The problem is this...
"as they earn significant income from untaxed capital gains"
You don't earn income from capital gains until you sell the asset. And it's only when you sell the asset that you know how much it is worth. Capital assets can be all sorts of things from art works and classic cars to property. Values can and do vary greatly. We have had a period of high growth in property values, but they are now dropping. So if someone was taxed on what they were worth last year, this year is totally different. Would they get a refund to compensate for the fall in value? Not to mention the changes in business viability. Kiwifruit orchards used to be worth huge amounts but the whole industry is in very dire straits at the moment and the value of the orchards is likely to drop significantly. With residential property, some people made a lot of money in the last couple of years but if they were selling to buy up, the relativity still meant that the next purchase would still have cost a corresponding amount more. And so on.
The bottom line is that the proposed wealth taxes would likely force people to sell their assets just to pay the tax, and having the cash in the bank, getting taxed every year would just whittle it away to nothing. So the hard work in planning for a comfortable retirement would have been totally wasted. And like dken31 said, people would just move offshore, taking their wealth with them.
Capital gains tax is at least a bit fairer, but is still complex over time. And as I've said a number of times before, is unnecessary. We already have income tax to cover income from sales of assets that were bought with that purpose in mind. Traders pay tax, if only IR would actually follow up and charge it. In the main investors don't sell assets because they are investments, and they pay tax on the income generated from the asset, eg rent.
Wealth taxes would just increase costs throughout the economy. They have no real benefit, and are totally unfair.
When I was working for local government I had every intention of standing for council in order to fix all the problems that I could see "from the inside". Over time I came to realise that people who become politicians don't have the power to make the changes they want and just become part of the system.
"as they earn significant income from untaxed capital gains"
You don't earn income from capital gains until you sell the asset. And it's only when you sell the asset that you know how much it is worth. Capital assets can be all sorts of things from art works and classic cars to property. Values can and do vary greatly. We have had a period of high growth in property values, but they are now dropping. So if someone was taxed on what they were worth last year, this year is totally different. Would they get a refund to compensate for the fall in value? Not to mention the changes in business viability. Kiwifruit orchards used to be worth huge amounts but the whole industry is in very dire straits at the moment and the value of the orchards is likely to drop significantly. With residential property, some people made a lot of money in the last couple of years but if they were selling to buy up, the relativity still meant that the next purchase would still have cost a corresponding amount more. And so on.
The bottom line is that the proposed wealth taxes would likely force people to sell their assets just to pay the tax, and having the cash in the bank, getting taxed every year would just whittle it away to nothing. So the hard work in planning for a comfortable retirement would have been totally wasted. And like dken31 said, people would just move offshore, taking their wealth with them.
Capital gains tax is at least a bit fairer, but is still complex over time. And as I've said a number of times before, is unnecessary. We already have income tax to cover income from sales of assets that were bought with that purpose in mind. Traders pay tax, if only IR would actually follow up and charge it. In the main investors don't sell assets because they are investments, and they pay tax on the income generated from the asset, eg rent.
Wealth taxes would just increase costs throughout the economy. They have no real benefit, and are totally unfair.
(17-08-2023, 08:29 PM)Oh_hunnihunni Wrote: I share that distrust, and have only found a couple worth paying attention to. I have often thought our system is flawed, volunteers should be looked at sideways. We should shoulder tap better people to put our faith in and be very suspicious of those who actually want the job...
When I was working for local government I had every intention of standing for council in order to fix all the problems that I could see "from the inside". Over time I came to realise that people who become politicians don't have the power to make the changes they want and just become part of the system.