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View Poll Results: Should there be a Capital Gains Tax on Property

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  • No

    213 100.00%
  • Yes

    74 56.49%
  • Goff is just an idiot

    2,147,483,658 100.00%
  • Epic fail for Labour

    1,935 100.00%
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  1. #601
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    Quote Originally Posted by dibble View Post
    ...just like AirNZ's spreadsheet is revenue-expenses * tax rate.
    Devil is in the detail.

    We have a half decent CGT that charges people at their top rate, not the usual 15-20% mooted. It's just tricky for IRD to prove intent... a tweak to move onus onto the tax payer to prove intent (or lack thereof) would go some way to addressing that without too much political hoo-ha.
    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%.

  2. #602
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    Quote Originally Posted by artemis View Post
    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%.
    The IRD would still differentiate a trader from an investor. The CGT would not apply to traders or developers/builders.They would still be subject to income tax - bet my bottom dollar.

  3. #603
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    Quote Originally Posted by fungus pudding View Post
    It's definitely subjective as you say and it seems to me that a lot of people deem it to be 'fair' when the burden falls on anyone but themselves. For all that I find it hard to argue with a flat rate - i.e. every dollar earned is taxed at exactly the same rate - double your income will double your tax. That's my idea of fair. It also has the added advantage of not being a major disincentive.
    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.
    Last edited by Bjauck; 11-07-2020 at 04:05 PM.

  4. #604
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    Quote Originally Posted by fungus pudding View Post
    The IRD would still differentiate a trader from an investor. The CGT would not apply to traders or developers/builders.They would still be subject to income tax - bet my bottom dollar.
    Probably correct, but it is quite a long time since I read Labour's CGT policy (actually policies as they kept tweaking it) or the TWG tome and don't recall the distinction being made. That is probably one of those pesky details to think about another day.

  5. #605
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    Quote Originally Posted by artemis View Post
    Probably correct, but it is quite a long time since I read Labour's CGT policy (actually policies as they kept tweaking it) or the TWG tome and don't recall the distinction being made. That is probably one of those pesky details to think about another day.
    It would soon be introduced if every builder chose to pay CGT and just lived off capital. Not income.

  6. #606
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    Quote Originally Posted by Zaphod View Post
    I agree with you. That's not the point I'm making though. What I am questioning is the all too often repeated orthodoxly that everyone must pay their fair share of tax. What is this fair share? How do we calculate it? It's completely subjective and those that repeat the line invariably can't come up with objective measures. It appears to be a line used to bludgeon those who believe others have accumulated too much wealth.
    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.

  7. #607
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    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.

  8. #608
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    Quote Originally Posted by moka View Post
    ...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.
    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.
    Last edited by Bjauck; 12-07-2020 at 06:49 AM.

  9. #609
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    Quote Originally Posted by moka View Post
    .... 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.
    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.

  10. #610
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    Quote Originally Posted by artemis View Post
    And yet no political party here, except TOP, thinks that CGT on the family home is ever going to happen.
    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).

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