Another rich guy who realises the game is up [Archive]

skid

30-11-2013, 10:42 AM

This was linked in interest.co.nz yesterday

I thought it a good piece

Scrooge McDucks

http://www.pimco.com/EN/Insights/Pages/Scrooge-McDucks.aspx

Besides the messages some interesting charts about how corporate earnings in the US are not that flash and even financial / balance sheet re-engineering is keeping EPS growth positive

Bill does give a fast read version

Scrooge McDucks Speed Read

1) Growth depends on investment and investment in part depends on an equitable rebalancing of personal income taxes, capital gains and carried interest.

2) The era of taxing “capital” at lower rates than “labor” should end.

3) Investors in the U.S. and elsewhere must look for investment in the real economy, not share buy-back maneuvers that artificially elevate stock prices.

absolutely spot on.
I think alot of us who are so wrapped up in the share market(s) sometimes fail to see this.
How life is getting harder for the normal worker--not as much real stuff is getting produced(especially the states)
But the share market is not reflecting this (YET)
This article should be on the Gold thread-not because Gold is the end all in itself-but because if they dont get their act together it may be the only protection (not the best scenario)

Stranger_Danger

30-11-2013, 11:22 AM

Totally agree with that ... And I'm one who'd be taxed far more!

I don't see the fairness in the outcome (untaxed capital gains in NZ) of my "labour" researching and investing should be untaxed where the average guy works 40-50 hours per week and has a young family to clothe, house and feed, is taxed on every hour that he "labours" away from his family.

So don't work - amass capital and pass it onto your children tax free ... Or do work and get taxed on every hour!

It just isn't fair. It isn't just. And it isn't what NZ stands for. I'm becoming very disappointed in my fellow kiwis who want to keep this outdated, unfair, unjust taxation system that really only taxes the working man and leaves the wealthy to get wealthier and wealthier.

Is Key a nice guy? Nope. He's a selfish prick trying to preserve his millions while most Kiwis struggle! Alas - its not just Key, although he epitomises the morally bankrupt kiwis that are against a capital gains tax, it all the selfish Kiwis who are against a capital gains tax!

And remember - this is from a Kiwi who would be one who'd be taxed far, far more than I am at present.

Are you talking about houses or something?

I have amassed capital by running profitable businesses.

I pay tax on the profits, no tricks or dodges - I don't dislike paying tax.

With what is then left over, I invest in other businesses. I then pay more tax.

Other than shares in public companies, I never sell anything, so we're not talking about running loss making businesses (no tax) then selling it to suckers for a tax free capital gain.

If you're talking about people who just buy bigger and bigger houses, then I get it, but they're choosing to do this. If you feel this strongly, simply don't own a house. It hasn't hurt me.

To complain about a situation whilst simultaneously exploiting it is the epitomy of chardonnay socialism.

It is easy to amass capital in such a way that involves the constant paying of taxes, in addition to providing employment etc etc.

If you're not doing it that way, presumably, you just don't want to?

Stranger_Danger

30-11-2013, 11:28 AM

P.S Belg, your statement about Key trying to preserve his millions almost sounds like he shouldn't want to preserve his millions?

I am increasingly understanding this attitude because I'm seeing it everywhere.

Due to Chorus, the power company fiasco, the possibility of a Labour/Green Government, high valuations and the attitude of most NZ'ers (more welfare! and how dare you preserve your millions!) I am deciding this weekend whether NZ is still investable.

I suspect by the end of the weekend I'll have decided to liquidate my NZ portfolio.

Chalk up another win for socialism I guess. I'll try not to shrug as I do it.

skid

30-11-2013, 11:42 AM

Are you talking about houses or something?

I have amassed capital by running profitable businesses.

I pay tax on the profits, no tricks or dodges - I don't dislike paying tax.

With what is then left over, I invest in other businesses. I then pay more tax.

Other than shares in public companies, I never sell anything, so we're not talking about running loss making businesses (no tax) then selling it to suckers for a tax free capital gain.

If you're talking about people who just buy bigger and bigger houses, then I get it, but they're choosing to do this. If you feel this strongly, simply don't own a house. It hasn't hurt me.

To complain about a situation whilst simultaneously exploiting it is the epitomy of chardonnay socialism.

It is easy to amass capital in such a way that involves the constant paying of taxes, in addition to providing employment etc etc.

If you're not doing it that way, presumably, you just don't want to?

Yes, I think he's talking about houses SD
Ive bought houses over the years ,mostly because its something I can actually work on and make improvements to--But on paper ive become one of those ''accidental millionaires'' and i can see the point Belg is making.
But without discounting that, I feel strongly that the real issue is the mega corporations and how they are getting away with paying little or no tax--that IMO is the big issue that needs fixing.

Harvey Specter

30-11-2013, 11:49 AM

Income and capital should be taxed the same. In theory, the intro of a CGT (incl family home) should allow income tax rates to reduce over time.

The treatment of carried interest as a capital gain is wrong in my view. They are earning that carry due to their efforts, not capital invested.

The other issue with taxes is that the government then spends it. I think most people would have no issue paying tax, provided they didn't think it was being wasted (eg interest free student loans - ok while studying but why when working? Etc)

Stranger_Danger

30-11-2013, 12:17 PM

SD,

The argument that your business's pay tax is somewhat selective (and well worn out).

If one looks at the total amount you've amassed (and can liquidate tax free) exactly how much tax have you paid on it?

Would that percentage be the same as the ordinary wage/salary has paid over ten years of working?

I don't want to quite figures, but everything has always been set up to maximise cashflow and taxable profit. Cash cows. With full taxes paid.

The percentage is whatever the top tax rate is at the time.

As for comparing it to the ordinary person, most ordinary people are no longer net taxpayers.

Try even getting someone to do paid overtime these days "No, it'll reduce my Working For Families and the wife will get mad".

Excuse me if I decline to shed a sympathetic tear.

janner

30-11-2013, 12:37 PM

A very small 0.01 % tax on All spending will catch every one according to their cloth..

Electronically taken..

Producing far more than the Gvt. spends today..

Bjauck

30-11-2013, 01:10 PM

Income and capital should be taxed the same. In theory, the intro of a CGT (incl family home) should allow income tax rates to reduce over time.
I agree that the family home should be included with any intro of CGT. Unfortunately Lab/greens realise that including the family home would make them almost unelectable. Hence their Capital Gains "lite" policy which will encourage more people to build up the value in their home properties as it would provide them with a further tax advantage compared with building up a kiwisaver balance or a bond and share portfolio subject to CGT!

In addition those people who have chosen to rent rather than purchase a house would see any capital appreciation of their savings taxed under CGT whereas those who have chosen to buy a home would have tax free capital gains on the home equity. This would probably increase house prices as demand would come from those who otherwise would have rented. House affordability being something politicians give "lip service" to wanting to improve!

Bjauck

30-11-2013, 01:33 PM

A very small 0.01 % tax on All spending will catch every one according to their cloth..

Electronically taken..

Producing far more than the Gvt. spends today..

The wealthier and more highly paid pay a small percentage of their income on GST as they save more of their income. Your tax would work if it included a "stamp duty" of 0.01% on the value of house and share purchases.

