Public Address | Cafe | Hard News: Superannuation: Back to the Future

Sacha

Sun, 12 Mar 2017 11:23:41 +1300

Liam Dann points out that 'generations' are an artificial construct anyway, and urges millennials to not be distracted from enjoying their youth.

Paul Campbell

Sun, 12 Mar 2017 10:11:30 +1300

But we already don't tax capital gains

Paul Campbell

Sat, 11 Mar 2017 11:40:24 +1300

Getting back to taxing the super – if it weren't taxed it's recipients would get less, likely about the same as the net after tax people receive today.

For people just living off the super it would be a wash.

What taxing super does do is act as a little…

BenWilson

Fri, 10 Mar 2017 20:24:20 +1300

Or even both

Rob Stowell

Fri, 10 Mar 2017 17:53:37 +1300

I guess the answer is “It’s pretty hard”.
Or 'they're pretty useless ... " :)

BenWilson

Fri, 10 Mar 2017 17:33:00 +1300

How hard could that be?!

Well it's defied our political system for 40 years so I guess the answer is "It's pretty hard".

dave stewart

Thu, 09 Mar 2017 22:07:30 +1300

If nothing else, at least the long delayed discussion about superannuation has actually commenced among those empowered to do something about it ...
Now we just need everybody to act like grown ups and work collaboratively and in good faith to identify a superannuation solution that's fair and fit for…

TracyMac

Thu, 09 Mar 2017 19:25:22 +1300

As for solutions, I say means-test and tax wealth and reintroduce higher income tax brackets. If a UBI shall come to pass, great, but I'm not holding my breath.

For means-testing, make it "if income than threshold, or if assets greater than 1st decile of house price index in city…

Rob Stowell

Thu, 09 Mar 2017 16:51:22 +1300

Yeah – this was my first thought. Diet, diabetes, antibiotic resistance. A generally more polluted and populated world. Climate change and associated catastrophes. The increased stress, which which plays a role in longevity, of debt, precarious employment, not owning homes. Not to mention, we've just had 60 years of relative…

Katharine Moody

Thu, 09 Mar 2017 15:33:21 +1300

Wealth taxes are a good idea, but they’re not a substitute for income taxes, they need to be part of a whole mix of different taxes if we’re to have an effective taxation system.

Of course they are a substitute for income taxes – well, not a substitute actually, because…

linger

Thu, 09 Mar 2017 15:23:40 +1300

@TracyMac: Nah, it’s worse: expensive point-scoring. Blinglish’s recent hints about possible tax cuts render this unambitious piddling footling pussyfooting around cutting future eligibility for super an example of fiddling in several senses.
Well, bugger me, it must be an election year :-/

Katharine Moody

Thu, 09 Mar 2017 15:20:48 +1300

You don’t need to restrict yourself to only one tax.

And I probably wouldn't. Taxation on income from dividends would survive, excise tax would survive (at a level that is pegged to cost recovery of the consumption costs of those goods to society.. e.g., tobacco, liquor), consumption taxes would survive,…

TracyMac

Thu, 09 Mar 2017 14:59:56 +1300

This whole thing enrages me. If anyone thinks us Gen Xers and younger will be retiring at 65, they're dreaming. And political grandstanding by Key and now Little on the topic is just cynical politicking.

In the meantime, my 69-year-old mother is working up to 16 hour days as a…

Bart Janssen

Thu, 09 Mar 2017 14:11:26 +1300

“where would the government get money if we don’t tax income?”

Land value tax – most efficient and most progressive of all taxes;

You don't need to restrict yourself to only one tax. There is a complexity issue but so long as you don't have exemptions then using multiple systems…

Moz

Thu, 09 Mar 2017 14:03:01 +1300

Land value tax

Is simply a partial asset or wealth tax. Why should land be special?

Specifically, why should Bill Gates pay zero tax on $60B of Microsoft shares while I pay extra tax on the unimproved value of the land my house sits on to compensate? Why should a…

simon g

Thu, 09 Mar 2017 14:01:32 +1300

The real villains in this whole mess are ... us. Well, about half of us, anyway.

