of the past three decades who sold off New Zealand should get the Mussolini treatment. We need action. Once our hydro electricity is sold off we are finished- this plus the farmland sales makes these the final days for New Zealand.

        A note to Labour- I know we are only months out from an election, but get rid of Goff NOW. You cannot win with him there. As well as being pathetic and spineless, Goff is forever associated with the Labour government who started the sell off. You don’t have the option of cynically waiting for the next electoral cycle to do a painless transfer of power- it will be too late-we are out of time and Key’s government cannot be returned to power. Roll Goff now- put Cunliffe in. If you genuinely care that is, though to be honest you seem to me just to be National in red clothing.

        I am ready to march.

        • jbanks 11.1.1.1

          Goff will not leave . Labour will lose. National will have some real fun next term.

          Bendover redrover.

          [lprent: I have no idea what the hell you mean, but from the context it looks like pointless gratuitous abuse and I see that you’ve done it on the previous comment as well. To discourage this rather disgusting habit from becoming part of your normal behavior here go away for a week to consider why I don’t want it here.. ]

      • Kevin Welsh 11.1.2

        Prepare the lamposts, I say.

      • mickysavage 11.1.3

        its definitely time to man the barricades

        Absolutely CV, see you there

  12. Treetop 12

    15 billion forecast in the deficit will be the the highest deficit on record by any government.

    Winston reminded me yesterday how anything over 25 % sold in shares could go belly up. Money mover Key is gambling with retaining 51 %. I have a suggestion retain 100 % of state owned assests because then they will belong to EVERYONE equally.

    • Lanthanide 12.1

      Winston was talking about BNZ being controlled by a 30% shareholder. That’s only because the remaining 70% of the shares were diluted amongst many investors.

      In Key’s proposal, 51% will be owned by the crown, so this technically can’t happen. Of course the crown could choose to side with the other 49% of the shareholders, against the taxpayers of NZ. While they can make those same sorts of decisions right now, there would be considerably more pressure for them to bow to the minorities demands – and they probably won’t even appear as ‘demands’, but as repeated publications in the media saying the government should do x or y, or that z is bad (even if it’s completely unreleted to power companies), so as to build public support for whatever it is they’re proposing, even if it’s against the publics best interest. See climate change + oil companies, and US republicans for examples.

      • Treetop 12.1.1

        Didn’t Auckland airport get carved up? What was the margin? Fine to correct me as I am weak on financial matters other than my own.

  13. tsmithfield 13

    Marty “But I got wondering, how does that one-off $10 billion compare to the cost of the tax cuts that National has given the wealthiest 1% of Kiwis, which they will continue to get year after year? Answer: not well.”

    Another fallacious argument from you Marty.

    Firstly, any reduction in tax rates for the wealthy is largely offset by the increase in GST. (Yeah, I know that the poor pay a greater percentage of their income in GST, but not more in nominal terms than the rich). This is because the wealthy tend to have spend a helluva a lot more to fund their lifestyles. Thus, in nominal terms they pay a lot more in GST.

    Secondly, the wealthy are more likely to have been hit by the removal of tax write-offs on property investment.

    Before you can make any claim that the wealthy are better off in overall tax terms, you need to demonstrate that their gain on reduced tax-rates hasn’t been offset by increases in other areas, as I have pointed out above.

    Thirdly, your claim that the income from sale of shares in SOE’s is for tax cuts for the rich is entirely arbitrary. It is equally valid to say the income generated is to pay for other assets.

    In short, there is not a shred of validity in your argument.

    • Blighty 13.1

      “Firstly, any reduction in tax rates for the wealthy is largely offset by the increase in GST”

      Not at the top end. 2.5% increase in GST is like a 2% income tax increase. Above $70,000 you’re paying 6% less tax than when National came to power. And at the top end, you are likely to be saving a large portion of your income and so not paying GST on it. Remember, the 2009 and 2010 tax cuts weren’t fiscally neutral – the 2009 ones cost $1 billion a year with no offsettin tax rise and the 2010 ones raise $400 million less this year than they cost

      “the wealthy are more likely to have been hit by the removal of tax write-offs on property investment”

      very few of the very wealthy are in property investment. It’ a get-rich quick scheme for the aging middle class, not people with real money.

