Quite right, except that IRD does require the taxpayer to demonstrate intent, on request. And those currently paying income tax on capital gains would be laughing all the way to the bank if they only had to pay 15%.
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Does your idea include a tax free subsistence income threshold, before income is taxed?
Why concentrate on income? Why not double your wealth (after a tax-free threshold) would mean double your tax? Or double your realised capital gains would mean doubling your tax.
Taxes often appear to be collected on what is easiest to collect i.e. at source from wages as PAYE, GST, RWT. Taxing income is easier than wealth/capital gains. If you are taxed on your own assessment of income/profit then it is not taxed at source and those who advise Inland Revenue of the income which is to be taxed have an unfair advantage as they can use creative accounting and all sorts of tricks to minimise and avoid tax. So there is the unfairness. How is it fair that someone pays tax on their labour/work and another person pays no tax on capital gains e.g. on rising house prices which they do nothing to earn? I don’t know what the solution is, but I can see the problem.
Here is Guy Standing’s view of how to transform the tax system.
https://greattransition.org/publication/precariat-transformative-class
The income from using commons resources should belong to every commoner equally. Accordingly, the tax system should shift from earned income and consumption to taxing commercial uses of the commons, thereby helping in their preservation. Levies on income gained from using our commons should become major sources of public revenue. This means such measures as a land value tax, a wealth transfer tax, ecological taxes such as a carbon tax, a water use levy, levies on income from intellectual property and on use of our personal data, a “frequent flyer levy,” and levies on all income generated by use of natural resources that should belong to us as commoners.
It is fair, because those with political power have political control and call the shots. Older (wealthier) people tend to participate politically more than younger (income earning) adults. Also the influential farming lobby with their land holdings and providing NZ's key exports for so long have perhaps ensured that NZ has a tax system that substantially avoids taxes on wealth, capital gains and estates. So the farming estates can pass through the generations intact.
In the meantime average salary and wage earners have taxes levied on both their incomes and consumption. The wealthier city dwellers of course finding common ground with the farmers as they are in a position to benefit from the light tax onus on capital profits and capital transfers.
So NZ has a system that encourages a type of pre-industrialised agrarian society. The emphasis is on land ownership as the means of developing wealth. This leaves a small institutional and pension fund sector and of course a small capitalisation of the stock market as the vast majority of NZ wealth is in investment in land. This means that NZ-based commercial and industrial companies are substantially owned by foreign off-shore interests, with little NZ-owned business operating overseas to compensate for it.
And yet no political party here, except TOP, thinks that CGT on the family home is ever going to happen. But the homeowner can make a capital gain just as much as a rental owner, a share investor, a farmer, a boat or bach owner, a classic car collection, a multi million dollar painting owner, or a business owner. Oh, some of those were excluded from Labour's CGT proposal and some were included - for reasons never satisfactorily explained. Except politics.
Most capital gains disintegrate when an asset is sold and a similar asset bought. Might have something to do with inflation.
And with some assets, eg shares in start ups, risk is priced in. Should an investor get some credit against a CGT for the risk in buying say ATM? You could say the buyer did nothing to earn the gain, apart from fronting up with some cash plus an appetite for risk.
And nor should it. A house is a place to live. Sooner we collectively get that into our heads the better. If it doubles due to Govt policy ((bldg regs, immigration, land restrictions etc) you still need to live somewhere, it doesnt mean you're suddenly wealthy. Unless you move to Gore perhaps. And if you have to move city for work and quarter of it disappears in CGT is it fair you can now only afford a smaller house in the next city because of factors you cant control?
Stamp and death duties are equally viable for discussion and might help with excessive wealth harbouring in the family home but generally hit all the same snags (trusts, exclusions, expensive ticket clippers etc).
You’re already taxed on the family home capital gains, it’s called rates. Every time your home and property value increases, so does the tax... Er rates.
That is also the case with other real estate - land, residential, commercial, farms, lifestyle blocks. Except that the main reason rates rise is that councils keep increasing rates above inflation. Otherwise, rate rises due to changes in value tend to be relative rather than absolute.
Rates are payments for council services - i.e. the beloved user pays. Landlords recover their rate expense through the rent that they charge their tenants. In Auckland there is a uniform general charge element to rates. That means part of the rate is the same whether the value is $500,000 or $5m. There can also be a targeted rate for amenities in the property’s neighbourhood.
We are talking about central government taxes. Not the payment for council services.
The only thing you’ll find when you dig deep into the process is that the rates tax is determined at local council level so there are differing approaches but the one thing common is a boffin with a spreadsheet that determines what your next tax rates rise will be and it’s directly correlated to QV. I contest every single rates rise and have every single one of them over turned by an on site valuation, always resulting in a lower valuation and a lower rates tax. Dig deep and you’ll find out how flawed the system really is. In any event it’s a tax on capital and increase in capital assessed, therefore it is a capital gains tax!
Im not suggesting a business ought be subject to CGT but for a start there are all sorts of tax breaks for a business (deductables, R&D credits when they are in vogue etc) that houses dont get during the lifetime and the whole point of a business is to make money so if CGT tax were implemented it seems a very different beast to a home which is, in the first instance, a place to live. One of the key elements of thingy's hierarchy of needs. Quite why you want to tax an owner occupied house for the sake of being a house, what it is you're trying to achieve, I cant see.