We had a Prime Minister for 8 years who was resolute in his refusal to do anything substantive about any long-term structural problems. Not just superannuation and the Cullen fund, but everything from property…

Katharine Moody

Thu, 09 Mar 2017 13:07:13 +1300

“where would the government get money if we don’t tax income?”

Land value tax – most efficient and most progressive of all taxes;

https://en.wikipedia.org/wiki/Land_value_tax

Lucy Telfar Barnard

Thu, 09 Mar 2017 13:03:04 +1300

I’m no expert (calling all experts!) but I think the particular problem here is the size of the baby-boomer cohort, which has basically reshaped society around itself by sheer force of numbers. Which is independent of arguments about the privilege that cohort has enjoyed.
I hear lots of people saying…

Stephen R

Thu, 09 Mar 2017 13:00:12 +1300

Those are entirely valid arguments, but I suspect you have forgotten that you are talking about the income tax system. The problems you identify are not new. So the question is not "are there reasons not to have one" but is "where would the government get money if we don't…

WH

Thu, 09 Mar 2017 12:46:13 +1300

I don’t oppose a phased increase in the retirement age provided it’s linked to renewed contributions to the Cullen Fund and other intelligent efforts to improve the long term well-being of the population. The point Russell, Andrew Little and Paul Krugman have made about those needing income assistance in the…

BenWilson

Thu, 09 Mar 2017 11:52:39 +1300

That said, I'm patently aware that the differences between the major parties, even on super policy, are likely to be a lot more than announcements would suggest. Most policy is not campaigned on, nor even really floated as balloons. It seems likely to me that Labour's would be more palatable…

BenWilson

Thu, 09 Mar 2017 11:31:12 +1300

I find this issue very complex to the point of being far less sure about it now than I used to be.

On the one hand, I feel like the silver bullet to the debate (and benefits more generally) is a full-on UBI. But a lesser UBI could also be…

Moz

Thu, 09 Mar 2017 11:25:52 +1300

I am paying NZ tax, at the residential rate, on my NZ income.

Good on you.

And Jeremy etc: I agree with you. I was arguing *against* Stephen R's claim that retirees are somehow special and shouldn't be taxed. I tried to make that clear. Sorry.

Ian Dalziel

Thu, 09 Mar 2017 11:23:46 +1300

Important meeting tonight in Chchch...

BenWilson

Thu, 09 Mar 2017 11:09:28 +1300

Super does count as income, and is taxed. Retirees pay income tax on their income just like anyone else.

Yes, so that does already function as a kind of means testing. More of their income, if they also have a well paid job, will be taxed at a higher rate.

BenWilson

Thu, 09 Mar 2017 11:00:27 +1300

Just running on a single issue – tax and welfare reform as per the Big Kahuna – would likely have been a much better strategy. It would have been like getting a referendum on it without having a referendum.

Yes, if it were the party of the Big Kahuna I…

Jeremy Andrew

Thu, 09 Mar 2017 10:35:53 +1300

I suggest that super should count as income, and retirees should pay income tax.

Super does count as income, and is taxed. Retirees pay income tax on their income just like anyone else.

linger

Thu, 09 Mar 2017 10:32:05 +1300

I am paying NZ tax, at the residential rate, on my NZ income. Yes, I would be eligible to pay the lower nonresidential rate; but I choose not to as a matter of principle.

Moz

Thu, 09 Mar 2017 10:19:59 +1300

arguments against means-testing; One, there'll be a cohort of people who are going to spend time and effort figuring out how to hide their assets ... Two, the administrative costs

Those are entirely valid arguments, but I suspect you have forgotten that you are talking about the income tax system.…

Ian Dalziel

Thu, 09 Mar 2017 10:03:45 +1300

It’s not a benefit it’s an annuity.
is it paid weekly?
surely it is then more of a hebdomadal financial boon???

Diamond Dog Days...
I have a mere 5 years ( thats all I've got, is five years, it isn't a lot... ) until my ship of state comes in,…

Bart Janssen

Thu, 09 Mar 2017 09:56:34 +1300

The frustrating thing about these discussions is they all seem to devolve into binary options. Super or not. Age X or Age Y. Means testing or not.

