Capital Gains Tax

[moka]

You sure have some strange ideas. Here is the real picture from NBR

"As a result, the rich shoulder a disproportionate burden of tax. The top 3% of all households (above $250,000 a year) pay a quarter of all income tax. The top 10% (above $175,000) pay 50%. The bottom 60% (less than $80,000) pay $6 billion in tax but receive $7 billion in handouts such as Working for Families. They are net tax recipients. In total, they suck in a billion dollars.

Meanwhile, the top 10% of households pay more than $11 billion in tax. They suck in nothing."

So really most businesses are getting a government subsidy because they are not paying their employees enough to cover their expenses such as raising their children without extra financial help from the government. If it was really a free market we would have a population that is less healthy and less educated and with other social problems. Raising children is reproducing human capital which business expects to have without contributing to the financial cost, someone else bears the cost.

[artemis]

So really most businesses are getting a government subsidy because they are not paying their employees enough to cover their expenses such as raising their children without extra financial help from the government. If it was really a free market we would have a population that is less healthy and less educated and with other social problems. Raising children is reproducing human capital which business expects to have without contributing to the financial cost, someone else bears the cost.

What say employers are paying employees what they are actually worth. Plenty of employees are low skilled and that skill level might be because of their own choices. We are starting to see a serious wave of layoffs and the low skilled are going to be first out. And double that if employers are forced to pay more than the return they get.

Raising children is only one way to ensure future employees. Immigration, upskilling, automation ...

[Zaphod]

What do you mean since the interest is fixed for 10-30 years when the govt issues a bond.
after-inflation the interest is 0% ..

Inflation and price rises effect bonds, particularly when this impacts the wider economy. What source did you use for the 1% inflation figure? Are you also claiming that the effective interest rate will be zero for the term of the bond, or is this just a momentary blip in interest rates?

All of the above. the response should be adapted to the conditions we are in... which it has been for the most part.
Look around the world and we are in great shape.

Thanks to prudent fiscal management of two successive governments. The real test will be how we emerge economically from this event, especially with major turmoil with exporters (also due to geopolitical factors) and the tourism & foreign education sectors effectively shut down.

[Bjauck]

What say employers are paying employees what they are actually worth. Plenty of employees are low skilled and that skill level might be because of their own choices.

"Might be" being a very relevant point. The children of those with stable high paid employment, capital gains from assets, and inherited wealth opening up more options in getting a hand up in realising their potential and acquiring those skills of course.

[kiora]

When are we to learn what we are in for?
"(i) tell people who lost their jobs that it was their bad luck to be working in the wrong sectors, and that they should borrow to get through the emergency until they could find employment in some other sector, or with their original employers if the jobs were still there when the emergency passed.

(ii) increase taxes by large amounts immediately on those who remain in employment (and those in receipt of capital income) in order to provide transfer payments to those unemployed or those whose businesses had suffered;

(iii) borrow from those most able to lend, to reduce the costs of option (ii), to be repaid by future taxes;

(iv) create money to provide the transfers."
https://www.interest.co.nz/opinion/1...ed-public-debt

[moka]

What say employers are paying employees what they are actually worth. Plenty of employees are low skilled and that skill level might be because of their own choices.

It should apply to the well paid too. CEOs paid well but not always competent. Certain sectors such as finance and insurance are well paid because of the sector, not necessarily the skill level. The wage gap between the low and high paid not does reflect actual skills.

[moka]

https://www.nzherald.co.nz/business/...ectid=12352640
Forget a capital gains tax – what New Zealand needs is a tax on inherited wealth.
New Zealand first taxed inter-generational capital transfers in 1866. However, the rate of estate duty was reduced to zero in 1993 and gift duty was scrapped in 2011.
The tax working group, established by the Labour-led government after the 2017 election, specifically excluded an inheritance tax. While there were good theoretical reasons for such a tax, group member Geof Nightingale said, it "breaks down at the politics".
Inheritance taxes are intensely disliked, so if you haven't got one it's very hard to put one in.

Baby boomers, the wealthiest generation that has ever lived, will increasingly start dying during the 2020s.
Tax policymakers cannot ignore the opportunity – arguably the moral imperative – of taxing and redistributing those transfers.