      “your claim that the income from sale of shares in SOE’s is for tax cuts for the rich is entirely arbitrary. It is equally valid to say the income generated is to pay for other assets.”

      and, yet, if those tax cuts for just 1% of the population hadn’t happened, the government would be in the same financial position as selling the assets (and that’s not even counting the lost dividends). You can’t deny there’s a trade-off at work here. Without those tax cuts, the asset sales wouldn’t be needed (indeed, they’re not needed anyway and won’t generate any net income anyway).

    • orange whip? 13.2

      This is because the wealthy tend to have spend a helluva a lot more to fund their lifestyles. Thus, in nominal terms they pay a lot more in GST.

      No, the poor HAVE to spend all of their income week to week just to survive.

      Over and above this, the rich can CHOOSE to spend as much or as little of their income – and therefore pay as much or as little GST – as they like.

      Big difference and not one that I’m certain you have the capacity to appreciate.

  14. Graham 14

    Tax the wealthiest 1% at 66%. Think of it as a “greed tax”. Most kiwis would be happy about this I’m sure. There will be a few tears “But it’s my right to exploit people and the environment to fulfill my cash and power addiction”! But the world can no longer sustain that kind of carry on.

    • Colonial Viper 14.1

      Not bad, but we have to tax land and assets – a lot of the wealthiest people in NZ have very little taxable income, but lots and lots of assets.

    • Rosy 14.2

      Is far as I can tell the richest one percent don’t pay any tax at all. If they do they either have ethics or bad accountants. So this whole argument is theoretical only. They probably don’t pay a helluva lot of GST either (buying overseas is so much more envy-enducing among the rich – and buying NZ-made so crass, unless it’s from the duty-free stores). It’s the ones that aspire to be in the top one percent that may pay the most tax. I can’t work out why they are getting so angry about the top tax rate seeing as if they get there they won’t pay it.

  15. Krispy 15

    The sale of a minority stake in SOE’s is a brilliant idea. The money raised from the sales will not be going to tax cuts as stated in the article, but instead will be used to invest in other assets and diversify our national interest in many assets. As long as the government maintains a 51% stake there is nothing to worry about. Private companies run much more efficiently than state owned companies do so it will be hugely beneficial.

    • Kevin Welsh 15.1

      Yeah, I’ve been really impressed how efficiently Telcom and TranzRail have been and were run under private ownership. All that investment Telecom did with fibre is saving us a bundle now.

    • Lazy Susan 15.2

      Hang on a minute – now the money raised from the sales is going into other assets? But didn’t Key say it was to pay down debt. Oh that’s right he said it was to do both – reduce debt and increase the net public asset base. Gee I wish I could do that at home!

    • Draco T Bastard 15.3

      More pure ideology from a RWNJ.

      Go check out history and you’ll find that private institutions run worse than government departments. AirNZ crashed when privately owned but came back to make a profit once it was government owned. Prior to Telecoms sale all of it’s profit (yes, it was making a profit throughout the 1980s) went into the network which is why you now have digital exchanges. After the sale that dropped to ~15% and the network degraded to the point that now we, as taxpayers, are having to put in another couple of billion dollars to get the network that we’ve already paid for.

      Reality – it has a radical left bias and fully contradicts anything the neo-liberals say.

  16. 26 January 2010

    ‘Open Letter’/ Official Information Act to Prime Minister John Key:

    “To whom exactly has NZ become indebted?”t

    Dear Prime Minister,

    You were quoted as saying, on 25 January 2011:

    “Our high level of foreign debt is New Zealand’s biggest vulnerability.”

    http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10701948
    Can you please uphold the principles of ‘open, transparent and democratically accountable’ government, and provide the following information:

    1) On a ‘line-by-line’ accounting basis, provide the detailed information which shows EXACTLY to whom New Zealand has become indebted, since the National /ACT Government came to power in November 2008.

