Which way will the property market go now?

[mfd]

The residential property investing is not just NZ thing, it's normal around the globe and most countries don't blame their government fails on property investors.


And the only inequality in NZ is inequality of effort and entitlement. There are tens of thousands of immigrants from second and third world coming here creating wealth for their families starting from nothing. Then there are locals who can't be bothered to lift a finger. Just go and ask average farmer. I talked to some I worked for and they all say the same. Honest day of work is not good enough for locals.

And on top you have a government working on creating as many of people dependend on them as possible to boost their voter base.

There is massive inequality of opportunity - we don't even have an inheritance tax. How can a society be equal when people can get a free ride from their parents work, on top of all the other advantages to coming from a rich family?

[peetter]

There is massive inequality of opportunity - we don't even have an inheritance tax. How can a society be equal when people can get a free ride from their parents work, on top of all the other advantages to coming from a rich family?

I fail to see how somebody's parents working smart and hard and passing something to children is anything wrong? There's plenty of opportunities to do this nowadays. My parents had nothing, gave me nothing and I am on my way to retire by 45. I do it by sacrificing and working harder than others. Anyone can do it, literally anyone. I came here, had nothing, lived in car and worked at kiwi orchards. 5 years later I own my own property and invest in stocks.

There is full equality of opportunity. If you're poor in NZ, it's by choice. That's a fact. Coming from post soviet country, I can tell you anyone living on minimum wage in NZ is rich. Living here is a breeze.

[kiora]

"While many legislators have pushed for raising the minimum wage, with more and more cities across the US roll out higher minimum wage laws, Buffett does not favor this solution. In an op-ed for the Wall Street Journal in 2015, Buffett wrote that raising the minimum wage would actually create more problems for our market system.

Instead, he offers a different way to help and incentivize struggling Americans.

“The Earned Income Tax Credit is the single best way,” Buffett said."
https://finance.yahoo.com/news/warre...150507164.html

[SBQ]

"While many legislators have pushed for raising the minimum wage, with more and more cities across the US roll out higher minimum wage laws, Buffett does not favor this solution. In an op-ed for the Wall Street Journal in 2015, Buffett wrote that raising the minimum wage would actually create more problems for our market system.

Instead, he offers a different way to help and incentivize struggling Americans.

“The Earned Income Tax Credit is the single best way,” Buffett said."
https://finance.yahoo.com/news/warre...150507164.html

Unfortunately NZ has a similar program but grossly ineffective:

https://www.ird.govt.nz/working-for-.../payment-types

This is a payment if your annual family income is $30,576 or less after tax. It tops up your family's income to at least $588 a week after tax. To get this payment you must work for salary or wages and not be self-employed. A single parent must work at least 20 hours a week. In a two parent family, one or both parents between them, must work at least 30 hours a week.

The EITC in the US applies to INDIVIDUALS and not based on NZ's subsidy which is based on having children. Anotherwords, only families are eligible in NZ.

Hope this is not getting too off topic but at least great discussion and relevent to the problems we have in NZ.

[Zaphod]

The EITC in the US applies to INDIVIDUALS and not based on NZ's subsidy which is based on having children. Anotherwords, only families are eligible in NZ.

Formal advice to the government proposes that the scheme should be extended to those without children as well. A review of the scheme is imminent, so perhaps New Zealand will end up with a very similar scheme.

[SBQ]

Formal advice to the government proposes that the scheme should be extended to those without children as well. A review of the scheme is imminent, so perhaps New Zealand will end up with a very similar scheme.

LOL - just like the formal advice by the TWG that some sort of CGT should be implemented in NZ - only to be cut down by Ms Ardern in the same week they announced it. What is imminent - NZ gov't is not serious about leveling the playing field.

There are probably a dozen implementations that the Canadian gov't has done to discourage inequality (all around taxation and mostly implemented in the past 30+ years). What has NZ done in that same period? Bring in Kiwi Saver (which still screws those that contribute to it vs those that buy houses). Bring in Working for Families tax credit? - screws the individual. More money for WINZ beneficiaries? (no program to remove their dependency).

The only reason why I can shout about these issues and compare to what other countries do is more to do that people in NZ have no idea. The gov't has no idea - they never look abroad to see how similar problems are addressed. They want to reinvent the wheel. Then the OECD year after year keeps reporting that NZ has the highest 'real return' rise in housing prices among the OECD.