Vaygor1

30-11-2013, 03:31 PM

Easy to say it is okay to pay CGT when you're already rich before it is introduced.

Introducing CGT will obliterate entrepreneurialship in NZ and force overseas those few who take initiative, do something, and actually make things happen.

Even without CGT, I left 8 years ago and as a result I have a far greater disposable income; VAT is only 7%; and I live in a safe, warm, friendly, clean environment.

Having said that, ALL my money goes into NZ to buy housing and buy shares, millions to-date. I have never purchased a square inch of property or a single share in any country other than NZ. I believe my contribution can only be good for the NZ economy... finally, someone injecting money into NZ instead of taking it out (like all the banks, telecom, F&P, etc etc).

I now look forward to coming home in the next 3 years (NZ CGT or not) with the capital (already in NZ, as I type) to do something good for the country and fulfilling for me while being geographically close to my mum and dad.

If CGT was in place 8 years ago, I would have almost certainly left for good and definitely would not have sent a single cent home.

As per my opening sentence, easier to accept CGT when one has already 'made it'.

steve fleming

30-11-2013, 04:13 PM

Vaygor1

30-11-2013, 05:31 PM

NZ'ers seem obsessed with tax / tax rates....whenever I come back home i get utterly bored hearing about someones latest scheme to save paying $5oo or whatever in tax or a new way to bludge the system

Living in Australia is an incredibly high tax environment....doesn't stop the huge migration flows to Aus

I've paid $50k to $100k each year, in capital gains tax over the past couple of years, in addition to the 46.5% tax on my salary.... I have done well so I accept it and pay up, so I sleep well at night...its my choice to live in the country so i play by their rules, pay my taxes, and focus my energies on more productive things

Incredibly high tax rates in Australia = incredibly high wages/salary in Australia.

The pre-tax wages offered to kiwi's was blindly accepted by many who were unaware of Australian tax rates and cost of living; a primary cause of the NZ to Oz migration which I understand has now reversed for a number of reasons.

I hear ad nauseam Australian's obsessed with tax dodging/savings too, even though Australian taxes are put to a far more beneficial use to a much greater percentage of its population compared to NZ's model in my most humble of opinions.

Hard to compare NZ to Australia in this matter though. In population difference alone it's like comparing NZ to Fiji.

elZorro

30-11-2013, 05:37 PM

Tax, tax, tax with more tax! That's all I ever hear these days.

If all my hard-yards of saving goes into the market, helping companies to gain market growth etc through SPP's, capital raisings etc, why should it be taxed yet again when I decide to pull it out and invest in another company (ie not for income)? That's double-dipping if I've ever heard of it!

I think the government should start living within its means, reduce debt and start being extremely efficient rather than taking more of my money off me. I already pay tax on everything; if my tax bracket is increased, what am I going to get from it as a person who puts the most minimal of strain on the system? Diddly-squat!

Moosie, you have already had the benefit of a largely free education from the age of five, there have been infrastructures like power stations, roads, railways, hospitals, built for your use, not to mention your other vested interests being looked after by a government. There might be others who use more of the tax-payer funded system than you, but that is usually not their choice. Like ACC, there is probably not a better system to be had. If the govt was a bit more on the interventionist side, they could have picked up the economy a bit faster, and the tax base would now be in better shape. Without any cutbacks or asset sales needed.

I agree with the general sentiment, the taxes on capital should match the taxes on labour. Certainly up until now, generally the easiest (or more normal) way to get ahead has been to start an enterprise of some kind. Whether it is owning rental properties, a farm or a business. Of course, it doesn't always work straight away. Carrying forward tax losses numbs the pain in years that are not so good.

winner69

30-11-2013, 06:05 PM

As long as you guys remember that you pay me a state pension in a few years ...The govt have been putting one and frippence a week away for me for years so don't forget, ever, that is mine until I die. Looking forward to it soon.

Yes I am one of the selfish generation ....got all that free education and stuff ....bought houses T the start of the biggest property boom ever ....but that pension anf free medical care is mine ...ok. If need be I will pay capital gains on any future profits.

Not my fault that many of the younger ones bought houses with 100% debt now find it hard to pay it off and find themselves in negative equity territory ....somehow they will have to work even harder to pay my well deserved state pension

But I promise to pay cgt on future profits if I have too.

winner69

30-11-2013, 06:09 PM

I really enjoy this article - The Generation Game - how the gap between the Jaggers and the Jugglers will be exposed. .....and Mick a hero of my generation

http://www.davidmcwilliams.ie/2007/09/10/the-generation-game

gv1

30-11-2013, 06:44 PM

Totally agree with that ... And I'm one who'd be taxed far more!

I don't see the fairness in the outcome (untaxed capital gains in NZ) of my "labour" researching and investing should be untaxed where the average guy works 40-50 hours per week and has a young family to clothe, house and feed, is taxed on every hour that he "labours" away from his family.

So don't work - amass capital and pass it onto your children tax free ... Or do work and get taxed on every hour!

It just isn't fair. It isn't just. And it isn't what NZ stands for. I'm becoming very disappointed in my fellow kiwis who want to keep this outdated, unfair, unjust taxation system that really only taxes the working man and leaves the wealthy to get wealthier and wealthier.

Is Key a nice guy? Nope. He's a selfish prick trying to preserve his millions while most Kiwis struggle! Alas - its not just Key, although he epitomises the morally bankrupt kiwis that are against a capital gains tax, it all the selfish Kiwis who are against a capital gains tax!

And remember - this is from a Kiwi who would be one who'd be taxed far, far more than I am at present.

Owning house or rental property is simply just like any other business. If tenants damage, its the risk you take, if they don't pay rent then you have to pay mortgage from your own pocket. Its a risky business like any other business, people who have agendas they either never owned rental properties or never will because they can never take business risks or damn too lazy to do so. It is because of govt stupidity that investors make CG is because they have not released enough land for development, if they did the house prices won't sky rocket and hence huge Captial gains. People forget that to lay deposit for properties, its not an easy task. It is sheer hard work, sacrifice, leaving on basics, they save, simply not to depend on GOVT handouts. But there are others who cream off everything, from winz home allowance, to having 4-10 kids, family support, housing NZ homes( some not declaring true inc), community services card. people who claim all this, should see them wear brand stuffs, eating at fast foods, driving flash cars, except they can't own homes...
Plus Belgarion, if that was so easy to earn inc from shares, won't every tom , dick and harry would have been doing and you have to have the dough to start. You must have also done the hard yard before doing this, but if you are a trader you have to pay tax anyway. Honest people will always pay inc tax and acc levies on income earned through trading.

Vaygor1

30-11-2013, 08:37 PM

I really enjoy this article - The Generation Game - how the gap between the Jaggers and theiers will be exposed. .....and Mick a hero of my generation

http://www.davidmcwilliams.ie/2007/09/10/the-generation-game

A very enjoyable article indeed Winner; of particular interest to me having lived in Dublin 8 years ago, paying some Jaggers a fortune in rent to live in a shoebox near Crumlin Cross in Walkinstown.