    2) In particular, the information which confirms since the National /ACT Government came to power in November 2008, whether or not New Zealand has become indebted to the Bank of America, any subsidiaries of the Bank of America, or any lending institutions of any form, which have any connections to the Bank of America.

    Yours sincerely,

    Penny Bright
    Media Spokesperson
    Water Pressure Group
    Judicially recognised Public Watchdog on Metrowater, water and Auckland regional governance matters.
    “Anti-corruption campaigner”

    Attendee: Australian Public Sector Anti-Corruption Conference 2009. Attendee: Transparency International 14th Independent Anti-Corruption Conference 2010

    Auckland Mayoral candidate 2010.
    Independent candidate Botany by-election 2011.

    http://waterpressure.wordpress.com
    ________________________________________________________________________

    http://www.parliament.nz/en-NZ/MPP/MPs/FinInterests/8/c/3/00CLOOCMPPFinInterests20101-Register-of-Pecuniary-Interests-of-Members.htm

    The reason why I have asked about the role of the bank of America is because John Key has listed in the above-mentioned ‘Register of Pecuniary Interests of Members of Parliament’ (pg 36) – an interest (such as shares and bonds) in the Bank of America.

    Is John Key personally profiting from NZ’s growing indebtedness?

    I’m not saying that he is – because I don’t know if this is the case.
    But, I’ve asked him the question.

    I think a lot of people will be interested in the reply to this OIA.

    Penny Bright

    • KJT 16.1

      He has already. When he was in Merril Lynch. Shorting our dollar. The moral equivalent on a larger scale of taking an old Ladies life savings.

      Now they are having another go with whats left.

      • Colonial Viper 16.1.1

        Although, there are some benefits to having our artificially strong and artificially highly traded currency fall in value. See the US, Chinese and Icelandic examples.

      • BHAT 16.1.2

        Can you please explain how shorting kiwi, is theft.????

        • Colonial Viper 16.1.2.1

          Easy: forcing a fall in the NZ dollar means that a NZ’ers assets are worth less in terms of equivalent international goods or US dollars.

          Really only matters for people wanting to take an overseas holiday or wanting to buy an expensive overseas item – a new Beemer or Merc for instance.

          • mcflock 16.1.2.1.1

            Agreed CV – essentially it’s the equivalent of a middle-man skimming off the top.

            Regular speculation is bad enough, essentially skimming money off profits for added value into the market (i.e. newly produced goods and services are sold to exporters who sell to [SKIM POINT] importers who sell wanted goods and services to that other marketplace), but short-sellers exacerbate losses while producing nothing. Like if you mortgage your house and go belly-up (your risk, fair call), but your local dept-collector takes your car as well as your house. And the bank only gets the house.

            And, a necessary component of theft, we have no control over whether currency speculators can fuck up our domestic markets. They take their cut (usually risking other people’s money to do so), whether we want our profits or not.

            • Colonial Viper 16.1.2.1.1.1

              Like if you mortgage your house and go belly-up (your risk, fair call), but your local dept-collector takes your car as well as your house. And the bank only gets the house.

              Or in the case of transferable credit default swaps, where its like your neighbour takes out insurance against you not being able to make your regular mortgage payments and losing your house.

              Except your neighbour also happens to be your boss’ wife, you get your ass fired by him, and she collects big on the insurance policy when you lose the house.

              Money made on the back of real workers getting destroyed.

              And John Boy wants to make NZ a global centre of this shite.

              (I should say that another consequence of our dollar being forced to fall, is that as a country we will find it harder to pay off our USD denominated foreign debts)

    • Descendant Of Smith 16.2

      I came across this once and always though this was interesting as New Zealand specifically gets a mention as a borrower under some obscure war legislation.

