Capital Gains Tax

[Bjauck]

You think it’s unfair if one earns an high salary and fair if they don’t, so the ones who do earn high wages should support the ones who don’t? And you address this imbalance through tax.

Is that a summary of what you think?

No. However if there is a debate about what is fair to deduct by way of tax from someone's income or other gains then there is an equally valid discussion about what constitutes fair income or gains in the first place.

For example if you think teachers are underpaid then you are more likely to think it is "unfair" to deduct as much tax from them as someone else who has the same income.

Also you may think it unfair if someone's income from their business does not fully account for the costs (for example) on the environment and for which the current government does not insist on compensation. In other words you may think it unfair that some of the true costs of an activity are socialised, whereas the exaggerated profits are privatised.

[artemis]

A further context is '2 workers for every 1 beneficiary'. Some interesting discussion and official numbers by Lindsay Mitchell at the below link, noting that the beneficiary number includes those on super. If the impost on workers continues to rise we should not be surprised if some of those workers make economic adjustments.

As they say - time is the new money.

https://lindsaymitchell.blogspot.com...neficiary.html

[Bjauck]

A further context is '2 workers for every 1 beneficiary'. Some interesting discussion and official numbers by Lindsay Mitchell at the below link, noting that the beneficiary number includes those on super. If the impost on workers continues to rise we should not be surprised if some of those workers make economic adjustments.

As they say - time is the new money.

https://lindsaymitchell.blogspot.com...neficiary.html

So definitely time to tax capital gains as other countries in the OECD do. If the impost on workers' incomes rises but capital gains generally remain untaxed, then the economic change taxpayers will try to do will be to structure their affairs to enable more untaxed capital gains, further burdening those who earn taxable incomes?

[artemis]

So definitely time to tax capital gains as other countries in the OECD do. If the impost on workers' incomes rises but capital gains generally remain untaxed, then the economic change taxpayers will try to do will be to structure their affairs to enable more untaxed capital gains, further burdening those who earn taxable incomes?

It is not either / or. And appears unlikely there will be a capital gains or wealth tax for at least the next 3 years. Yet as a smaller economy and higher debt $$ need to come from either increased revenue or reduced spending or of course both.

For example -
- productivity increase - probably means increased automation, fewer jobs in those sectors.
- spend less tax / rates revenue - some stupid expenditure out there that should be examined. And canned.
- new industries supported but limited support so sink or swim.
- less regulation unless supported by rigorous benefit cost analysis and post implementation reviews with consequences if results are nothing like projections.

[Bjauck]

It is not either / or. And appears unlikely there will be a capital gains or wealth tax for at least the next 3 years. Yet as a smaller economy and higher debt $$ need to come from either increased revenue or reduced spending or of course both.

For example -
- productivity increase - probably means increased automation, fewer jobs in those sectors.
- spend less tax / rates revenue - some stupid expenditure out there that should be examined. And canned.
- new industries supported but limited support so sink or swim.
- less regulation unless supported by rigorous benefit cost analysis and post implementation reviews with consequences if results are nothing like projections.

Of course there will be no CGT as vested interests have blocked that. So it looks like investment continues to favour Real estate (see the latest REINZ figures) and not into productivity improving business investment. So NZ will have to continue to rely on immigration and not productivity improvements for any GNP growth. And increased tax revenue to pay for covid will have to be squeezed out of workers, income earners and GST...

[Sir Ten]

Has anyone else wondered whether the only way to deal with the "housing crisis" is to wait 30 odd years? And even if that helps, Gen X'ers and Millenials are largely screwed?

- Those that own a large proportion of the houses are, let's say, 50 years or older (yep, it's an assumption, that I haven't had time to find supporting information for... yet... but if I'm onto something, I do have 30 odd years)
- In 1996, only 23% of the population were 50+. As of 2018, it was closer to 32%.
- When the boomers start pushing up daisies there should be an increased level of supply
- In the meantime, a large proportion of Gen X'ers and Millenials probably need to come to the realisation that home ownership is not going to be the norm for their generations. Their job is to stop procreating - which has been helped by slow wage growth relative to house price growth - i.e. large families (say, 5+) are unaffordable
- Therefore, in 30 years time we have less people, more houses and prices go down

I know it's very simplistic and that the government can and will tweak around the edges but, as we've seen, all governments (regardless of colour) have struggled to make much of an impact.

The variable in there that needs some attention is wage growth. And by wage growth I mean, productivity driven wage growth, not wage growth driven by government intervention (minimum wages) which just leads to price increases and inflation. At the moment, it seems like our pollies are throwing darts at the board with things like fees-free university, etc.

Hard not to feel sorry for millenials. I reckon many of them are pretty f*cked. Doesn't help that they're been encouraged to behave in ways that don't necessarily foster much self-responsibility... and did I mention robots. Robots are coming for them and their jobs too.

[artemis]

....
I know it's very simplistic and that the government can and will tweak around the edges but, as we've seen, all governments (regardless of colour) have struggled to make much of an impact.....

There is an even simpler solution, if there is a housing crisis at all. It is ECON101 - supply and demand. Not much ordinary folk can do about demand, but certainly can do something about supply.

But first governments, central and local, need to step out of the way. Sort the RMA, sort the rural urban boundary, sort consents process and costs, stop interfering in the rental market more than with other businesses.

Realistically there are going to be some limits, but need be nowhere near as many as there are now. But if people in the supply chain can make a decent buck from building, they will. And if cheap, people will buy or rent. Might mean cookie cutter or imports in containers from China. Might mean permanent trailer parks.

Might be like an idea Rodney Hide wrote about a few months ago, a small trial subdivision where people could buy a section and build what they like with minimal or no consents or comebacks. Every buyer agrees.

People put up basic baches for generations and just got on with life. Worked well.

[macduffy]

People put up basic baches for generations and just got on with life. Worked well.

True, but they were holiday homes. Not one's pride and joy permanent res.

[artemis]

True, but they were holiday homes. Not one's pride and joy permanent res.

Actually they were not all holiday homes. Some permanent, some rented. Family used to stay in one back in the day and others in the street were similarly basic but lived in. No longer allowed to be rented out even to existing long term tenants without big bucks to upgrade, followed by rent increases.

Time to time some of these little enclaves are in the media because long term residents have to leave.

[Sir Ten]

But first governments, central and local, need to step out of the way. Sort the RMA, sort the rural urban boundary, sort consents process and costs, stop interfering in the rental market more than with other businesses.

Agree. So simple, but seemingly, so hard.