Wolf

30-11-2013, 08:57 PM

Moosie, you have already had the benefit of a largely free education from the age of five, there have been infrastructures like power stations, roads, railways, hospitals, built for your use, not to mention your other vested interests being looked after by a government. There might be others who use more of the tax-payer funded system than you, but that is usually not their choice. Like ACC, there is probably not a better system to be had. If the govt was a bit more on the interventionist side, they could have picked up the economy a bit faster, and the tax base would now be in better shape. Without any cutbacks or asset sales needed.

I agree with the general sentiment, the taxes on capital should match the taxes on labor. Certainly up until now, generally the easiest (or more normal) way to get ahead has been to start an enterprise of some kind. Whether it is owning rental properties, a farm or a business. Of course, it doesn't always work straight away. Carrying forward tax losses numbs the pain in years that are not so good.

Havent been seeing any free education these last couple years... College "compulsory donation fees" and NZQA fee's add up to a couple grand a year.
The government/schools needs to stop saying free/ largely free education and start saying subsidized education.

Before they start introducing Capital gains tax and etc they need to sort out their own . The National and Labour Partys need to realise that their role is bettering New Zealand not counter fitting the previous party like the Kiwi Rail disaster or state housing. Dear God lets hope nothing similar happens with these asset sales.

I am no where near "making it" and dont see any reason for me to be double taxed. My capital, my income is already taxed and shouldn't be taxed again because i choose not to settle for bank interest rates. Before they start adding taxes they need to make them self more efficient.

Harvey Specter

30-11-2013, 09:08 PM

Moodier - don't thing of it as more tax, just raising the same amount from a different range of sources. Assume the govt looks at all it's spending, prioritises it's spending, and decides it needs to raise $100.

Now should that $100 be raised from income tax, CGT, GST, land tax, etc. that's is your income tax rate should drop but you will also pay CGT on your trades (which as a trader, you should be paying anyway).

iceman

30-11-2013, 11:50 PM

I agree with the general sentiment, the taxes on capital should match the taxes on labour. Certainly up until now, generally the easiest (or more normal) way to get ahead has been to start an enterprise of some kind. Whether it is owning rental properties, a farm or a business. Of course, it doesn't always work straight away. Carrying forward tax losses numbs the pain in years that are not so good.

The problem I have with the CGT discussion and policy from Labour of its introducion, is that it is meant as an increase in tax take. I have not heard of any policy to reduce other tax rates to match the CGT take.
I agree in general with you EZ and don´t have a problem with taxes on labour and capital being equal. Which to me would be something like a 10-15% flat tax rate, income tax, company tax, GST and CGT without exemptions. If I remember correctly this is something Roger Douglas wanted to introduce. I´ve always known you are an ACT supporter deep down EZ ;)

elZorro

01-12-2013, 07:42 AM

The problem I have with the CGT discussion and policy from Labour of its introducion, is that it is meant as an increase in tax take. I have not heard of any policy to reduce other tax rates to match the CGT take.
I agree in general with you EZ and don´t have a problem with taxes on labour and capital being equal. Which to me would be something like a 10-15% flat tax rate, income tax, company tax, GST and CGT without exemptions. If I remember correctly this is something Roger Douglas wanted to introduce. I´ve always known you are an ACT supporter deep down EZ ;)

Yes, maybe that would be a suitable target that everyone could agree on, but of course it can only be reached steadily. Otherwise there would be a massive business disruption and dissent. Introducing a simple CGT in 2014, and if the only way to get a mandate is to exempt the family home, then capital limits on the home for exemptions could be placed, as being a suitable multiple of the average property value in the region. Any mansion value above that, would be subject to CGT if it was sold. Home ownership should be encouraged.

Maybe Roger Douglas didn't get to implement the flat tax in toto. There were enough changes to take in for NZ anyway. GST was a big one. I seem to remember many SOEs downsizing in a big way. Steady changes, that would be more acceptable.

I can't see National moving on these ideas, even in a slow way. They just do part of it, the top end.

Under National, even the Super Scheme is dodging tax.

http://www.scoop.co.nz/stories/PA1309/S00469/nz-super-fund-caught-using-tax-havens.htm

craic

01-12-2013, 08:19 AM

As a South-Dubliner, born in the late thirties and growing up there into the mid-fifties, I found the article most interesting. I can never be anything but a Dubliner but I could never live there. I went back for visits over the past twenty years but it's a different planet for me.
A very enjoyable article indeed Winner; of particular interest to me having lived in Dublin 8 years ago, paying some Jaggers a fortune in rent to live in a shoebox near Crumlin Cross in Walkinstown.

cammo

01-12-2013, 09:52 AM

Interesting thread.

I own businesses and im sick of being the tax collector every month and paying $$$ to an accountant yearly to tell them i owe them more $$$.

I continually sit there and try to work out whether i should drop all my baskets walk down to winz with my kids and line up. Its easier and doesnt cause stress and you're guaranteed a income (also can people please learn you're and your - it aint that hard but man it makes you sound like a retard) , ok it aint great, but you can afford sky,bb and maccas so couch potato existence is sweet.

I just received an IRD survey asking how stressful using their system is...i.e how stressful is doing your gst (including finding the money?), paye etc and how much time it uses...so they're obviously worried about the goings on. (note correct use of they're - rant over). Im more down the line of IRD providing a rebate for time spent providing them with tax revenue or providing a contribution to cover some of your accounting fees.

Im in moosies line.

I actually see mass job losses rolling in over the next many years especially in retail. Falling margins along with mass internet shopping will kill lots of SMEs in NZ, the ones employing 1-4 staff. increased GST, 4 wks holiday etc have started and will kill these. Nurseries are one of the first hit badly and most are declining or changing business model. There just isnt the profit in them anymore.

Business investment is to be encouraged and nz is terrible at this. The benefit cycle is totally closed cycle so you cant get up out of it to start a SME.
All the mums and dads businesses making widgets here are slowly being driven out of business by inferior imports.
america is trying to restart manufacturing now after sending all their machines to the crusher and bringing it in on boats because they now understand what it does to their economy.

Capital gains tax i see as just a way to strip further $ off new zealanders who actually try to better nz by providing or improving shelter for other people. Its kinda moot for profiteering off houses because if its profit from development of a property you should be paying tax on it unless its a one off tidyup of your own house. Anything more and your accountant + the ird would be suggesting you provide $.

I definitely see us as considerably well taxed, its very hard for most people to juggle everyday living on 35-45k and they're unlikely to afford a death - grip (mort - gage). The recent change to 20% dep favours this more.

This will well increase as we allow foreign purchase of houses, and I reckon Nz is the best example of a banana republic that wants to be a first world country (over bloated government and public service) which unfortunately provides other first world countries with a "bach-purchase" destination. Buy a house here, leave it rented till you have kids needing a safe place to school and be brought up, move over, then bring your sister and her family who you help into a house, then bring your parents and MIL too, all needing houses. Price goes up cos you get paid in pounds or euros and our houses are like 50% of the cost of your one and plenty of punters want in here, esp chinese...be here for few years get cheap tertiary education for your kids.
Its going to get worse. My 2c.

fungus pudding

01-12-2013, 09:59 AM

This will well increase as we allow foreign purchase of houses, and I reckon Nz is the best example of a banana republic that wants to be a first world country (over bloated government and public service) which unfortunately provides other first world countries with a "bach-purchase" destination. Buy a house here, leave it rented till you have kids needing a safe place to school and be brought up, move over, then bring your sister and her family who you help into a house, then bring your parents and MIL too, all needing houses. Price goes up cos you get paid in pounds or euros and our houses are like 50% of the cost of your one and plenty of punters want in here, esp chinese...be here for few years get cheap tertiary education for your kids.
Its going to get worse. My 2c.

