Public Address | Cafe | OnPoint: Why Rightwingers Should Support the CGT

Joe Wylie

Mon, 20 Oct 2014 14:16:37 +1300

In October1974, the Labour Government announced the establishment of the ohu scheme for groups of New Zealand citizens willing to set up alternative communities or settlements in rural areas. Prime Minister Kirk said that the reasons for it were mainly spiritual and social

Very spiritual indeed, seeing as Kirk died…

mark taslov

Sun, 19 Oct 2014 18:00:54 +1300

Thanks a lot for that Ian, that’s an intriguing plot of history.

Ian Dalziel

Sun, 19 Oct 2014 08:46:03 +1300

Come together...
Why are collectables exempt?
Probably a typo...
I'm guessing it's a vestigial trace of Labour's Ohu collective scheme...
In October1974, the Labour Government announced the establishment of the ohu scheme for groups of New Zealand citizens willing to set up alternative communities or settlements in rural areas. Prime…

mark taslov

Sun, 19 Oct 2014 07:28:20 +1300

Labour Capital Gains tax question #3:

Exemptions: The family home, personal assets, collectables, small business assets sold for retirement and payouts from retirement savings schemes, including KiwiSaver, will be exempt.

Why are collectables exempt? Who can afford collectables? Are vintage cars and planes collectables? Are paintings collectables? Are Ming vases…

Kyle Matthews

Mon, 18 Jul 2011 19:55:34 +1200

Misinformation has flourished since the CGT announcement, helped along by Farrar and co and faithfully rebroadcast by the credulous. Danyl debunks some of it.

Yeah, but 90% is even worse than the figures that were presented there.

Sacha

Sun, 17 Jul 2011 21:18:23 +1200

they now could be stuck with the kind of tax the rest of us actually pay

Nah, they only have to pay 15% – but just listen to the whining about getting to keep 85% of the gains.

Sacha

Sun, 17 Jul 2011 21:16:52 +1200

do you have a source for that

Misinformation has flourished since the CGT announcement, helped along by Farrar and co and faithfully rebroadcast by the credulous. Danyl debunks some of it.

Islander

Sun, 17 Jul 2011 21:08:54 +1200

I'd really love to know a source for that (totally outrageous )figure also...
Raymond A Francis- envy tax? Nope. Just the justifable resentment at seeing a certain sector get away with paying very little tax – and getting a huge profit upon retirement & sale of their property. And the joy…

Kyle Matthews

Sun, 17 Jul 2011 19:02:58 +1200

We have 90% of all families in NZ paying no income tax when you take into account WFF..

Umm, do you have a source for that?

DexterX

Fri, 15 Jul 2011 12:02:01 +1200

touche.

Raymond A Francis

Fri, 15 Jul 2011 10:33:53 +1200

If this is not an envy tax but a way to allow/encourage citizens to make better financial decisions, why are gambling gains tax free
Just crazy and why an exemption for small business but not agriculture, again "let's stick it to people who don't vote for us"
And now never…

BenWilson

Fri, 15 Jul 2011 10:15:15 +1200

Mine lost money before it ever even made it to the water.

FletcherB

Fri, 15 Jul 2011 09:15:06 +1200

I love the fact people are complaining that boats arent included.... when has a boat EVER gone up in value? Where are all the people getting rich from boat speculation?

dont forget that old joke.... the definition of "boat" is a hole in the water you pour money into...

Craig Ranapia

Thu, 14 Jul 2011 17:04:07 +1200

Hum...

Collectables

Collectables, such as jewellery, antiques, artwork, rare folios or stamp collections and the like will be exempt from the CGT.

A CGT that included collectables would be intrusive, result in high compliance costs, and would not raise significant revenue.

Why shouldn't right-wing rich-pricks support this? The yacht ("personal…

DexterX

Thu, 14 Jul 2011 17:01:14 +1200

After 9 years of Labour back pay was not guaranteed and if you are under a collective agreement you lost the right to take industrial action.

Add to this that workers in belonging to a union actually cede their right to be consulted on bargaining and a wide range of…

Russell Brown

Thu, 14 Jul 2011 16:48:11 +1200

the over reach of WFF and the depressive effect that it has had on wage bargaining

You may have the causality backwards. If pay rates as a proportion of total company profits and productivity improvement had even stayed the same over the past few decades, a wage subsidy would never…

Sacha

Thu, 14 Jul 2011 16:43:22 +1200

the over reach of WFF and the depressive effect that it has had on wage bargaining

DexterX

Thu, 14 Jul 2011 16:36:02 +1200

NZ is a small economy which doesn't have a wide base.

Any reform of the tax regime needs to address the over reach of WFF and the depressive effect that it has had on wage bargaining and growth in the economy.

The CGT proposal avoids a lot of structural issues…

Sacha

Thu, 14 Jul 2011 11:47:17 +1200

Other exemptions will include ... inherited assets

I hope they're bringing back death duties then.