Most of us are adults, we live in a world of greys and compromises. Day to day we make judgement calls and think…

Bart Janssen

Thu, 09 Mar 2017 09:25:12 +1300

disdained the idea of "borrowing money to invest"

That made me laugh out loud. Are these the same people who run workshops on how to borrow money ... er I mean leverage your assets ... to invest in capital gains-free property?

Stephen R

Thu, 09 Mar 2017 08:52:13 +1300

I think there are a couple of arguments against means-testing;

One, there'll be a cohort of people who are going to spend time and effort figuring out how to hide their assets (or even just spend enough money that they don't have any assets) to come in under the means…

Paul Campbell

Thu, 09 Mar 2017 08:28:42 +1300

Surely the difference in received benefits between Maori and Pakeha is best addressed long term by having more middle class Maori.

On the other hand the issue of people doing hard manual labour simply wearing out faster and not getting the same benefits as middle class people is better addressed…

Katharine Moody

Wed, 08 Mar 2017 23:44:16 +1300

Yes, I'm in favour of a UBI as well – mainly as a result of reading the Morgan/Guthrie book.

So when GM launched TOP, I thought – great, that book (an overhaul of both tax and welfare) will be the policy platform, so I promptly sent off my $25 (or…

Corries

Wed, 08 Mar 2017 22:36:06 +1300

Will everyone stop calling superannuation a benefit. It's not a benefit it's an annuity.

Hilary Stace

Wed, 08 Mar 2017 21:39:43 +1300

I was going to write a comment in favour of a Universal Basic Income for everyone from birth, as a fairer alternative to the system we have now. It's a good time to look at other options. But I have reposted what I wrote last year for Access instead.…

Richard Wain

Wed, 08 Mar 2017 21:35:31 +1300

All in favour of a UBI.

Paul Baker

Wed, 08 Mar 2017 21:18:27 +1300

It strikes me that there is little point in looking at the issue of retirement age and the future of superannuation without a much broader discussion about the future of work itself. It is increasingly clear, despite the strident promises of Trump et.al that many jobs in modern economies are…

linger

Wed, 08 Mar 2017 21:18:15 +1300

One reason would be because most NZers have already been paying taxes, for decades, on the understanding that they would get national super.

Richard Wain

Wed, 08 Mar 2017 21:07:18 +1300

I mean, if you need the pension, great. It's there for you. But if you really don't... why give it to you?

Kiwiiano

Wed, 08 Mar 2017 21:06:01 +1300

Wasn't 2037 about when it was predicted that a Universal Minimum Income would be necessary with so many jobs being automated, disappearing entirely with no promised alternatives, or only being available to highly trained and capable specialists? Try teaching a freezing worker to cut code.

And why do so many…

Richard Wain

Wed, 08 Mar 2017 21:03:53 +1300

But isn't this whole idea that you pay tax to get money back yourself just wrong?

Don't we pay tax so that people less well off than us don't starve and (hopefully) have a roof over their heads?

And, roads, etc. The communal good. Not to get money back to…

Peter Alsop

Wed, 08 Mar 2017 21:01:46 +1300

How do you overcome the major incentive problems with means tested super? Work hard, pay lots of tax (compounding fwd), save, spend wisely and get ...... nothing. The current tax bargain (in my view) includes a late-life rebate called super. So we should discuss tax reform and tax reduction too?

Rochelle Wilson

Wed, 08 Mar 2017 20:32:49 +1300

Forgive me Richard in that I cannot quote sources, but I know from much reading around medical and complementary health and other sources that what I say is correct. If you listen to National Radio even, you will hear at times that the incidence of even auto-immune Type 1 Diabetes…

Rich of Observationz

Wed, 08 Mar 2017 20:07:28 +1300

Do you have a reference for those assertions about increased morbidity?

Rochelle Wilson

Wed, 08 Mar 2017 19:55:53 +1300

Also, don't accept so easily that life expectancy will continue increasing because it has increased so far.
For reasons of poor diets and environmental toxins of all sorts [and bacterial resistance to antibiotics], people are more unwell now than before. Thus Type 11 diabetes in children and teens .. and…

Katharine Moody

Wed, 08 Mar 2017 19:51:12 +1300

Yes, I'm in agreement with that as well :-).

