Cracker by Damian Christie

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Cracker: Another Capital Idea...

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  • Rik, in reply to Jeremy Eade,

    ...and one more thing! :)

    I think the real reason I come to PAS is to enter into debate on such matters arising. I am hugely disappointed when the debate is reduced to sniping between those with opposing views (and yes, I get sucked into this as well).

    I am no expert and I do not have a solution (indeed, there is no one solution, just preferred options held by different factions) however I would like to learn from hearing from others who may think differently to me. Let's use the example that I have used earlier - a teacher and the CEO of Telecom. I see two individuals - the teacher paying something like (and I am rushing out the door to chop some wood so don't have time to do accurate sums) $10k in tax annually and the CEO of Telecom paying something like $561k of tax annually. In my opinion the CEO of Telecom needs a pat on the head for his large contribution and the teacher has paid an absolutely fair and reasonable amount of their income. Others seem to think that the CEO of Telecom should pay far more tax - simply because "he can afford it". Like he has no say in how the money he earns should be apportioned.

    There's only so many people in NZ earning the sort of money the CEO of Telecom earns. No matter how much we tax people like this we are not going to solve the problem of how to fund the country. The IRD can take $10 off 100,000 people and make $1bn, far more than they will make taking a slightly bigger hit out of the handfuls of people that make $300k+ per year.

    The discussion I wanted to have a few months back related to what the definition of "rich" or "earning shit loads" was. I know plenty of people who earn +/- $100k and they are by no means rich or earning shit loads. With a mortgage and a couple of kids you need to be pretty good at budgeting to make ends meet. So how do families on less than that get by? I have no idea - it must be really tough.

    I have to run so i will stop rambling on - I'm hoping to not be seen as the enemy, I'm genuinely interested in discussion. But feel free to throw stones if you must.

    Since Jun 2007 • 130 posts Report Reply

  • giovanni tiso, in reply to BenWilson,

    I'm not convinced investment bankers aren't worth the money they earn.

    They could work for free and still owe us money.

    Wellington • Since Jun 2007 • 7473 posts Report Reply

  • giovanni tiso, in reply to Rik,

    I know plenty of people who earn +/- $100k and they are by no means rich or earning shit loads. With a mortgage and a couple of kids you need to be pretty good at budgeting to make ends meet

    These people can't be living in the same country in which I live. Either that, or feel free to send them to me for budgeting advice.

    I'd start with cutting down on the Beluga. I know, it's rough.

    Wellington • Since Jun 2007 • 7473 posts Report Reply

  • Jeremy Eade,

    I'm not throwing stones bro, I'm amazed and confused at the thinness of right wing economic theory.

    Super Special Needs Scotsman Paul Reynolds gets to live fiscal life like a king.Taxing him more aggressively will not change his lifestyle one bit unless he is basically financially illiterate.The tax take of an individual is not the focus, the take home pay is the focus. That's where you do your living.


    Saint Paul and his family are worried about losing some disposables and according to you we may lose him to country X . So he is taking home $5000 a week and I reduce that to $4000.00 a week, (actually he's taking much more than that home a week hence the need to get real.) Rationally he is still uber wealthy. His financial dominace over a teacher is still stunning. This is because the maximum wage has been blown out through severe political lobbying ; by those with the money to have a lobbyist

    .Rationally it makes sense. I think you have more of an emotional attachment to your theories (?) I think you know this as you don't have a supported view. Do you have a problem with poor people getting money, I don't know. A vulgar charge. I am out of answers.

    I like these threads because there is a drive for facts, answers and strategys. You like them too. So by our own combined logic of thread preference the views of these citizens should be taken with the maturity in which they are offered. As you say , the p.a threads are massively supportive of higher taxes for those blown out salaries. So WHY ?

    auckland • Since Mar 2008 • 1112 posts Report Reply

  • Jeremy Eade,

    also Rik,

    I can't help thinking if we met we probably would have comment agreements on most things that bring value to our lives.

    It's just these economics are doing my head in.:)

    auckland • Since Mar 2008 • 1112 posts Report Reply

  • Sacha, in reply to Rik,

    There was a very similar discussion to this one about 3 months back on PAS where there was debate on the fairness of a small percentage of the population contributing a high percentage of income tax revenue – once again I was derided for having an opposing viewpoint

    Sure you weren't derided because it's not true? Previous discussions hereabouts have established to most people's satisfaction that those who pay the greater share of tax also happen to have the greater share of both income and assets.