      9 billion dollars

  17. ianmac 17

    Damn read this just now but not sure where:
    Our Crown debt is, by global standards, still low. Lumping these two types of debts together, as the Prime Minster is doing to attempt to justify this policy, is at best mischievous and at worst dishonest.”
    Yes Key said that several times this morning and then he puts us in line with Ireland, Spain, Portugal and Greece. Wonder how we challenge him on this?

  18. Fisiani 18

    [deleted]

    [lprent: And that is trolling – it is exactly the same comment as you put here and I’d already requested substantiation on. Go away for a month for being stupid enough to copy and paste unsubstantiated assertions. ]

  19. randal 19

    ya should have heard the vultures on nat rad yesterday morning.
    (they {vultures} have bald heads so they can eat the guts of carrion)
    drooling at the thought of all that free money from their pal the PM.
    never mind.
    with the rate of regime change accelerating all over the globe the nats wont be round long enough to get in a bit of looting of the state treasury before they get the boot.

  20. bobo 20

    the rich guy and falling money pic 🙂 priceless, in regards to Key selling kiwi assets is like a slippery snake swallowing it’s tail..

  21. burt 21

    It’s such a shame that Labour left the cupboard bare with the economy in recession after 9 years of middle income tax pillage.

    Oh well, it’s what NZ Labour parties do… spend like a drunken sailor to try and stay popular while growth stagnates and we slide into recession.

    Will Labour be honest this time and promise a few terms of fiscal drag leading to recession if they get reelected or will they promise to “fix” things then revert to normal behaviour once they have the treasury benches and baubles ?

    • Colonial Viper 21.1

      It’s such a shame that Labour left the cupboard bare with the economy in recession after 9 years of middle income tax pillage.

      Meh. Labour ran 9 years of surpluses and repaid a large amount of foreign debt. In fact, NZ had no net debt by the time Labour left office.

      Bill and John – on the way to 3 deficit strikes out.

      • burt 21.1.1

        Is this the same CV who has repeatedly detailed his own tax prescription which is very different from the one that labour used to stagnate the economy ?

      • burt 21.1.2

        Under 9 years of fiscal drag the govt got rich and the people got poor. Guess that is how socialists like it eh.

        • mickysavage 21.1.2.1

          When will you realise Burt that the Government is the people? And the big bad organisations intent on taking your money are the multinationals like Telecom (sort of multinational), McDonalds, IBM, Rio Tinto and a multitude of others.

          And when we pay money to the government it is like we are getting a benefit as shareholders, but if we pay money to the others we are seeing jack siht?

          Do you see this?

          Why do rwnjs think that the state is a foreign entity?

          • Pete 21.1.2.1.1

            Jobs are jack shit? What sort of jobs is Labour thinking of creating? More non-productive?

            • Colonial Viper 21.1.2.1.1.1

              Hey Pete you noticed that NAT don’t care in the least about crisis levels of youth unemployment?

              And what do you mean by ‘more non-productive’?

              LAB has got a raft of policies and policy ideas about growing the real productive economy and the tradeables sector.

              What do you have? Pimples?

              • Pete

                Do you mean Labour plan on trying to encourage employers to create more jobs?

                The Nats are trying things with youth employment, new initiatives kick in this year, too soon to tell whether they will work. Labour had different ideas, mixed results. My wife works in that field so I do know a bit about it.

            • Armchair Critic 21.1.2.1.1.2

              How will privatising these four SOEs create an increased number of productive jobs?

              • Pete

                From what I’ve seen that’s not the main aim, but one possibility being suggested is it will make it easier for the SOEs to raise capital for expansion and projects, and that would create jobs.

                • Armchair Critic

                  Because private businesses can raise capital more cheaply than the government? No?
                  The electricity generators try to match generation capacity to demand. The privatisation won’t change demand, so I doubt it will affect expansion and projects, either in scope or timing.
                  In short – these sales won’t create any productive jobs.

                • But the SOEs have a really easy way to raise capital. Have a good business case and then persuade the Government to borrow it. After all the Government has relatively low debt (thanks Michael Cullen) and can borrow oodles and oodles of money because it is a sovereign state but if the politicians think that the state should do nothing at all and instead the rules should be changed so that their rich mates can skim the rest of us then I guess the state will not borrow the money.