Just the other day I was looking at trusts in NZ and in Canada. NZ trusts are taxed flat rate 33% - but we have no capital gains tax (ideal for owning houses in the trust). In Canada, there's a whole new level of trusts available such as Inter Vivos (while alive) and Testamentary (trusts formed upon the death of a person). It seems in NZ they make no distinction between the two in terms of tax treatment. But in Canada, all Inter Vivos trusts formed are flat rate taxed at the highest marginal tax bracket (because rich people should pay more). There are special trusts like an Hensen Trust in Canada where upon death (testamentary) the settlor in his will creates a trust for the beneficiary who has disabilities. The tax dept will grant a special status to the trust where the trust is taxed at individual rates (which is much lower than the top marginal tax rate in a conventional trust). Seems fair? I think so since people with disabilities should have the benefit. Also Trusts in Canada every 21 years the assets are reassessed and CGT is paid despite the assets have not been sold.

[peetter]

There are probably a dozen implementations that the Canadian gov't has done to discourage inequality (all around taxation and mostly implemented in the past 30+ years). What has NZ done in that same period? Bring in Kiwi Saver (which still screws those that contribute to it vs those that buy houses). Bring in Working for Families tax credit? - screws the individual. More money for WINZ beneficiaries? (no program to remove their dependency).

I'd like to know if any of these actually worked? I find most policies governments introduce to tackle inequality are extremely ineffective. Then again most of them are just take from rich an give to those that don't know how to work with money.

I wonder why no government has ever introduced mandatory practical finance classes at schools, that would teach how to use compound interest to build wealth and how to avoid credit card and personal loan debt. My bet is on governments actually wanting to have poor class.

[Zaphod]

LOL - just like the formal advice by the TWG that some sort of CGT should be implemented in NZ - only to be cut down by Ms Ardern in the same week they announced it. What is imminent - NZ gov't is not serious about leveling the playing field.

The review is imminent, not the Government actually doing anything about it. Modern voters only care about intent, not results.

[ynot]

LOL - just like the formal advice by the TWG that some sort of CGT should be implemented in NZ - only to be cut down by Ms Ardern in the same week they announced it. What is imminent - NZ gov't is not serious about leveling the playing field.

There are probably a dozen implementations that the Canadian gov't has done to discourage inequality (all around taxation and mostly implemented in the past 30+ years). What has NZ done in that same period? Bring in Kiwi Saver (which still screws those that contribute to it vs those that buy houses). Bring in Working for Families tax credit? - screws the individual. More money for WINZ beneficiaries? (no program to remove their dependency).

The only reason why I can shout about these issues and compare to what other countries do is more to do that people in NZ have no idea. The gov't has no idea - they never look abroad to see how similar problems are addressed. They want to reinvent the wheel. Then the OECD year after year keeps reporting that NZ has the highest 'real return' rise in housing prices among the OECD.

Just the other day I was looking at trusts in NZ and in Canada. NZ trusts are taxed flat rate 33% - but we have no capital gains tax (ideal for owning houses in the trust). In Canada, there's a whole new level of trusts available such as Inter Vivos (while alive) and Testamentary (trusts formed upon the death of a person). It seems in NZ they make no distinction between the two in terms of tax treatment. But in Canada, all Inter Vivos trusts formed are flat rate taxed at the highest marginal tax bracket (because rich people should pay more). There are special trusts like an Hensen Trust in Canada where upon death (testamentary) the settlor in his will creates a trust for the beneficiary who has disabilities. The tax dept will grant a special status to the trust where the trust is taxed at individual rates (which is much lower than the top marginal tax rate in a conventional trust). Seems fair? I think so since people with disabilities should have the benefit. Also Trusts in Canada every 21 years the assets are reassessed and CGT is paid despite the assets have not been sold.

I'm not familiar with how Canada run things today but I lived up there from 1980 to 84 and was impressed with how things worked. Unemployment benefit which paid well at around 80% of your previous wage but only for 1 year. After that you either worked or ended up begging. Certainly encouraged you
to find new employment asap.
The dentist scheme was also impressive. Pay your compulsory annual dental insurance and that was it. No dental bills.
Perogies weren't half bad either !

[mfd]

I fail to see how somebody's parents working smart and hard and passing something to children is anything wrong?

I didn't say it's wrong, but it's clearly incompatible with having equality of opportunity. If two children are raised in the same city, receive the same education, but one is gifted a house and a wad of cash to start a business while the other gets nothing, in what way did they have equality of opportunity?