    I'm genuinely interested in discussion

    Good. However, if you value ideology over evidence, expect a hard time.

    Ak • Since May 2008 • 19745 posts Report Reply

  • Sacha, in reply to BenWilson,

    Teachers do important work too, but they aren't holding anywhere near as much responsibility or liability.

    Only if you conflate value with money.

    Ak • Since May 2008 • 19745 posts Report Reply

  • Jeremy Eade,

    Teachers do important work too, but they aren't holding anywhere near as much responsibility or liability

    Just huge influences over your childs development, nothing special.

    auckland • Since Mar 2008 • 1112 posts Report Reply

  • BenWilson, in reply to Jeremy Eade,

    Only if you conflate value with money.

    If you think money doesn't have value, why worry about it?

    Essentially the problem is that the direct value of people like investment bankers is easily calculated, indeed they structure their lives to make it so. They sell their service to some organization as "You will make x profit if you do y to your organization, if you use us". This makes it very easy for the organization to figure what slice of that profit the banker deserves, typically an auctioning process takes place there. And most often, the organization wants to take the biggest profit they believe is possible, so of course there is a ton of money in that kind of work.

    The influence of teachers is much harder to quantify. In fact, quantification of it is almost anathema to the process itself. But it's not often a teacher is in a position that their influence directly made someone millions of dollars. So there just aren't millions of dollars to give them. That is why I say that I find it hard to imagine a situation where the two professions could ever be in the same league pay-wise.

    If you are talking about their value to society then it's a much trickier call. A capitalist system could probably exist perfectly well without any investment bankers, just as it could also do without lawyers. But they would have to be legislated against, because, as I argue above, what they do sells itself for big bucks. People want lawyers because they know what they're doing and the person's very life could depend on it. People want investment bankers because good advice about organizational manipulation from people who have done it before is worth a fortune.

    If the system is not capitalist, there could be no such people, but the basic function they serve would still fall on someone, it would wield enormous influence and thus power, way more than most teachers. Merging or changing bureaus in a big government works very much the same way.

    There aren't too many ways that humans can be organized such that people who take huge initiative with large numbers of people, aren't much more powerful than people who don't. Some teachers might do this, but they're seldom going to be the people teaching you calculus, much more likely to be making big calls about the organization of education. These people are the ones who are highly paid within education.

    However, despite all of the above, I think teachers should be paid more, and wealthy people taxed more. It just works better that way. The difference in real value between teachers and investment bankers is definitely not as much as the difference in how much they get paid. I just think there is a difference.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Sacha, in reply to BenWilson,

    Essentially the problem is that the direct value of people like investment bankers is easily calculated

    If you regard value as what can be calculated in monetary terms, yes.

    what they do sells itself for big bucks

    verily, the sound of one hand clapping

    Ak • Since May 2008 • 19745 posts Report Reply

  • Jeremy Eade,

    typically an auctioning process takes place there

    Yank and rank its called. It was a big part of Enrons personnell policy and is used
    to determine how far you will go with an organisation, because if you get yanked there's no salary to discuss.

    auckland • Since Mar 2008 • 1112 posts Report Reply

  • Jeremy Eade,

    Education, it's a pretty important influencer on getting our budgets under control.

    Just take health. Surely a good, well-funded education system and the stability it will bring to its participants will have obvious effects on the blow outs of domestic budget we see each year on a variety of health issues from physical obesity to mental illness.

    We can't keep asking the health system to repair us all the fucking time once we leave school. Our schools are like big over crowded education farms ,still running on very slow Victorian teaching concepts

    .Schools are running out of money at a time when with all the science we have gained on human development in the last twenty years they should be running into money, lot's of it. School and hospital and home. The big three. Employment should just be a right.

    auckland • Since Mar 2008 • 1112 posts Report Reply

  • martinb, in reply to Damian Christie,

    My guess or hope is next week we'll see some specifics- the actual numbers, the details of the policy, discussion of who exactly the policy will affect and how the policy will work and hopefully a general philosophy from Labour to place this within- so far- help the weakest (fruit and vege, tax free threshold), and get our assets working for us to create growth and jobs.
    .