Katharine Moody

Wed, 08 Mar 2017 19:49:43 +1300

Well said – with you on that for sure.

Katharine Moody

Wed, 08 Mar 2017 19:34:50 +1300

Thanks Russell, I had no idea about the history of changes – what a political football.

It’s a very complex subject if we start the discussion around forecasting and numbers and predicting whether we can/can’t afford this or that or whatever in the future. An elephant-cousin in the room is…

Tom Semmens

Wed, 08 Mar 2017 19:08:53 +1300

The media are ignoring means-testing with a vengeance. I saw a poll on Stuff (I think) the other day asking if the status quo should reign or the age be lifted to 65, 67 or 70 years of age. No mention of means testing in the poll or the lengthy…

Richard Wain

Wed, 08 Mar 2017 18:48:30 +1300

Why should we pay hundreds of thousands of well-off oldies a benefit they don’t need? Shouldn’t we pay more to elderly with no resources? Over 140,000 over-65’s are very wealthy

Amen. I've been hassling my father for years about the moral bankruptcy of accepting the pension as he worked until…

Peter Davis

Wed, 08 Mar 2017 18:44:45 +1300

There are two design flaws with National Super. First, it is not contribution-based, which means that it is not related to the size of the incoming cohorts, and it is in constant competition with other applications for tax revenues. The schemes elsewhere in the world I am aware of that…

Zach Bagnall

Wed, 08 Mar 2017 18:43:28 +1300

Independent but fairly relevant given the sums of money at play, if they are also the cohort with the most wealth (in aggregate). Point taken though.

Kevin McCready

Wed, 08 Mar 2017 18:33:23 +1300

What has stunned me in the last few days is the number of people who drink the Scarcity Myth koolaid. We're a wealthy society merely in need of a decent tax system.

Russell Brown

Wed, 08 Mar 2017 18:32:56 +1300

The idea of the actuarial approach seems to be that by putting money aside now we’ll save having to pay more tax in the future when we have a larger retired population. But when that future point arrives, won’t we then have to be saving money for an even larger…

John Farrell

Wed, 08 Mar 2017 18:27:01 +1300

The expense is political, rather than economic.

Andre

Wed, 08 Mar 2017 18:07:16 +1300

I think that all benefits should be means-tested and the pension is a benefit. Why should we pay hundreds of thousands of well-off oldies a benefit they don't need? Shouldn't we pay more to elderly with no resources? Over 140,000 over-65's are very wealthy. We pay that group about the…

John Farrell

Wed, 08 Mar 2017 17:50:16 +1300

New Zealand Superannuation – We are paid $591.94 a week, for the 2 of us. It is almost possible to live on that, if you have no debts, and don't expect overseas trips.

We have no debts because, 9 years ago, we sold up in Auckland and moved to Dunedin;…

Rich of Observationz

Wed, 08 Mar 2017 17:11:15 +1300

The idea of the actuarial approach seems to be that by putting money aside now we'll save having to pay more tax in the future when we have a larger retired population. But when that future point arrives, won't we then have to be saving money for an even larger…

Lucy Telfar Barnard

Wed, 08 Mar 2017 16:47:09 +1300

Another thing that I think is not often mentioned in this debate:
Although people recognise that life-expectancy is increasing, it's usually in the context of "superannuation will cost us more money", rather than looking at what we think superannuation is for.
In 1938, when the pension age was 60, those…

Rich of Observationz

Wed, 08 Mar 2017 16:30:28 +1300

I said some of this elsewhere, but it bears repeating.

In real world economics, the working part of the population has to produce the goods and services used by the working, retired (and school age) part. Whether we purport to pay for pensions through tax, saving schemes or property inflation,…

Mike Graham

Wed, 08 Mar 2017 16:27:05 +1300

Good summary.

It's unfortunate that the current debate seems to be simply about the retirement age, rather than a broader discussion also encompassing the Cullen Fund, Kiwisaver and how we as a country look after the low waged and/or non-home owning citizens.

Public Address

Wed, 08 Mar 2017 16:27:05 +1300

Discussion from blog post.