You've overpriced it.

elZorro

01-12-2013, 10:20 AM

I agree with a lot of what you are saying Cammo. I've tried running two businesses, and running one that you are in control of, is a lot better. I think we're all tempted to think that whatever is in the business bank balance must be ours, but in the case of GST, you've charged someone else for it on top of standard invoicing, and unless you have a lot of GST credits (you don't when you employ staff), you'll need to set it aside like prov tax. Retail is really hard, not my area in general. But like you say, there are a lot of jobs there, jobs that should be kept going if possible. Manufacturing, this has to be smart manufacturing, increasingly.

Business needs a good profit centre somewhere, or it just ends up being too hard to employ staff. Farms, rental owners, commercial property owners have been surviving on low staff ratios to assets employed for decades, because the profit centre is usually untaxed capital gain. Our problem with the tax base will show up more, if everyone gives up on business models that need staff.

Zaphod

01-12-2013, 10:53 AM

elZorro

01-12-2013, 01:41 PM

IMO, the implementation of a CGT is inevitable. Opposition parties have whipped up public sentiment to the point where the vast bulk would vote for implementation of the tax, despite it effecting them adversely. From my discussion with others, it is seen as the primary solution to the housing crisis (along with banning evil foreigners from owning property) and a tool to (quote) "whip those rich bastards into line."

I cannot see Labour, who are the party most likely to implement a CGT, including the family home, nor can I see a reduction in PAYE rates occurring, especially for those in the middle to upper brackets. This will simply be seen as a new revenue stream for the Government that the public will be happy to pay for.

Maybe that's right Zaphod, but Labour would probably drop the upper tax a bit more at the same time, maybe the company tax too. There's been a lot of talk about how the CGT should apply across the family home. This treatment would mean that after generations in NZ, the most common means of protecting some modest capital for employed people, their spouses and offspring, would come under the tax umbrella. NZ has become less egalitarian, and most people have some idea how that has come about. Those with more capital have done comparatively well, due to generous (nil) tax on capital gains on many long-term assets besides the family home. The filter-down effect hasn't worked that well here, or in any other countries, and floating the NZ dollar hasn't solved everything either.

It would be fairer and safer to at least delay the CGT on a modest family home, and maybe a flat tax across all assets and income would be brought in a few years later. But it's my feeling that the reason for anyone stating that it should be immediately applied across all property, is to make it an unwinnable policy, and to demean the intent of the fairer policy.

Reasoning of some National or right-wing (liberal) voters: Happier with a smaller public sector, as long as it doesn't affect them. Unhappy paying taxes full-stop, if possible will go out of their way to minimise these. May agree CGT is on the cards, but looking for any way to stave off this event. Want the govt to stay out of the economy if possible.

Reasoning of some Labour or left-wing voters: See the usefulness of more employment in the public or state sector up to a point. Unable to avoid tax generally, would like to see it applied fairly to all. Would be happy to see a CGT, as long as it was applied fairly. Would like to see more direction for the economy from the govt.

Harvey Specter

01-12-2013, 02:02 PM

Maybe that's right Zaphod, but Labour would probably drop the upper tax a bit more athe same time, either.
.hahaha. You do know it is Labour policy to increase the top rate of tax AND bring in a CGT!

Vaygor1

01-12-2013, 02:48 PM

Easy to say it is okay to pay CGT when you're already rich before it is introduced....As per my opening sentence, easier to accept CGT when one has already 'made it'.
That depends on how it is introduced. Many countries have established tables that backdate the amount owed to the date of the asset's purchases. While these can be a bit blunt - I'm okay with this backdate formula - so long as they can be appealed / discussed sensibly with the taxman.

Retrospective CGT?? This absurd concept if implemented, would compel me to give up on NZ. My investment decisions in the past were formed (in part... actually a major part) on the basis of the tax system at the time. If retrospective CGT was implemented then back to when.. 1880? What about calculating the Capital Losses for every business over the last 135 years that the IRD would then have to agree on and pay back?

Introducing CGT will obliterate entrepreneurialship in NZ and force overseas those few who take initiative, do something, and actually make things happen.
Sorry Vaygor1, this is "pub economics" again. Were this actually true then NZ would be flooded with foreigners from most other developed countries where they actually do have CGT. :)

One could also produce the counter argument that with systems like working for families in place NZ's current "tax and state welfare" system is actually discouraging entrepreneurial activity in NZ. Wouldn't taxing people far less via PAYE tax encourage wiser choices rather than forcing many young workers to live hand to mouth for far too long?

Percentage-wise, New Zealand is flooded with foreigners given its isolation from the rest of the world... but alas not with many entrepreneurs. The entrepreneurs you refer to do not go to NZ for any length of time but take our money instead from overseas locations. Who owns all our banks again?

Tax and State Welfare system is a separate issue. If the overall NZ tax take is the same with CGT, as you argue, then the amount paid out to the incapacitated and disadvantaged would not alter with the introduction of it. The non-incapacitated young workers you refer to would be on low wages and are therefore already subject to low or zero tax, so no new incentive there by lowering PAYE with CGT introduction.

Vaygor1

01-12-2013, 03:25 PM

In every facet of life there is a ying and a yang. When changes are made there is a bit (or a lot) of upheaval and then everything settles down again to the new equilibrium. So long as the new way-things-are is sustainable and non-corrupt, the end result will be that the new regimes advantages will come with matching disadvantages, and life will go on.

There are good arguments for the introduction of CGT and good arguments for not introducing it, and we can all discuss this until the cows come home while having no major impact on each other's views.

The one issue that I do wish to highlight is that NZ in not having CGT gives it a point of difference; a differentiator. Every business and entity in the world is trying their best to find them; to give themselves a niche.

New Zealand has a few unique differentiators; its isolation, land mass to population size, its lack of history (ie baggage), no land borders with other countries, its massive coastline given its population (9th longest in the world), it is first in the world to open trading every day, and amongst others, no CGT. Most of these are not (or not readily) with our control.

I don't see any short term advantage in causing the upheaval that would take place with CGT introduction, nor do I see a long term advantage in removing one of NZ's few points of difference within our control.

elZorro

01-12-2013, 06:35 PM

hahaha. You do know it is Labour policy to increase the top rate of tax AND bring in a CGT!

OK, I might not have remembered that. Under National, the top tax rate of 33% kicks in at $70,001 and it doesn't change. Labour proposed in 2011 that at $150,000 the tax rate would move back to 39%, where it had been before National got in. There has been some discussion within Labour about that rate if CGT came in, so who knows what the proposed rate will be in 2014. In Australia, the tax rate once you earn over approx. NZ$228,000 is 45%.