    Auckland • Since Jul 2010 • 206 posts Report Reply

  • Kyle Matthews,

    So the “lions share” is not being paid by the wealthy, but by ordinary working stiffs.

    It's a little difficult to tell from your spreadsheet and post, but I think you've overstated that. People earning a million dollars a year also earn (and pay tax) in the blue, green, and pink zones, yet you've counted their income as part of the ordinary working stiffs, which they're clearly not.

    Like others, I'd like to see the reinstatement of a top tax band, but I'd like it to be out a fair way - $150,000 or something - and a tax free band for your first chunk of income.

    I'd see just as important however the introduction of a system for moving the bands in line with inflation. Wage creep is a tremendous boom for governments, and they basically can increase their future income by setting hard bands and knowing pay rises are going to move people up the scales. If IRD can increase student loan repayment rates (finally paid mine off last month after 15 years - screw you Lockwood Smith) then they can increase tax bands as well.

    Since Nov 2006 • 6243 posts Report Reply

  • Rik, in reply to Sacha,

    Sure you weren’t derided because it’s not true? Previous discussions hereabouts have established to most people’s satisfaction that those who pay the greater share of tax also happen to have the greater share of both income and assets.

    So I'm a bit confused now...you seem to be saying that it is not true that a small proportion of wealthy people pay a disproportionate amount of income tax...but then you seem to take a u-turn and agree that it is the wealthy that pay the greater share?

    I looked back a few months and this came either from you or from Keith:

    So the top 1% of taxpayers pay 15% of the tax, and the top 3% pay 26% of the tax? Does it mean we overtax our rich?

    This was generally accepted as fact and is what I was referring to. The point I made then and repeat now is that I for one don't think that is necessarily such a good thing. Although I am coming around to accepting the idea as necessary.

    Since Jun 2007 • 130 posts Report Reply

  • Rik, in reply to Jeremy Eade,

    Saint Paul and his family are worried about losing some disposables and according to you we may lose him to country X .

    Just wanted to clear a minor detail up - it was not me who suggested that high earners would leave if top tax rates went up. What happened was someone suggested this theory, others jumped on the bandwagon and said great, let's get rid of these "rich pricks" and I was thinking how ridiculous, on the one hand we want to tax the high earners more to pay for everything, on the other hand we want to see the back of them (which begs the question, where will the money come from once they are gone).

    So when I was so bold as to suggest what might happen if they did leave and take there future tax dollars with them the answer I was quickly provided with was that nothing would change as a new bunch of high earners would come to take their place and happily pay (presumably) higher tax rates. And I'm guessing also attract the scorn of many for being "rich pricks" in the first place. Unless they were teachers - as apparently no amount of money is too much to pay teachers (OK, I'm taking the piss now, settle anyone who's bothering to read this. I love and respect the teaching profession. Really).

    Anyway - small point, but just wanted to clarify in case anyone else seemed to think it was me who suggested high earners would leave if tax rates went up. I did not, and think it would be an unlikely outcome.

    I would like to add though that I find labelling people as "rich pricks" as a tad offensive, especially when it is seen as imperative that we have them in the first place so that we can tax them highly to support the running of the empire. Kind of smacks of biting the hand that feeds the nation.

    The discussion I was looking for would be to 1) accept that one solution might be to tax the high earners more than is done currently but then 2) to look at other options, such as the concept that there is more involvement (in paying tax) across the board at all income levels. But obviously if you have anything like a higher level of unemployment or welfare dependancy you are always going to need more to fund the state.

    Another minor point - someone was talking about the good ole days when tax rates were a lot higher for the high income earners - this was well before GST came along so surely this would need to be taken into account as well? It's not like tax rates were just dropped on their own.

    Jeremy, I'm sure we would not be poles apart in general life, but for now I would have to disagree that we need to tax high earners such as our Scotsman more than we do currently. Having said that - do we really think he gets paid via PAYE and pays the sort of tax in my rough calculation? I suspect there would be some form of management company or trust involved with its own accounts so who would really know just how much tax ends up getting paid by individuals such as this. And that might be another thing to consider - when tax rates are reasonable, people just pay them, when they get higher and may be considered by some to be too high, that might be when people go looking for ways to minimise their tax.

    Since Jun 2007 • 130 posts Report Reply

  • giovanni tiso, in reply to Rik,

    Another minor point – someone was talking about the good ole days when tax rates were a lot higher for the high income earners – this was well before GST came along so surely this would need to be taken into account as well? It’s not like tax rates were just dropped on their own.