                  It is a pity really. Because if the state stayed involved we would retain control of the electricity generation system AND get all of the profits. I am happy to pay more tax so that this happens.

                  EDIT – I agree with Armchair

                  • Colonial Viper

                    Because private businesses can raise capital more cheaply than the government? No?

                    Yeah Pete is really struggling here with why we should sell off strategic energy assets during peaking oil production.

  22. Uncle Helen 22

    The top 10% of earners bare a disproportionate 78% of the total income tax burden.

    That’s 68% more than our “fair share.”

    Want as many votes as I have? Pay as much tax as I do.

    Next.

    • Colonial Viper 22.1

      Uncle Helen making the case for plutocracy! A country ruled by the rich for the rich.

      Frak off. Your definition of fair seems to be – a rich person with a new Porsche should pay exactly the same amount of tax as someone in poverty who cannot afford the power bills.

      Someone hand me a Tui.

      80% of NZ’ers earn less than $60K p.a. We are a poor country, and we pay almost all our people poorly, except for the few sucking down the vintage Bolly at the top end.

      Our ‘leaders’ should be doing double time to push the pay rates of ordinary workers up the scale.

      In contrast the top 5 % of earners ($90K p.a. and over) need to pay ***more*** in tax, and currently untaxed land and capital needs to be caught by a CGT and an estate tax.

    • joe90 22.2

      Want as many votes as I have? Pay as much tax as I do

      …and you sling it over your shoulder and burp it….

    • orange whip? 22.3

      The top 10% of earners bare a disproportionate 78% of the total income tax burden.

      Um, that’d be because the top 10% have all the money, genius.

      Better trolls please.

      • Colonial Viper 22.3.1

        How’d all you guys rebuke so succinctly??? I had to write an essay 😯

        • orange whip? 22.3.1.1

          Haha, without your essay we wouldn’t have been able to 😉
          But also, he’s not worth it is he?

    • mcflock 22.4

      Hey Uncle, your figures seem to be wrong.

      I looked at IRD income distribution tables.

      The 2009 sheet seems to say that the top 10.16% of individuals earned 1/3 of all the taxable income and paid 44.5% (not 78%) of the tax. They earned $69,001 and up.

      The BOTTOM 10.14% earned 0.242% of all the taxable income and paid 0.119% of the tax. They earned $3,000 or under.

      So, source please.

      • Colonial Viper 22.4.1

        Source? Probably out of his nether regions. Thanks for the fact check.

      • arants 22.4.2

        These are TAXABLE income distribution tables. Not wealth and not gross income. The point is that there is no tax on wealth and that many of the most wealthy have no TAXABLE income. Even in terms of the income tables, I would wager that the highest GROSS income earners (eg law & accounting partners) are typically in the BOTTOM 10% of TAXABLE income earners and that many of the most successful self-employed have no TAXABLE income at all. When they do, it can be so low that they get WFF and their children qualify for student allowances.

        • McFlock 22.4.2.1

          yep, that’s true enough as well.

          Bit of a conceptual leap for UH, though. Baby steps…

    • I would like to say a couple of things to Uncle Helen.

      Firstly great choice of name. I felt like calling you a misogynist fucktard but I thought better of it and thought I should address your comments instead.

      Secondly you bare when you take your clothes off. You bear when you support. Your suggestion is that the wealthy get naked when they writhe in huge piles of money, I am not sure but you might be right.

      Thirdly you have got your maths wrong. See above.

      Fourthly we have a problem. Over the past couple of decades the wealthy have done really well but society has been going backwards. Society survives better when we share it round.

      Fifthly I bet I pay as much tax as you. Unlike you I would prefer to live in a community where I can go into the village and everyone is doing OK. I prefer this to buying the second BMW with a v8 motor. Some things are more important than other things.