First, the application of tax needs to shift from the deceased to the living. In other words, we need to focus on the recipient of the wealth transfer. Ireland's capital acquisitions tax (CAT) applies a flat rate of 33% to accumulated gifts and inheritances over the relevant threshold.
Unlike a CGT, which can be perceived as penalising business owners, a CAT targets unearned windfalls from an accident of birth. This should make a CAT more politically acceptable than a CGT.

Second, the younger generations most critical of baby boomers' "unfair" acquisition of wealth (Gen X and millennials) must accept that taxing this unprecedented transfer of wealth will promote both inter- and intra-generational fairness.
If we don't tax and redistribute these transfers, wealth inequalities will be exacerbated and entrenched among future generations.

And finally, arguments in favour of a more equitable system have to overcome the rhetoric of "death taxes". As far back as the 1960s, Canada's Royal Commission on Taxation did this by popularising the idea that "a buck is a buck", no matter how it is earned.
In other words, if you have the money you can pay tax, whether that money comes from labour, investment or inheritance.

[fungus pudding]

It should apply to the well paid too. CEOs paid well but not always competent. Certain sectors such as finance and insurance are well paid because of the sector, not necessarily the skill level. The wage gap between the low and high paid not does reflect actual skills.

Of course not. As one example, there are plenty of low skill workers who are overpaid because of minimum wage laws.

[Bjauck]

Of course not. As one example, there are plenty of low skill workers who are overpaid because of minimum wage laws.

I agree. Just a slightly more skilled worker could end up saving a lot in costs or boosting revenue by more than their current extra employment cost . Similarly a slightly better CEO could make a material impact in profitability, especially in large organisations.

However a boost to the minimum wage rates and social welfare benefits help create a high consumption market for various products and services - which could boost business revenue by at least the amount of the extra payments . In addition a more “egalitarian” society with equal opportunities to achieve potentials could help create a more socially peaceful society less prone to social unrest and revolution. That is good for wealth creation and retention?

As long as a majority of politically engaged people think they will or could benefit from untaxed inherited wealth and capital gains, then leaving these gains untaxed but taxing gains from what is currently classed as “assessable income” will continue to be deemed a “fair” way to raise tax.

[mfd]

https://www.nzherald.co.nz/business/...ectid=12352640
Forget a capital gains tax – what New Zealand needs is a tax on inherited wealth.
New Zealand first taxed inter-generational capital transfers in 1866. However, the rate of estate duty was reduced to zero in 1993 and gift duty was scrapped in 2011.
The tax working group, established by the Labour-led government after the 2017 election, specifically excluded an inheritance tax. While there were good theoretical reasons for such a tax, group member Geof Nightingale said, it "breaks down at the politics".
Inheritance taxes are intensely disliked, so if you haven't got one it's very hard to put one in.

Baby boomers, the wealthiest generation that has ever lived, will increasingly start dying during the 2020s.
Tax policymakers cannot ignore the opportunity – arguably the moral imperative – of taxing and redistributing those transfers.

First, the application of tax needs to shift from the deceased to the living. In other words, we need to focus on the recipient of the wealth transfer. Ireland's capital acquisitions tax (CAT) applies a flat rate of 33% to accumulated gifts and inheritances over the relevant threshold.
Unlike a CGT, which can be perceived as penalising business owners, a CAT targets unearned windfalls from an accident of birth. This should make a CAT more politically acceptable than a CGT.

Second, the younger generations most critical of baby boomers' "unfair" acquisition of wealth (Gen X and millennials) must accept that taxing this unprecedented transfer of wealth will promote both inter- and intra-generational fairness.
If we don't tax and redistribute these transfers, wealth inequalities will be exacerbated and entrenched among future generations.

And finally, arguments in favour of a more equitable system have to overcome the rhetoric of "death taxes". As far back as the 1960s, Canada's Royal Commission on Taxation did this by popularising the idea that "a buck is a buck", no matter how it is earned.
In other words, if you have the money you can pay tax, whether that money comes from labour, investment or inheritance.

I'd love to see an inheritance tax in NZ - there's no time I'd rather pay my tax than after I'm dead. A society where each generation stands on its own two feet a little more should be an improvement - it obviously won't do anything about the better schooling and connections of the well-off but it gives those less lucky in birth a bit of a fighting chance. Ideally I'd pitch it higher than 33% as this money is truly unearned and receiving it is correlated with the other benefits I've mentioned, but I guess that's a good starting point.