In 2011, Labour proposed a CGT of 15%. This matches the flat tax in the Seycelles, Belarus, etc. http://en.wikipedia.org/wiki/Flat_tax

bottlerboy

01-12-2013, 07:45 PM

Under National, the top tax rate of 33% kicks in at $70,001 and it doesn't change. Labour proposed in 2011 that at $150,000 the tax rate would move back to 39%, where it had been before National got in.

Excuse me EZ under Labour the 39% kicked in at $60,000

G on

01-12-2013, 08:00 PM

IMO income tax needs to be scrapped and only have GST at 23% to finance the country. Think what you could do if you didn't need to waste any time on paye!!
I ceased my business as I just didn't consider it was worth it accumulating any more!!
It's time for an alternative to the same old same old.

janner

01-12-2013, 08:06 PM

The wealthier and more highly paid pay a small percentage of their income on GST as they save more of their income. Your tax would work if it included a "stamp duty" of 0.01% on the value of house and share purchases.

This would apply to all financial trans-actions..

Each would pay according to their pocket .

JBmurc

01-12-2013, 08:11 PM

Zaphod

01-12-2013, 08:31 PM

This would apply to all financial trans-actions..

Each would pay according to their pocket .

I can see the lawyers and accountants salivating already!

elZorro

01-12-2013, 09:00 PM

Excuse me EZ under Labour the 39% kicked in at $60,000

Well, in 2011 they were talking the 39% rate at $150,001 upwards, so that was quite a bit more even-handed. I haven't been able to find out what the current proposed policy is.

Harvey Specter

01-12-2013, 09:04 PM

Well, in 2011 they were talking the 39% rate at $150,001 upwards, so that was quite a bit more even-handed. I haven't been able to find out what the current proposed policy is.
39% used to kick in at $60k. Labours policy at the last election was 39% over $150k and Cunliffe has referred to that since being leader. That's on top if a CGT.

digger

01-12-2013, 10:05 PM

Can CGT not be got around by creating a company with mom and dad as the major holders and the kids very small holders. Now the kids might be 50 or so when the major holders die but then they own 100% of the company. How would a company pay CGT just because a major holders has died? The company has not died.

gv1

02-12-2013, 10:51 AM

(and receive your vitriolic condemnation) Its a fact. That is the problem in this country. That's what the govt has been doing, its better to teach them how to fish THAN give them fish. results will be way different than what we have today.

Poet

02-12-2013, 11:05 AM

For those who believe the rich create jobs ...

Sorry-folks-rich-people-actually-don-t-create-the-jobs (http://www.stuff.co.nz/business/9463649/Sorry-folks-rich-people-actually-don-t-create-the-jobs)

A completely facile article IMHO

Bjauck

02-12-2013, 11:59 AM

Bring in the DEATH TAX I say 30% over 1million
As probably a majority of those who have over a million in assets have transferred their assets into family trusts, death duties would be largely ineffective. If anything they would encourage even more people to set up trusts..enriching the accountants and lawyers involved in the trust business. As trusts are so prevalent in NZ you would need to introduce a wealth tax instead of death duties. Otherwise the law surrounding family trusts should be rewritten so that the assets of trusts, where settlors still use the assets settled and/or are trustees and/or beneficiaries, should still be regarded as the property of the settlors for calculating tax and benefit entitlements.

Bjauck

02-12-2013, 12:18 PM

Maybe we should go back to the future....scrap all income tax and council real estate rates and replace them with a combination of financial transaction tax and a wealth tax. The wealth tax may encourage a shift away from non-productive assets in favour of building up businesses and shareholdings.

G on

02-12-2013, 12:54 PM

Poet

02-12-2013, 02:06 PM

Your opinion is noted. Would you care to explain how you arrived at your opinion? :)

OK - IMHO the article is just complete sophistry from start to finish but maybe an example

Suggesting that "rich entrepreneurs and investors" create the jobs, therefore, Hanauer observes, is like suggesting that squirrels create evolution.

No it isn’t – if anything it is probably more like suggesting that squirrels create baby squirrels (or maybe squirrel nests or squirrel $hit or anything, really, that squirrels do create), Poet observes.

Or, to put it even more simply, it's like saying that a seed creates a tree. The seed does not create the tree.
So saying squirrels create evolution is like saying a seed creates a tree – no it isn’t ! at least not in any logical way that I can understand. I’ll agree that it does sound simpler though.

This is just a straw man argument he has created so he can now demonstrate his cleverness by knocking it down – I doubt if anyone in the history of mankind has ever really suggested that squirrels create evolution

The seed starts the tree. But what actually grows and sustains the tree is the combination of the DNA in the seed and the soil, sunshine, water, atmosphere, nutrients, and other factors that nurture it.

No **** Sherlock – great deductive reasoning. This must mean that entrepreneurs don’t create jobs – wow!

blobbles

02-12-2013, 02:07 PM

There was a book written about the tax system in America to change it to a GST only system and all the ramifications. The basic premise is everybody spends, so pays tax. Personally I thought it made better sense than the current system most of the Western world has. Imagine businesses being able to just manage their business without the compliance costs we presently have. A tax system should be as simple as possible and GST does it.
As Belgion comments, there would be less accountants doing income tax work which frees them for the business operations.
If I can remember the name of the book I'll let you know.

Man its refreshing to go onto a thread with intelligent conversation! Very humbling too as I have learnt a lot, nice to see smart people out there thinking about things and coming to more informed conclusions than myself :)

I don't think a spending only tax will ever work because it would adversely affect the less well off who spend more of their income than the wealthy. GST is REGRESSIVE tax policy as a result. What we need, as everyone is pointing out quite well I believe, is for the middle class to have a large disposable income, if we are to base our economy around buying/selling, which is what a capitalist system is all about. That means taxing the wealthy dramatically more than they currently are and redistributing the wealth through taxation so the middle income are much more well off. This means getting money out of unproductive areas (wealth accumulating bank balances/overvalued shares/property) and into productive areas (wealthier middle class spending and investing in their own small businesses). If you are interested in seeing where the current inequality lies in America and increasingly the rest of the world, check out the youtube video here: http://www.youtube.com/watch?v=QPKKQnijnsM

The problem I see in todays world is that it is increasingly globalised but not an increasingly level playing field legally. I mean to say that it is more and more easy to move wealth around the world in the sense of both hiding your wealth and using it to further another countries economy, but the rules are so different in every country that governments are ending up having to out tax break each other to woo corporates/investors. I don't know about you but that is NOT the world I would like to live in where governments are constantly pandering to the needs of the wealthy and forgetting about the majority of their citizens, or even worse, claiming that it helps their citizenry in doing so, or even worse, them being correct. It creates a race to the bottom scenario and forces countries to become low wage economies or be crushed under the heel of the larger/stronger economies. I believe this is what the TPP will end up doing, if it comes to fruition, forcing all the pacific nation signatories to become proxy economic states to the US where the majority of the money will flow as they force upon us their rules of doing business (which they are obviously adept at in their own environment). The copyright bills which would be more strongly enforced are an example of this - NZers would most certainly not be able to copy music/movies etc that is syndicated US companies, but we would still not get the benefits of having these in our market as companies like Netflix etc most likely wouldn't provide their service to the country as it is too small a market. Hence money would flow one way only. And even if they ended up supplying their product, all taxation of that product would either flow back to the US or to some other country where it has its "headquarters" and (surprise surprise) a very low tax rate, exacerbating the problem.