    • KJT 22.6

      I suspect I pay a lot more than you do if you are really one of the top 5% of the wealthiest people. Most of them structure their affairs so as to pay minimal tax as possible. From the tax working groups conclusions it is the bottom 10% of the top 15% who pay the most taxes. The really high earners can and do structure their affairs to pay little tax. Half the wealthiest people in NZ pay little tax. (Tax working group). As they benefit the most from tax payer supplied infrastructure they should be paying for it.
      It is people like Teachers, Small business owners, Doctors and highly skilled workers who pay most of the tax. Not the rich.

  23. Draco T Bastard 23

    Foreigners will buy asset shares – Treasury

    Foreign corporates could end up with big stakes in state-owned power companies within a decade of them being partially-sold, according to a Treasury assessment.

    Wonder if Jonkey is going to continue to say that “ma & pa” investors will buy them?

    EDIT:

    It effectively urges the Government to sell out of all its commercial interests, saying there is no compelling reason for it to stay involved.

    ”We think full private ownership for all companies over the medium term would be likely to result in moderate economic benefits compared with alternative institutional arrangements … We do not find any of the arguments for continued Crown ownership particularly convincing …”

    PS, Somebody fire everyone at Treasury who are obviously no longer working in the best interests of the country.

    • Colonial Viper 23.1

      Maybe the Crown should divest itself from NZ. That would likely lower taxes a whole lot. Exactly as you do in a computer game, where you sell every building in your home base off and end up with a stack of folding stuff. But nothing else to do anything with.

      It effectively urges the Government to sell out of all its commercial interests, saying there is no compelling reason for it to stay involved.

      And hey what about that commercial analysis unit that the Government seems to use all the time…what’s it called again? Treasury, was it?

      Sell those frakkers off for a start*. They’re worse than worthless to us as a country.

      *Except no decent investment bank with a real analysis unit would touch it.

  24. Nick C 24

    Not directly related to the post but on the topic of asset sales: Did anyone else spot Dr Norman’s glaring error in this press release?

    http://www.greens.org.nz/press-releases/asset-sales-pay-tax-cuts

    • Colonial Viper 24.1

      Possibly I’m going blind
      – Consumers already face monopoly power generators – no change there?
      – The assets are only being part privatised so the Govt will still receive some dividend?
      – John Key doesn’t drive a Porsche?

      Hmmmm not sure Nick, must be late.

      • Nick C 24.1.1

        “Monopoly power generators”. If it were a monopoly there would only be one!

      • McFlock 24.1.2

        [attempts to channel RW PoV – eeeuuuw]

        I’m not going to number check each stat norman pulled up, but NickC might be referring to the line “Once the assets are privatised, government will no longer receive the dividends from the assets, and so the government’s fiscal position will be worse. ”

        You see, CV, what the average tory doesn’t get is that in order to sell something in a completely fungible environment (speculators don’t care what company a stock is in, they just want the share price to change), the buyer usually wants to pay less than the revenue that item will generate. This effect is moderated to a certain extent by the fact that the conventional trader will try to sell to someone who overestimates the true worth of the stock, but in a market with perfect knowledge the government would not sell the SOE stock because long term dividends, each and every time, would outnumber the short term “cash in hand” payoff that will burn a hole in Shonkey’s pocket.

        [edit: damn – it was “monopoly power generators”. ]

  25. Deadly_NZ 25

    And when even treasury are saying that the mom n Pop ain’t going to own the shares in about 10 years. But foreigners will . Now Smile and Wave that one away. But in the end they still say sell. Bloody Vultures.

    http://www.stuff.co.nz/business/money/4594268/Foreigners-will-buy-asset-shares-Treasury

  26. burt 26

    Did anyone follow Marty G’s link to IRD ?

    If you did you may have noticed in the notes;

    6. Income tax for individuals is calculated based on their taxable income. The table shows income tax before any allowances for tax credits such as imputation credits or Working for Families Tax Credits. The low income and tax credit and tax credit on the IR3 and personal tax summary have been applied, but the calculation does not include the donations, housekeeper or redundancy tax credits. For non-filers, income tax is calculated as if they had filed an annual return.

