All that is possibly correct FP, but PAYE employees don't have quite the same problems with tax, as it is deducted at source. It's the trusts, companies, partnerships and sole traders who have a problem. Quite a bit of the tax calculation that might be due, is hidden inside the large churn of transactions that almost every firm has to make, to stay in business. So often for me, the big tax catchup happens after the annual books are completed. I suspect it catches many business people out, including my previous accountant, who as I mentioned was hauled into court and put into liquidation by the IRD, over unpaid tax. Maybe we should all run full sets of books and use these to keep an eye on profits, at least each quarter.
Is 33% too high a tax rate? In many ways it shouldn't be. There are tax rates at very similar levels overseas, and maybe if capital taxes are introduced here, the top income tax rate will come down further. The way I look at it, every dollar I'm smart enough to profit by, on paper, has partly been earned by the use of common assets owned by the state, the country as a whole. Reticulated power, water, sewage, roading, rail, port facilities, airline services, airports, customs, stats office, Trade and Enterprise, university linkages, etc. While some of these services have a private enterprise segment, or are partly covered by other local body taxes and excise taxes, the result is the same.
A lot of hard graft by other generations put this infrastructure here, my only problem is how to ensure the profits keep rolling. I will never be asked for taxes on paper profits I didn't make, and I'll never get to keep 2/3rds of them in my bank account either.
On another front - FP- do you think national have a gnat's chance of getting a third term at this stage? What with trying to amalgamate CHCH schools without giving the locals much say, the John Banks fiasco and stalled asset sales, it's not looking too good for them.
Yes. 33% is too high, and increases the black economy, as well as discouraging the productive. Tax rates will not be reduced by Labour because of Capital gains tax. CGT will raise little as much of what is consodered capital gain is currently taxed as income now. It's a bit silly introducing CGT. All that is necessary is for IRD to more actively enforce current rules.
Will National get a third term? Almost certainly I'd say. Labour are still the leading opposition parties, but haven't got a leader yet, and it's hard to see one in their ranks who would fire up the voters. It's the potential PM, who gains the swinging voters every bit as much as the policies - and Key is popular.
Last edited by fungus pudding; 23-09-2012 at 07:36 AM.
Yes. 33% is too high, and increases the black economy, as well as discouraging the productive. Tax rates will not be reduced by Labour because of Capital gains tax. CGT will raise little as much of what is considered capital gain is currently taxed as income now. It's a bit silly introducing CGT. All that is necessary is for IRD to more actively enforce current rules.
Will National get a third term? Almost certainly I'd say. Labour are still the leading opposition parties, but haven't got a leader yet, and it's hard to see one in their ranks who would fire up the voters. It's the potential PM, who gains the swinging voters every bit as much as the policies - and Key is popular.
The company tax rate is only 28% FP, not too bad as a holding account. In any case I think many are too fixated on the top income tax rate. There's 15% GST on internal spend, fuel taxes, power taxes, local body taxes, which for the 'great unwashed' as you put it, are big costs. For those on high incomes, the effect of those is capped to some extent. What you're really saying is that if you made an extreme income, you'd like taxes to be capped, or have a sliding percentage.
But where have these profits come from in the first place? In the case of some farmers - and Brian Gaynor has been impressed by some well-travelled farm-owning entrepreneurs recently- they have screwed down suppliers into delivering goods by ute to their farms for a 5% markup, and paid mediocre salaries to farm workers and managers most likely. They aren't too worried about the exchange rate, but are looking to buy other properties. They have sorted out their tax problem - they'll happily pay three times the cost in bank interest instead. And hope they don't get caught out with property values dropping. Unlike property developers, farms are held longer term and are rarely subject to taxes on sale. A CGT would change the approach to this large sector of investment.
We should have a bet on the outcome of the next election FP, because I'm certain you're wrong there. It's unlikely any government gets a third term, and there are people like David Parker on Labour's team, who held his own this morning on "The Nation", albeit alongside Don Brash and Winston Peters.
I still think they're missing the big picture. A profitable exporter isn't too worried about the exchange rate. If their goods are in demand for whatever reason, and there are no major competitors, the market will have to pay the set price. How do we set NZ up to have more of those types of exports? Everything else will follow.
The company tax rate is only 28% FP, not too bad as a holding account. In any case I think many are too fixated on the top income tax rate. There's 15% GST on internal spend, fuel taxes, power taxes, local body taxes, which for the 'great unwashed' as you put it, are big costs. For those on high incomes, the effect of those is capped to some extent. What you're really saying is that if you made an extreme income, you'd like taxes to be capped, or have a sliding percentage.
