Quote Originally Posted by Bjauck View Post
People will always try to minimise tax, no matter the type.
Kerry Packer summed it up:
"I am not evading tax in any way, shape or form. Now of course I am minimizing my tax and if anybody in this country doesn't minimize their tax they want their heads read because as a government I can tell you you're not spending it that well that we should be donating extra."

A reasonable fair taxation system usually means that the incentives for evasion are deterred by the likelihood of enforcement and penalty and that the incentives for avoidance are not usually cost-effective enough to bother. Many countries that have reduced high marginal tax rates for income often collect more tax revenues when they have reduced rates and increased enforcement/penalties as the reward for evasion is lowered and the deterrence factor raised.

In terms of TOPs tax policy, wealth taxes such as land tax presume that an asset actually produces an income that can fund the tax - most of the time there have been exemptions for the family home as an owner-occupier doesn't have an income stream such as a rental although the countervailing argument is that they don't have to pay rent instead. You could argue that a pensioner living in a mortgage free house in Auckland is sitting on $1m (based on a median value) and they could sell their home instead and release it to the market to fund their retirement but as a society we have to consider if that means that they have to rent or move outside of the area that they have lived their lives because arbitrarily the market now values their home at a level that they are considered wealthy - so it's complicated.

We could start means testing the pension instead (wealth tax by stealth) or tax cash-poor and asset-rich folk out of their homes - but neither is going to make middle New Zealand particularly happy especially when they find their parents spending their inheritance on rent or moving in with them.