    I wonder if Marty G saw it ?

    • lprent 26.1

      Burt, you know how I’d hate to even suggest that you’re sometimes a bit of an idiot.

      But I can’t see the relevance of your carefully highlighted quote to Martys post about the reduced taxes on the wealthy (an asset sakes). After all the wealthy shouldn’t be getting WFF and imputation credits (presumably latgely from the banks) shouldn’t make that much impact. I also wouldn’t expect the wealthy to get much in the way of tax credits on income tax (they tend to get those through boondoggles on company tax regimes instead).

      Now you really should make whatever point you are trying to get across clearly. It makes it easier on we mere mortals, enhances the discussion, and we might actually get some value from your contributions (instead of thinking that you’re a bit of an idiot still locked into the last election)

      • burt 26.1.1

        The point is pretty simple lprent, I’m surprised that you don’t get it. Marty G has posted a link to graphs that he uses to illustrate his “i can make up shit” point that the top 1% of tax payers are getting all the benefits using a graph (and data) that takes no account of tax credits, WFF etc.

        See the spike in the graph that meets his ideology of lots of tax being paid by lower earners would look very different if such things were accounted for. You do know that there are people on lower incomes paying no tax at all once WFF is taken into account don’t you?

        You once commented on the location I was posting from lprent so I think you know I know a bit more about this shit than the picture you like to paint with your “Burt, you know how I’d hate to even suggest that you’re sometimes a bit of an idiot” distraction.

        • Marty G 26.1.1.1

          The IRD stats show the taxable income of people by income band. From that I calculate that the top 1% are getting $586 million a year as a result of the National government’s income tax cuts in 2009 and 2010.

          WWF has nothing to do with it because it is not part of that tax package. this is about the cost of cutting taxes for the very wealthiest New Zealanders.

          I hope I’ve explained that simply enough for you.

        • Marty G 26.1.1.2

          maybe I should have linked to the excel table for you instead rather than the page with the link on it. I thought it was obvious since I’m only using the numbers to calculate the tax cuts for the top 1%. But never too obvious for burty boy.

          • burt 26.1.1.2.1

            maybe I should have linked to the excel table for you instead rather than the page with the link on it.

            No, I found that pretty quickly. Perhaps you should have either read the notes on what the data actually was or if you did read it perhaps you should have not ignored it.

            The only thing you have proven is how inefficient churn is when the IRD can’t readily provide actual stats on tax paid by income band rather than just tax assessed before rebates, credits and other social policy handouts.

            • Marty G 26.1.1.2.1.1

              this post has nothing to do with WFF. the stats only serve to give us the taxable income of the top 1%. if you refuse to engage with the issue, i’ll move your comments to open mike and you can whine about the difference between net and gross tax for low income earners there to your heart’s content.

              • burt

                Marty G

                Move my comments if you can’t stand the heat. This post is about tax cuts and who they go to… sure I agree with that. But you have only looked at half the picture and it would be a lot easier if you acknowledge that rather than try and hide your failing because of blind ideology by removing my comments. Over to you – stand and debate or use your blog author position to pretend you didn’t make a fundamental blunder trying to spin shit to match your socialist failure world view.

        • burt 26.1.1.3

          Marty G

          From that you can calculate what gross tax is “assessed” based on income but you cannot calculate what net tax is “paid” because you are missing all the tax credits, WFF etc. Fail.

          • Marty G 26.1.1.3.1

            1) People on the top 1% of incomes don’t get WFF or other income tax credits. It’s mathematically impossible, they’ve all abated to zero well below $165,000.

            2) WFF does not effect the size of the tax cut that anyone got, especially not the top 1%, which this post is about.

          • burt 26.1.1.3.2

            Marty G

            It might be easier in the long run if you just admit you didn’t think enough about it before making this post. Here is a clue for you. What is the cost per year of WFF vs what was the cost per year of the tax cuts National have delivered over and above the cost of the tax cuts that Labour implemented in 2008 just before the election?