I hate to say it, but soon we are going to need UN intervention in the tax area, I feel, or at least a concerted effort from a great many number of countries that stops money flowing offshore to the government who sucks up most to corporates or wealthy investors. You see this a lot in NZ where we suck up to investors overseas by offering them visa money for "investment" into the country which now means "buy a house in Auckland and I give you a resident visa", in the hope that this will somehow make our economy stronger but does the exact opposite by exacerbating the inequality gap.

Zaphod

02-12-2013, 04:18 PM

Actually no.

The tax collection mechanisms becomes so simple that lawyers and accountants don't get much to do. IMNSHO this would be a good thing so that these highly skilled people target their skills more at making businesses better rather than working out ways to save tax which is largely, if not completely, unproductive.

So your system is so simple and water-tight that tax avoidance is simply not practiced? While I agree that this would be a good thing, I have doubts from a practical perspective, that such a utopia could ever be realised.

JBmurc

02-12-2013, 04:40 PM

As probably a majority of those who have over a million in assets have transferred their assets into family trusts, death duties would be largely ineffective. If anything they would encourage even more people to set up trusts..enriching the accountants and lawyers involved in the trust business. As trusts are so prevalent in NZ you would need to introduce a wealth tax instead of death duties. Otherwise the law surrounding family trusts should be rewritten so that the assets of trusts, where settlors still use the assets settled and/or are trustees and/or beneficiaries, should still be regarded as the property of the settlors for calculating tax and benefit entitlements.

Yes I,m purely looking in the macro sense without really delving into the exact details
How it could be fairly set-up ...what I do know is personal I know of so many kids that
Will never have to worry about money thanks to their baby boomer parents living through
Some of the greatest capital growth times in nz history likely to be seen again for muti-decades
Then we have the impending problem of the smaller base of tax players having to fund the baby boomers retirements and increasing amounts if health care costs
Easy to see A growing divide between the rich and poor families going forward ...no cap gain or higher income tax will change much

Poet

02-12-2013, 05:53 PM

What about these:

http://en.wikipedia.org/wiki/Trickle-down_economics
http://en.wikipedia.org/wiki/Supply-side_economics

I can post many more from more academic sources and even from commercial banks.

The conclusions are basically all the same: ... Those that believe making the rich richer will create jobs and/or result in higher economic growth have absolutely NO basis for this view in fact.

Belgarion

My post was that the article that you posted was facile, you asked why I thought this and I gave my reason by way of one example (of the many available).

I wasn't intending to express an opinion about the trickle down theory or job creation, I was just implying that this particular article didn't add anything to the debate (so I'm not altogether sure why you are posting refutations of arguments I didn't make)

Vaygor1

03-12-2013, 02:29 AM

Remember this interview on a simple tax system on 3news?

I don't really hold a view on Gareth Morgan, and I find the concept interesting but I do wish that John Campbell would learn to shut up sometimes.

http://www.3news.co.nz/Gareth-Morgans-radical-tax-overhaul/tabid/367/articleID/132177/Default.aspx

Whipmoney

03-12-2013, 02:15 PM

All those studies were done in countries that had not lost 15% of their population, and have supportive conditions for job creation and healthy economic growth. NZ does not. It's like saying AIDS is not an epidemic when all the studies were conducted only on straight white women. find an analysis that has been conducted using NZ's unique economic conditions.

The UK recently scrapped CGT for entrepreneurs. Must be some economic policy behind that decision!

Anecdotally 'Trickle down economics' doesn't work. Income inequality (i.e. the rich taking a bigger slice of the pie) invariably leads to a decline in aggregate demand (consumption) as they either hoard their wealth in the banks or invest it in some form. As a larger percentage of the national income is diverted to investments then bubbles will invariably form (e.g. in real estate and the stock market) which ironically hit lower income earners the hardest.

The other factor in play in that low skilled labour is often replaced by capital (hence the decline in manufacturing jobs worldwide - including china) with the benefit of the increased productivity going straight back to capital. This results in unemployment and a further decline in aggregate demand, with the capital holders (generally the rich) simply getting richer. And so the circle goes..

blobbles

03-12-2013, 04:14 PM

Logically, trickle down should work. But it doesn't for two reasons: human greed appears to know no bounds and such policies are implemented in complex systems (economies) which follow their own set of rules which are constantly modified as external/internal feedback keeps it changing (as does the climate, human body etc).

It would be great if trickle down did work, but it never does. But under capitalism it will always have its evangelists.

Whipmoney

03-12-2013, 04:32 PM

Logically, trickle down should work

Why so..? I would go as far to say that Trickle Down Economics is actually illogical.

Think about it this way... consumption is ultimately what drives the economy as if humans didn't need to consume then simply put... we wouldn't need/have an economy. Investment on the other hand can loosely be described as the process of increasing/improving your capital in order to consume/produce more, with the latter activity essentially allowing one to derive further capital to essentially consume/invest more.

Which economy is going to consume more?

1) A tribe of 20 where the big chief has 90% of the income and wealth; or
2) A tribe of 20 where all the income and wealth is roughly shared.

In the first the big chief will be able to satisfy all of his needs with a small portion of his income but will likely hoard wealth in order to defer his consumption to later. The rest of the tribe is essentially required to base their productive activity (say fishing, hunting, making clothes) around his demand (and theirs to a lesser extent).

In the second example the various tribes people will all consume various amounts and the currency will flow around the economy creating more incentive for the producers in the economy to produce (fish/hunt/sew) more. Collectively it is imaginable that this economy will grow at a faster rate as each tribesman will produce more and more to accomodate growing demand.

A very basic example i know but I hope you get the point..

blobbles

03-12-2013, 04:55 PM

Why so..? I would go as far to say that Trickle Down Economics is actually illogical.

Think about it this way... consumption is ultimately what drives the economy as if humans didn't need to consume then simply put... we wouldn't need/have an economy. Investment on the other hand can loosely be described as the process of increasing/improving your capital in order to consume/produce more, with the latter activity essentially allowing one to derive further capital to essentially consume/invest more.

Which economy is going to consume more?

1) A tribe of 20 where the big chief has 90% of the income and wealth; or
2) A tribe of 20 where all the income and wealth is roughly shared.

In the first the big chief will be able to satisfy all of his needs with a small portion of his income but will likely hoard wealth in order to defer his consumption to later. The rest of the tribe is essentially required to base their productive activity (say fishing, hunting, making clothes) around his demand (and theirs to a lesser extent).

In the second example the various tribes people will all consume various amounts and the currency will flow around the economy creating more incentive for the producers in the economy to produce (fish/hunt/sew) more. Collectively it is imaginable that this economy will grow at a faster rate as each tribesman will produce more and more to accomodate growing demand.

A very basic example i know but I hope you get the point..

I think you just proved my point that in system feedbacks are why it doesn't work logically. You are thinking in terms of system theory, not in terms of rule based logic, I feel! Spending is a feedback loop which enables an entire economy to grow.