Sacha

Thu, 14 Jul 2011 11:45:43 +1200

I don't think 'family homes' should be exempted either

As people have said upthread, that's a purely political move rather than a logical one.

uroskin

Thu, 14 Jul 2011 10:20:05 +1200

15% CGT doesn't make sense as it also distort the market for investment. It should be levied at the personal marginal tax rate. And I don't think 'family homes' should be exempted either as there can be some creative accounting applied there too (who qualifies for owning a family home?…

Craig Ranapia

Thu, 14 Jul 2011 08:35:53 +1200

I guess this whole thread is moot, because right-wingers have absolutely nothing to fear from this piss-weak effort:

Labour hopes to swing public opinion behind its capital gains tax plan by including an exemption for hundreds of thousands of tradespeople and small owner-operated businesses.

And it is understood there will be…

martinb

Wed, 13 Jul 2011 15:28:27 +1200

With the Greens and Norman coming out strongly on the CGT are we going to see a common desire for a focus on the productive side of the NZ economy push towards a new government, with perhaps some of that investment going towards NZ companies creating greener technologies for export?…

merc

Wed, 13 Jul 2011 12:05:03 +1200

This seems pretty reasonable. I like the cherry picking idea, as South Africa did 10 years ago, http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10738073

Paul Campbell

Wed, 13 Jul 2011 11:12:35 +1200

I hope not – as I've pointed out elsewhere in the US the special lower CGT rate (25%) is only available to people who invest long term (2 years minimum) – house flippers, day traders, currency speculators etc need not apply

Graeme Edgeler

Wed, 13 Jul 2011 10:40:19 +1200

If we introduce a tax on capital gains at 15%, does that mean that those people who are currently taxed at marginal rates for capital gains that IRD treats as income (house flippers, day traders etc.) will have their tax rates on such transactions reduced to the CGT rate?

BenWilson

Wed, 13 Jul 2011 10:32:51 +1200

I've got the same 2 halves, Gareth. But also in my mind about the second half is "National's partisan kneejerkery could bite them in the arse and erode their support on this one". So actually, both halves are positive.

Gareth Ward

Wed, 13 Jul 2011 09:55:01 +1200

Half of me is thinking "damn, National's partisan kneejerkery means they have to attack this excellent idea, and odds on it's them back in charge of Government this time around".
However the other half is thinking "at least now we have one of the major parties supporting it and so…

BenWilson

Wed, 13 Jul 2011 07:34:09 +1200

Yes, it does seem like an idea that's been ruled out by arbitrary thinking from long ago. It might lead to the beginning of a sweeping change to our curious orthodoxy in NZ that is so damned unorthodox everywhere else in the world.

Kumara Republic

Tue, 12 Jul 2011 23:52:20 +1200

I actually think this move by Labour will be quite positive and powerful, and that National have either miscalculated or simply been outmaneuvered. I did not expect anywhere near the support the idea has received on this site. It’s nice to see an issue the Left is not divided on.…

Angus Robertson

Tue, 12 Jul 2011 10:53:55 +1200

That said, I am rapidly wading out of my depth on economic issues, so take everything I say with a handful of salt.

Ditto

Paul Campbell

Tue, 12 Jul 2011 10:48:28 +1200

I most foreign CGT regimes a capital improvement is not included as part of the capital gain on the asset.

When I sold my California house I was able to to write off: the new roof we'd just put on, the money we spent painting it to tart it up…

Rich of Observationz

Tue, 12 Jul 2011 10:15:14 +1200

That is the normal way business taxation operates (and renting out houses is more like a business activity than banking cash or working for an employer). You pay tax on any profit after expenses.

Also, buildings intrinsically depreciate in value. Land appreciates, mostly.

James Butler

Tue, 12 Jul 2011 09:45:11 +1200

That’s not my understanding of what we’re likely to see. Capital gain is profit you make from your house value increasing just because houses do that.

Investing money by improving the property would be exempt from the capital gains tax wouldn’t it? Otherwise if you buy a empty bit of…

BenWilson

Mon, 11 Jul 2011 23:12:26 +1200

Sigh I'm left with hoping the ABs lose the RWC because that is about the only thing I can see able to damage the National Party halo at the moment.

I actually think this move by Labour will be quite positive and powerful, and that National have either miscalculated or…

Kyle Matthews

Mon, 11 Jul 2011 23:02:31 +1200

If capital improvements to private dwellings are to be tax free, whilst those on rental dwellings are taxed at 15%, capital improvements to private property will be preferred and those to rental property deferred. Overall this is not good for the people who rent, if their landlord is going to…

Brent Jackson

Mon, 11 Jul 2011 22:44:55 +1200

Sigh I’m left with hoping the ABs lose the RWC because that is about the only thing I can see able to damage the National Party halo at the moment.