            • Marty G 26.1.1.3.2.1

              it’s irrelevant. if national hadn’t cut tax for the top 1% the crown would be $10.6billion better off in present value terms, negating any argument for asset sales.

              • Marty G

                you can similarly argue that the crown would be 10.6 billion better of in present value terms if it cut $586 million a year from health or education or wff. that’s your prerogative but you’re only serving to further undermine the privatisation argument.

              • burt

                So there were no adjustments to the WFF threshold then ? No other adjustments to other rebates etc ? ummm – FAIL.

                • Marty G

                  none that affected the top 1% of income earners

                  • burt

                    Marty G

                    How stupid are you. The data provides you with the ability to determine what income bands got what value of tax cut but with no data provided for actual tax paid after the tax changes it is impossible for you to work out what the actual effect was by income band. Just keep using half the picture and slagging me off if you like, it’s your blog.

        • lprent 26.1.1.4

          It was a description of what you looked like putting a comment up without an actual argument in it. I’m sure that you were aware in your own mind what you were talking about – but it wasn’t apparent to anyone else.

          So I put a spike into you to encourage you to say what you mean. I see that the treatment is at least partially successful. But it appears that you’re still not making any particular sense apart from saying that the information required is not publicly available. However all the authors can do here is to work on the information that is available. Perhaps you should ream the treasury and IRD for not providing more?

  27. Jenny 27

    John Key has assured New Zealanders that the government will legislate against any foreign investor owning more than 50% of any privatised public asset.

    But the continuing secret negotiations around the proposed Trans Pacific Partnership agreement is likely to give foreign investors the right to sue future New Zealand government’s if they try to limit foreign investment.

    Trying to get to the bottom of this contradiction, Brian Fallow the Herald’s economics editor, on the fact that the secretive TPP agreement is likely to have an “investor-state” dispute mechanism, which allows foreign investors to sue a country if they try and regulate foreign investment.

    http://www.nzherald.co.nz/brian-fallow-on-the-economy/news/article.cfm?c_id=1502863&objectid=10688274

    Companies investing in the other country can sue its government in an international tribunal for alleged breaches of the FTA, usually arising from some attempt by the government to regulate some part of its own economy.

    These “investor-state” cases are litigated in international arbitration bodies of the World Bank or United Nations.

    Public Citizen, the advocacy body Wallach and Tucker work for, has monitored 66 such cases brought under Nafta. Of the 25 resolved, the governments won in 14 cases and the investors in nine, requiring the governments concerned to pay more that US$300 million in compensation.

    The chilling effect of giving multinational corporations the right to stand in the shoes of a sovereign state in this way can only be guessed at.

    Australia is the exception; three of the other TPP countries have agreements with the US that include such a provision.

    Asked this week about the possibility the TPP would also include it, Prime Minister John Key dismissed the idea as “far-fetched”.

    But his reaction sounded more like “I have only just encountered this idea, but I wouldn’t have thought so” than “I have looked into this and I can assure you it won’t happen”.

    Reassured?

    John Key replied to a journalist who asked him if an “investor-state” dispute mechanism was being discussed in the secret TPP negotiations.

    Key: “Not as far as I’m aware.”

    Journalist: “And it’s being ruled out in that sense? The Australians apparently have ruled it out.”

    Key: “I imagine we would too and I think it’s pretty farfetched.”

    Despite questioning in the house by the Greens leader Russel Norman, the Government has refused to comment further.

    Dr Russel Norman: Will the Prime Minister rule out signing the Trans-Pacific Partnership if the agreement includes investor-State disputes mechanisms that allow investors to sue Governments—yes or no?

    Hon TIM GROSER: ….The Prime Minister has made the Government’s position quite clear. This is a far-fetched, hypothetical hunt, and I will not go beyond the statements the Prime Minister has issued.

    Can we have any faith in John Key’s assurance that the government will keep a controlling share in our state assets, when his government refuses to say whether or not they will give foreign investors the right to over rule any such limitations on foreign investment?

    Brian Fallow asked us. “Reassured?”

    I don’t think so.

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