    Of course – we got rid of higher levels of taxation for high income earners so we could shift the burden onto the people who earn less. A quarter of a century later, the supposed benefits of this have yet to materialise in the real world. Except for rich people.

    But you make a convincing argument. Given that the experiment has so obviously failed, I’m all for reintroducing the progressive brackets and abolishing the regressive GST.

    Wellington • Since Jun 2007 • 7473 posts Report Reply

  • Sacha, in reply to Rik,

    you seem to be saying that it is not true that a small proportion of wealthy people pay a disproportionate amount of income tax

    I'm saying the level of personal tax paid is more proportionate to income and asset ownership levels than is often presented. The wealthiest New Zealanders are not "overtaxed" though they do like to whine about it and to structure their affairs to avoid paying any at all.

    Ak • Since May 2008 • 19745 posts Report Reply

  • Sacha, in reply to giovanni tiso,

    the supposed benefits of this completely failed to eventuate in the real world

    Which is what really gets my goat about the resurgence of entitled libertarian whinging of late. Had their chance from 1984 until 1999 (and beyond, some might argue) and it's all too clear who benefitted and where their self-interested greed and lazy stupidity has left our economy relative to others and to our potential.

    Ak • Since May 2008 • 19745 posts Report Reply

  • Sacha, in reply to Rik,

    when tax rates are reasonable, people just pay them

    oh really

    Ak • Since May 2008 • 19745 posts Report Reply

  • Sacha, in reply to Rik,

    I'm taking the piss now

    Randians have been doing that for some time. Some better than others.

    Ak • Since May 2008 • 19745 posts Report Reply

  • Sacha, in reply to Rik,

    So the top 1% of taxpayers pay 15% of the tax, and the top 3% pay 26% of the tax? Does it mean we overtax our rich?

    That's from Keith's post about the subject last year. Graphs currently broken but his answer to the lines you quoted still stands:

    No, and I'm sick of writing about it.

    Ak • Since May 2008 • 19745 posts Report Reply

  • BenWilson, in reply to giovanni tiso,

    These people can't be living in the same country in which I live. Either that, or feel free to send them to me for budgeting advice.

    I expect I need some of that advice. I can't talk to anyone else's reasons for being in this position, but I've been in the top tax bracket for the longest time and don't have much of a fortune to show for it, other than whatever value my house has risen by in the last 8 years, and the deposit.

    I guess the main thing is that, at least for me, I have never developed a habit of personal saving, and I just don't think too much about money (hence finding DexterX's "cognitive miser" phrase quite poignant) and how much I've got and what to spend it on. I just don't have a tight belt. Which possibly sounds like a wonderfully enviable position for many, but it has always seemed a bit odd to me to be lumped in with "rich" people.

    But I still don't grudge paying more tax. It's not going to impoverish me, nor cause me to stop doing work I like. I remember making a whole lot less money than I do now and not living particularly differently.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • bmk, in reply to BenWilson,

    I can imagine easily spending all the money you earn in the top tax bracket. But I can't imagine that you struggle to get by day to day.

    When I was married with two children and studying. Our family had a total income of about 25k before tax. And we got by just - permanent scraping by and living week to week. Was very unpleasant but doable.

    So anyone in the top tax bracket should be able to live quite comfortably and shouldn't begrudge the tax they are paying (which I note you weren't).

    If I were in the top tax bracket I would be probably spending all my money too just living much more comfortably and wouldn't be worrying about where to find the money to buy a pair of shoe's for my daughter or dread the school stationery list/fees.

    Since Jun 2010 • 327 posts Report Reply

  • BenWilson,

    But I can't imagine that you struggle to get by day to day.

    No, I have occasionally struggled, usually trying to work out how the hell to pay my next tax bill, since the payment on contracts can be very delayed. But on the whole, I seldom spend time worrying about paying the mortgage and feeding the family. I expect that would be deeply unpleasant, and that's probably a large part of the reason a lot of people like me feel bitter on the idea of more tax - a fear of being put in that position. I just doubt it would play out that way for me. More likely, there would be some tightening, and the overall quality of life would be identical, or even, paradoxically, better, due to tightening causing a highlighting of wherever the money is going, and a re-evaluation of what's important.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

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