Logically it works because the theory goes:

People that are entrepreneurs and business owners provide jobs which give people income. They need rich people to make this investment, so the rich people need to be unencumbered with taxes. More people working for salaries means better economy (forget the feedback of those people spending and think of it in terms of those people were unemployed before i.e. incredibly simplistic). Therefore, giving entrepreneurs more money means more jobs, more people want to become entrepreneurs = better economy.

Really, smart people can't think of it in the terms I just described because they have a little experience and education about the complex interplays within economies or other complex systems. They realise that spending/employment/unemployment/inflation/monetary policy/financial systems/governance etc each have a little part to play which affects everything in the big picture... but it doesn't stop the people who think they know better from thinking about it in terms I just described, because it "makes sense" to them due to ignorance of complex systems.

Whipmoney

03-12-2013, 05:25 PM

So you are all saying that venture capitalists and angel investors serve absolutely no economic purpose and if there were none at all in NZ we wouldn't even notice because companies would miraculously start themselves?

And companies that need working capital injections to expand, or simply survive, would still be funded in the absence of any sophisticated investors who currently take up share placements and IPOs?

And baby boomers seeking to sell their businesses so they can retire should just close them down instead of finding a buyer with the funds to purchase them?

i think you are all dreaming if you think that wealthy people don't have an economic impact.

Where was it suggested that wealthy people (including venture capitalists and angel investors) don't have an economic impact?

What I am saying is that society as a whole is more likely to be more prosperous if the aggregate wealth is more evenly distributed.

Sure the super wealthy, venture capitalists, angel investors and like the play an important role in society but then again so does the common worker who actually provides the labour.

Arguably the healthiest societies are those that have the largest middle class as the middle class provides massive platform for consumption in addition also providing for a significant source of potential in the form of human capital.

If you want to talk about the superwealthy, venture capitalists and angel investors then ask yourself in what society/class did the likes of Jobs, Gates, Thiele, Musk and Zuckerberg grow up in? And what would the world have looked like if none of these guys got entry into college in a world where only the offspring of the top 1% could get into Ivy league colleges.

janner

03-12-2013, 06:08 PM

I can see the lawyers and accountants salivating already!

This is the age of Electronic Banking Zaphod..
Accountants will be reduced..

No Income Tax very little if any Company Tax..

They will be the shrieking voices crying that it will never work !!

Universities will have to find work for those departments that will shrink :-)

janner

03-12-2013, 06:11 PM

Actually no.

The tax collection mechanisms becomes so simple that lawyers and accountants don't get much to do. IMNSHO this would be a good thing so that these highly skilled people target their skills more at making businesses better rather than working out ways to save tax which is largely, if not completely, unproductive.

Total agreement !!

Useless pencil pushers with expensive educations.

janner

03-12-2013, 06:16 PM

I hate to say it, but soon we are going to need UN intervention in the tax area, I feel, or at least a concerted effort from a great many number of countries that stops money flowing offshore to the government who sucks up most to corporates or wealthy investors. You see this a lot in NZ where we suck up to investors overseas by offering them visa money for "investment" into the country which now means "buy a house in Auckland and I give you a resident visa", in the hope that this will somehow make our economy stronger but does the exact opposite by exacerbating the inequality gap.

The UN is a socialist organisation Hell bent on world control !!

janner

03-12-2013, 06:18 PM

So your system is so simple and water-tight that tax avoidance is simply not practiced? While I agree that this would be a good thing, I have doubts from a practical perspective, that such a utopia could ever be realised.

Far more simple than the current one !!

Less expensive ..

Every one shifts money. Every one pays.. Each according to their spending.

blobbles

04-12-2013, 01:10 AM

Whipmoney

04-12-2013, 08:34 AM

All of you who said that wealthy people don't create jobs. Of course they do. Businesses wouldn't exist without financing. Without businesses there would be no jobs (or everyone would be govt employees).
And here is a report showing just how many jobs are created by venture backed companies
http://www.nvca.org/index.php?option=com_content&view=article&id=255&Itemid=103

All of who? I didn't say that.. all I said was that Trickle Down Economics (defined below) is bulls**t. It's just crony capitalist.

"Trickle-down economics" and the "trickle-down theory" are terms in United States politics to refer to the idea that tax breaks (http://en.wikipedia.org/wiki/Tax_breaks) or other economic benefits provided by government to businesses and upper income levels will benefit poorer members of society by improving the economy as a whole.[1] (http://en.wikipedia.org/wiki/Trickle-down_economics#cite_note-1) The term has been attributed to humorist Will Rogers (http://en.wikipedia.org/wiki/Will_Rogers), who said during the Great Depression (http://en.wikipedia.org/wiki/Great_Depression) that "money was all appropriated for the top in hopes that it would trickle down to the needy."

In4a$

04-12-2013, 08:36 AM

skid

04-12-2013, 12:26 PM

I think what we are all missing is that there are really 2 classes of wealthy--the lower class,which is the venture capitalists that are really important in making $$ available to fund and help new businesses and basically ,help things develop
And then there is the upper class of wealthy(the 1% they talk about) Thats big corporations that tilt the playing field toward themselves and do their best to create monopolies that harm the working people. They actually ,in many cases do the opposite of the venture capitalists because they buy up,or force out smaller businesses to support their growing monopoly.Their mantra is greed at the expense of anything that gets in their way--these are corp. like Walmarts etc.
They get stronger and stronger(often lobbying governments) and basically hoard $$ that should be circulating.They create jobs,but only on an exploitation level and outsource to sweatshops if possible.
They are not only binding up the economic system but are often taking away basic freedoms in the process(do some research on Monsanto) They create societies where the people flip burgers and clean hotel rooms instead of creating businesses.
They will get a patent on the word silver fern and Kiwi if you let them and sue you in the international court if you use it.
Those are the real 1% ..and they are a hard lot to stop.

That is what the TPPA trade agreement is about (behind closed doors)
more info here if anyone is interested

http://www.avaaz.org/en/selling_out_nzs_democracy_c/?bYjaJbb&v=31965

blobbles

04-12-2013, 12:57 PM

Skids got it. I also include the super wealthy individuals in there who sit on piles of cash, spending tiny amounts on frivolous item's that have no economic utility like super yachts and private islands, essentially removing money from the real economy. People like Bill Gates are all right in that they give back in the end but those that hold what amounts to super rich ego pissing contests against one another need a wake up call. The new breed of rich entrepreneurs (Musk/Theil etc) deserve their wealth and continue to prove it.

Stu

04-12-2013, 06:37 PM

Where was it suggested that wealthy people (including venture capitalists and angel investors) don't have an economic impact?

What I am saying is that society as a whole is more likely to be more prosperous if the aggregate wealth is more evenly distributed.

Sure the super wealthy, venture capitalists, angel investors and like the play an important role in society but then again so does the common worker who actually provides the labour.

Arguably the healthiest societies are those that have the largest middle class as the middle class provides massive platform for consumption in addition also providing for a significant source of potential in the form of human capital.

If you want to talk about the superwealthy, venture capitalists and angel investors then ask yourself in what society/class did the likes of Jobs, Gates, Thiele, Musk and Zuckerberg grow up in? And what would the world have looked like if none of these guys got entry into college in a world where only the offspring of the top 1% could get into Ivy league colleges.