It doesn't matter what you think, or what I would like. What matters is what happens, as shown by the Laffer curve. CGT will not change anyone's approach to anything unless it is targeted. e.g. applied to property and not shares or collectables, but that is not the proposal. CGT does more harm than good because it can stop things happening. (Try doing business in Australia and you'll see.)
El Zorro, the result of the next election will be the same as the last - a fuzzy conglomerate of F-Wits only held together by the fear unemployment or being recycled into some area where they might have to perform. The great irony is that they have to work their butts off to stay in that foggy place. The idea of a Conservative National government or a Popular Socialist Labour government died years ago.
El Zorro, the result of the next election will be the same as the last - a fuzzy conglomerate of F-Wits only held together by the fear unemployment or being recycled into some area where they might have to perform. The great irony is that they have to work their butts off to stay in that foggy place. The idea of a Conservative National government or a Popular Socialist Labour government died years ago.
I enjoyed your turn of phrase Craic But I can't agree with it. Like the phrase "Those who can, do - those who can't, teach" it's almost certainly not correct. How many of us in our jobs, end up making or doing stuff that makes someone else's life a bit easier, and that's all. We get paid for it, but does it mean that much that we can be smug about it?
Being a politician looks like a very hard job, and not well paid for the hours and the hassle. I think that's why many try it for a term, make some contacts, and then get out.
You're suggesting the main parties have very similar ideologies, and I don't think that's correct. Not most years anyway. Muldoon's leftish state support and Lange's correction term were aberrations.
I asked for someone to show us all how good National has been for the country since they took office. No replies on that.
Their biggest achievement was/is preventing Labour from doing any more damage than they had already done. We would be far better off with the Swiss system where the populace get to vote on all the significant issues and can hardly argue with the results. Here, every major bit of legislation seems to be against the will of the majority, or at least the vocal majority. How many people would you have to stop in the street before you found one who could name the Swiss Prime Minister or whatever he is called?
Their biggest achievement was/is preventing Labour from doing any more damage than they had already done. We would be far better off with the Swiss system where the populace get to vote on all the significant issues and can hardly argue with the results. Here, every major bit of legislation seems to be against the will of the majority, or at least the vocal majority. How many people would you have to stop in the street before you found one who could name the Swiss Prime Minister or whatever he is called?
Which damage Craic? I seem to remember the Nats, when they were in opposition, bleating on about tax cuts for everyone, to use up the budget surpluses Labour had achieved. Labour also repaid a lot of debt. When National got in, the tax cuts mostly went to the few at the top end, the surpluses disappeared, and now we're borrowing money again hand over fist, with heaps more unemployed, and other trained mobile people leaving in droves.
So from my point of view, Labour need to get back in, to stop the damage being done by two National terms.
The surpluses were used up well before National got into power El Zor. They were established by Roger Douglas and Ruth Richardson and progressively run down by Labour until in their last two years Michael Cullen was no longer able to boast a surplus at all as he desperately spent in all directions in an unavailingly attempt to hold onto power. The employment situation you complain of (one of the best in the world actually) would be much worse if National hadn't borrowed some money to ease the transition back to surplus.
The surpluses were used up well before National got into power El Zor. They were established by Roger Douglas and Ruth Richardson and progressively run down by Labour until in their last two years Michael Cullen was no longer able to boast a surplus at all as he desperately spent in all directions in an unavailingly attempt to hold onto power. The employment situation you complain of (one of the best in the world actually) would be much worse if National hadn't borrowed some money to ease the transition back to surplus.
That has to be the biggest load of bollocks I've seen typed out for a while, MVT. I took the liberty of checking the budget data for the last 10 years, and found this table. It clearly shows that National is presiding over a massive change in the surplus position from fully positive data that Labour had attained. So I'm left wondering if you (i) were mistaken, (ii)were trying to get a reaction, or (iii) you're a diehard National Voter.
Colin James writes for the ODT today:
[QUOTE]Colin James's column for the Otago Daily Times for 25 September 2012
The old orthodoxy frays, the next is debated
Last Wednesday John Key invited Winston Peters to read the books that say nothing can be done about the high exchange rate. If Key were keener on reading than he has shown in the case of John Banks' damning police report, he might find there are now also books challenging the orthodoxy he is wedded to.