I would really like to do something to try and stop National from getting into power again. But I don't…

Ross Calverley

Mon, 11 Jul 2011 22:37:54 +1200

You are assuming that all policy gets forgotten after an election. That isn't true. A party will recycle policy if it thinks there is a need for it. Look at Act. Using Labour Party economic policy of the 1980s, while using National Party Racial policy of the mid 2000s. Look…

Kumara Republic

Mon, 11 Jul 2011 20:04:43 +1200

Pull the rug from under that, and capitalism starts to look decidedly shaky. So the right are never going to be keen on capital taxes – turkeys, christmas and all that.

How better to fight wedge politics, than with wedge politics?

Gareth Ward

Mon, 11 Jul 2011 17:31:44 +1200

Doh! Humbly amended.

Sorry!
Although correction is actually more powerful and someone would probably have suggested the entire argument was invalid due to that one line...

Bart Janssen

Mon, 11 Jul 2011 17:27:47 +1200

So as far as I can tell the arguments against it are:
It might be a bit difficult to do right
All taxes are evil
and
Labour proposed it and we oppose anything Labour says

Given there are a whole bunch of countries that have variations on a CGT theme…

James Butler

Mon, 11 Jul 2011 17:16:05 +1200

But I’m sure there’s an Occam’s Razor for Economics – that the simplest solution is the most efficient.

Well, both flat tax and poll tax are very efficient. The quibble is whether the most efficient solution is necessarily the best.

Ross Mason

Mon, 11 Jul 2011 17:11:29 +1200

Hmmm...my simple logic thus: If a landlord improves the rented house, he can up the rent. He thus receives the benefit from day one. He does not have to pay the tax on the capital gain until he sells it. A little bit of optimisation should figure out how much…

Angus Robertson

Mon, 11 Jul 2011 16:39:11 +1200

They might not realize the highest monetary return, but will perhaps on average live in a nicer house, which might be a good thing overall.

If capital improvements to private dwellings are to be tax free, whilst those on rental dwellings are taxed at 15%, capital improvements to private property…

Greg Sands

Mon, 11 Jul 2011 16:37:34 +1200

Sure, I agree – an all-encompassing one is better than one with exemptions. But the question is, is a CGT with exemptions better than no CGT?

I think it's an unequivocal yes.

And I think not. Why? The same reasons why I think removing GST off fruit&veg is a silly idea.…

James Butler

Mon, 11 Jul 2011 16:18:40 +1200

Replying to self, OTOH no exemption might help drive investment in improving existing housing versus always trading up, which might be of benefit too...

James Butler

Mon, 11 Jul 2011 16:13:38 +1200

Optimistic but intriguing! It doesn’t change the efficiency argument: It’s still going to mean that people will invest in things that are not necessarily the best investment (e.g. Houses)

Depends on the meaning of "investment". They might not realize the highest monetary return, but will perhaps on average live in…

Keith Ng

Mon, 11 Jul 2011 16:01:32 +1200

Optimistic but intriguing! It doesn't change the efficiency argument: It's still going to mean that people will invest in things that are not necessarily the best investment (e.g. Houses), but it does mean that they won't consume the gains immediately. Unless they borrow against their houses for consumption...

James Butler

Mon, 11 Jul 2011 15:34:31 +1200

Am I wrong in thinking that the family home exemption acts kinda like a combined incentive towards better housing and retirement savings? For most people it will not be cashed in until they either trade down in housing (which often happens after retirement) or die (passing the benefit to descendants);…

Keith Ng

Mon, 11 Jul 2011 15:10:49 +1200

The "ideal" CGT you describe doesn't actually sound too bad – applied universally at a flat rate to all capital gains. However, even despite not knowing the details until Thursday, there is a snowball's chance of Labour's proposed CGT coming anywhere close to this. It will be just another set…

Keith Ng

Mon, 11 Jul 2011 15:02:49 +1200

Doh! Humbly amended.

Gareth Ward

Mon, 11 Jul 2011 13:59:16 +1200

If a CGT was truly universal, across the board, applying to all gains in capital, and was balanced with reductions in all other taxes, I think there'd be much less "right-wing" resistance, just the usual complaints by "interest groups".
Hence why I think a good way of launching this would…

Gareth Ward

Mon, 11 Jul 2011 13:56:27 +1200

Excellent post, all great points but the Tax Working Group did not, in the end, support it (falling back on that useless "it's a bit hard excuse"):
Most members of the TWG have significant concerns over the practical challenges arising from a comprehensive CGT and the potential distortions and other…

Greg Sands

Mon, 11 Jul 2011 13:45:48 +1200

David Ritchie

Mon, 11 Jul 2011 13:42:27 +1200

churning powerpoints

Speaking of which, the Swiss Anti-Powerpoint party is seeking to a national referendum to abolish presentation software.

Rich of Observationz

Mon, 11 Jul 2011 13:35:05 +1200

(sorry, long, but it could be a 300 page book)

Capitalists want to maintain capitalism. Way back in 1867, Marx predicted capitalism to be hosed. The vast majority of the population were oppressed workers and peasants, with a small minority of land and business owners living off their…

Public Address

Mon, 11 Jul 2011 13:35:05 +1200

Discussion from blog post.