There's so much stupid on this thread I don't know where to start.
Aggregate wealth was quite evenly distributed throughout the Soviet era, right up to the point it went bankrupt.
Socialism completely destroys the middle class as you can see happening in the US, what you get left is a state dependent underclass and an elite ruling class of political lawyers, actors, federal educators, etc, and their progeny who will rule the next generation. Unhealthy in all senses including the literal sense, and the effects of the trainwreck that is ObamaCare are only just sinking in.
The last para is a joke surely? Jobs came from poor background and fortunately didn't even complete college and would have failed at high school but for an unconventional teacher the unions would sack today, Musk like Jobs was largely self educated and attended Wharton on merit but dropped out of his PhD after a week. Gates also dropped out of college after coming from an elite prep school. Thiel is nothing more than a money-lender and Zuckerberg a right time right place sociopath. In all cases their main advantage was access to the technology, entrepreneurs and corporations that grew out of Silicon Valley, not sure how many academics you know but I can assure you most of them are neither bright nor productive.
The point is they succeeded because they could start a business in a time when it was still possible, currently federal and state regulation, taxes and liabilities are destroying everything from small banks to family farms, leaving only the Party and union favoured funders who can afford the lawyers, compliance and kickbacks. For the moment you can still write an app or shuffle money around but the main hope for any rebirth of the US economy is cheap fracked gas, and tons of cheap fuel isn't helping Venezuela much. And an economy like the US needs much more than apps and an occasional Twitter to sustain itself.
California despite its massive natural and inherited assets is collapsing, its counties and cities are going bankrupt under endless entitlements and its state schools are turning out the worst in the nation in subjects like maths and english, and Jobs way back in the nineties was railing at the dire state of education, and that was before common core's homogeneous indoctrination.

blobbles

05-12-2013, 02:58 AM

There's so much stupid on this thread I don't know where to start.
Aggregate wealth was quite evenly distributed throughout the Soviet era, right up to the point it went bankrupt.
Socialism completely destroys the middle class as you can see happening in the US, what you get left is a state dependent underclass and an elite ruling class of political lawyers, actors, federal educators, etc, and their progeny who will rule the next generation. Unhealthy in all senses including the literal sense, and the effects of the trainwreck that is ObamaCare are only just sinking in.
The last para is a joke surely? Jobs came from poor background and fortunately didn't even complete college and would have failed at high school but for an unconventional teacher the unions would sack today, Musk like Jobs was largely self educated and attended Wharton on merit but dropped out of his PhD after a week. Gates also dropped out of college after coming from an elite prep school. Thiel is nothing more than a money-lender and Zuckerberg a right time right place sociopath. In all cases their main advantage was access to the technology, entrepreneurs and corporations that grew out of Silicon Valley, not sure how many academics you know but I can assure you most of them are neither bright nor productive.
The point is they succeeded because they could start a business in a time when it was still possible, currently federal and state regulation, taxes and liabilities are destroying everything from small banks to family farms, leaving only the Party and union favoured funders who can afford the lawyers, compliance and kickbacks. For the moment you can still write an app or shuffle money around but the main hope for any rebirth of the US economy is cheap fracked gas, and tons of cheap fuel isn't helping Venezuela much. And an economy like the US needs much more than apps and an occasional Twitter to sustain itself.
California despite its massive natural and inherited assets is collapsing, its counties and cities are going bankrupt under endless entitlements and its state schools are turning out the worst in the nation in subjects like maths and english, and Jobs way back in the nineties was railing at the dire state of education, and that was before common core's homogeneous indoctrination.

The assertion that "socialism destroys the middle class" and giving America as an example of it is pretty poor. Is that what you really meant? America is one of the most deregulated economies in the world with extremely strong property laws for individuals and corporations. These are NOT the hallmarks of socialism (which is about collective ownership over the means of production and less private property) and there are more socialist like countries (like NZ/many in Europe) which are doing better than the US. I will stop there though as I aren't 100% sure I am reading you correctly as you seem smart and that statement is so flawed...

Again, I don't think any of us (Whipmoney or myself) are arguing for Communist/socialist doctrine to rule. What we ARE arguing for is a more sensible distribution of wealth. Currently 40% of the wealth in the US is controlled by 1% of the population. While the first 40% of people are living on, or very close to, the breadline. This is where unrestrained capitalism leads, an incredibly inequitable society with a stark difference between the have and have nots. It could easily lead to revolution as inequality has so many times before in so many different societies. Or should I say that it doesn't lead to revolutions per se, but it is like having AIDS, putting you in a position where another simple disease could kill you easily (be it racial intolerance, dissatisfied rebel groups etc).

KW - read my comment I left at the bottom of that article. Seriously comparing HK to NZ in ways to attract foreign investment is seriously deluded in my opinion. Its like comparing the NZ economy to the Thai economy and saying we should invest in rice and latex because they do it well (i.e. completely forgetting about the climatic differences). Or comparing us to the UK and saying that we should become a financial powerhouse because it worked for them (i.e. completely forgetting the history of the country and its geopolitical position).

Stu

05-12-2013, 02:58 PM

The assertion that "socialism destroys the middle class" and giving America as an example of it is pretty poor. Is that what you really meant? America is one of the most deregulated economies in the world with extremely strong property laws for individuals and corporations. These are NOT the hallmarks of socialism (which is about collective ownership over the means of production and less private property) and there are more socialist like countries (like NZ/many in Europe) which are doing better than the US. I will stop there though as I aren't 100% sure I am reading you correctly as you seem smart and that statement is so flawed...

The US is increasingly and highly regulated, only states rights gives it some air pockets. It's manufacturing has been destroyed by regulation. Education, health, finance are effectively govt run or soon will be. Sarbanes Oxley would not have prevented an Enron but it sure has prevented new IPOs, what Dodd Frank doesn't destroy it will simply further entrench. Just try getting an incompetent and unqualified union teacher sacked, a criminal like Corzine will however have no trouble walking free with the right political contacts.
By "hallmarks" of Socialism you mean the "purist definition" of socialism? If the state confiscates 30, 40, 50, 60, 70 percent of your incoming capital, then they own that. But you're saying it's not socialism until it gets to 100 percent?

Stu

05-12-2013, 03:07 PM

Again, I don't think any of us (Whipmoney or myself) are arguing for Communist/socialist doctrine to rule. What we ARE arguing for is a more sensible distribution of wealth. Currently 40% of the wealth in the US is controlled by 1% of the population. While the first 40% of people are living on, or very close to, the breadline. This is where unrestrained capitalism leads, an incredibly inequitable society with a stark difference between the have and have nots. It could easily lead to revolution as inequality has so many times before in so many different societies. Or should I say that it doesn't lead to revolutions per se, but it is like having AIDS, putting you in a position where another simple disease could kill you easily (be it racial intolerance, dissatisfied rebel groups etc).

I think you'll find most revolutions occur in countries with govts that like to redistribute wealth, as the US have been doing increasingly for the last few decades, but they are not nearly as bad off as Greece, despite their govt's attempts at stoking racial, class and political division.