These challenges are no longer a fringe activity. Some big names and brains are seriously positing alternatives. While that doesn't yet tell us the shape of the next orthodoxy, the old one is no longer securely orthodox.
When circumstances changed in the early 1970s the Keynesian orthodoxy frayed. After some debate, the Friedman orthodoxy triumphed.
That originally said central banks should control money supply. But because globalisation and financial innovation kept changing the nature of money, by the 1980s it was not clear which measure of money to target. Inflation was adopted as a proxy.
That proved a somewhat distant proxy when central banks, led by Alan Greenspan (justified intellectually by Ben Bernanke), left inflation positive when Chinese manufacturing and computerisation and new levels of globalisation lowered production prices for goods and services, which suggested there should have been disinflation, not inflation. The money supply ballooned, feeding an asset price bubble and, inevitably, a crash.
This is not just a hindsight view. By the mid-2000s a number of commentators worried about asset prices. I relayed this in a column in January 2006.
Now central banks -- supposed to epitomise the straight and narrow -- print money like seventeenth-century monarchs. The United States Federal Reserve this month opened the floodgates.
Brazil's Finance Minister Guido Mantega declared this debasing of the United States dollar a currency war which could have "disastrous consequences" for the rest of the world. Financial Times columnist Gillian Tett said that far from lifting United States producers and consumers off their sickbeds, with each new round of Bernanke's "quantitative easing" (QE), "expectations and fears are being racheted up", discouraging investment.
Our central bank can't do much about Bernanke's currency war on us. On Thursday Japan's central bank announced $US125-1000 billion of QE. The yen went down a bit -- for just a few hours.
Nevertheless, the Reserve Bank's new policy targets agreement adds "asset prices" to consumer prices, thus broadening the money supply proxy. And it instructs new governor Graeme Wheeler to aim for 2 per cent inflation, a veiled rebuke to Don Brash's and Alan Bollard's floating in the top half of their different target bands (Bollard averaged 2.6 per cent in his 1-to-3 per band).
Meanwhile Labour's David Parker has been mining the minds of heavyweight international economists who are exploring pathways towards a new orthodoxy. A learning he has taken from Harvard's Jeffrey Frankel is that no one system of monetary policy is right for all countries or for any one country at all times; New Zealand could try targeting GDP (George Stiglitz, whom Parker also saw, argues for GNP). A second learning: inflation targeting can be procyclical (compounding upswings and downswings), especially for asset bubbles. A third: use macroprudential tools as monetary policy levers.
Put that together with economic development shadow minister David Cunliffe's exploration of ways the government can usefully get alongside upwardly mobile businesses, in addition to the Friedman orthodoxy's tight focus on getting regulatory and tax settings right.
Add in that supposed enemies Cunliffe and deputy leader Grant Robertson are jointly leading a small group of MPs aiming to focus at least some of that activity on clean-tech, which has a growing appeal in some areas of business.
Then add Jacinda Ardern's gradual behind-scenes fleshing out of the "child-centred" approach to social policy first proposed in 2007. Couple that with a swag of reports and a growing range of alliances highlighting poverty and inequality which has got the government edgy, judging by the harrumphing conveyed behind-scenes to Children's Commissioner Russell Wills' Wellington workshop on poverty last week.
In sum, Labour is starting to lay some foundations for a more coherent policy than in 2011. And among interest groups there is a growing openness to its counter-propositions to the orthodoxy Key reveres.
But watch Key comfortably batting away the Banks embarrassment with a story he has internalised to the point where it has become for him a reality. That characteristic, which may be a legacy of being odd-boy-out in a state house enclave, gives him the powerful presentational strength of conviction.
Conviction-Key can keep the old orthodoxy breathing a bit longer. Book-reading David Shearer's subtleties, nuances and counterpoints accurately reflect the argumentative phase of the transition to the yet-to-be-defined next orthodoxy. But that isn't strong politics. A bookie would say: advantage Key -- for now.
-- Colin James, Synapsis Ltd, P O Box 9494, Wellington 6141
Ph (64)-4-384 7030, Mobile (64)-21-438 434, Fax (64)-4-384 9175
Webpage http://www.ColinJames.co.nz
[/QUOTE]
Originally Posted by fungus pudding
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But I can't agree with it. Like the phrase "Those who can, do - those who can't, teach" it's almost certainly not correct. How many of us in our jobs, end up making or doing stuff that makes someone else's life a bit easier, and that's all. We get paid for it, but does it mean that much that we can be smug about it?
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