The Greens wealth tax

[Lilith7]

So you're all frothing at the thought of more money being taken from "the rich" to be given to you...and yet they're the greedy ones?

Also, the Green's policy is poorly thought out and the policy document is written either by people that don't actually understand how the tax system works or they're being deliberately dishonest and misleading; I suspect its probably a combination of the two.

People have this idea that trusts are only used by "rich people" to dodge tax, when that just isn't true for so many people who set one up. For almost all of my many clients who have trusts, any tax benefit (and often there isn't any) is a secondary "bonus" rather than the reason for having a trust. And yet they would all be hammered by the proposed 1.5% trusts tax despite many being on pretty modest incomes. By way of an example, one client is on a salary of $90K and has her own home in a trust to keep it out of relationship property (why should any guy she lives with for 3years get half of it when he never put a cent towards its purchase). Under the Green's tax policy, her annual tax bill would increase from the current $20k she pays up to $45K! And there are plenty more like her.

If that's what you think then you've misunderstood badly; what's wanted is less inequality & more fairness, which is a very different thing to greed. 

Accumulating money for its own sake isn't what is meant but rather a more equal division of it.

Some though, have strong objections to any hint of a  fairer method.


For some insight into the situation here as contrasted with other countries which are almost all far better off, this sets it out clearly.


https://thespinoff.co.nz/books/19-03-202...divides-us


"Physically separated, people of different status slowly lose their understanding of how the other half lives. Their sense of those other people being “like” them, their feeling of having something in common with them, and consequently their empathy for and trust in them, all dwindle. In Auckland, for instance, people have become less likely to volunteer in other communities, to share their skills across social and economic boundaries, as those communities have become more segregated. 



And they dominate our politics. Rashbrooke cites research comparing the makeup of the 1972 and 2017 New Zealand parliaments. Our politicians in 2017 are far more diverse in terms of gender and ethnicity; but far richer than the rest of us, and: 

In 1972, one MP in five had done blue-collar work – in clerical, service-sector or labouring jobs – immediately before entering Parliament. That was still unrepresentative of the population at large (of whom 71% did such work), but ensured a modicum of socio-economic diversity. "

---

"The employment contracts act 1991 made it harder for people to bargain collectively & helped reduce the proportion of workers covered by a trade union from 70% to its current 17%.
If the share of revenue going to wage earners had stayed at 70%, the average wage in 2020 would have been $14,000 higher. That income went instead to business owners."

Too much money, Max Rashbrooke

[Olive]

....our house had a value of $1.2M 18 months ago. For us to find $25,000 for tax on that would be a dream! So many people are sitting on a market driven high value assets without having a lot of cash in the bank.

...

The wealth tax kicks in at $2m NET assets (or $4m NET for a couple).   Most family homes, even in Auckland, are valued at less than $2m, and most are subject to mortgages securing loans,.  The policy is not targeting the general population who own one home.

[Oh_hunnihunni]

I get really cross when people who should know better start talking about the 'unproductive', the 'lazy', and the 'greedy'. Especially so when they fail to acknowledge a good chunk of their own wealth is generated by others, by good fortune, and the ever increasing values of the property market.

Because that is how capitalism works. It is a giant pyramid scheme that relies on a broad base of those very same heavily exploited low income workers and tax payers. Because the fact is, NO ONE in this country escapes being a taxpayer, except the very few extremely wealthy at the top of that same pyramid.

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....our house had a value of $1.2M 18 months ago. For us to find $25,000 for tax on that would be a dream! So many people are sitting on a market driven high value assets without having a lot of cash in the bank.

...

The wealth tax kicks in at $2m NET assets (or $4m NET for a couple).   Most family homes, even in Auckland, are valued at less than $2m, and most are subject to mortgages securing loans,.  The policy is not targeting the general population who own one home.

You missed a word - proposed.

It is a long way from being fixed in anything other than hot air, so we don't actually know how it will work or kick in...

[Kenj]

....and Gawd help us at the thought of Swarbrick as PM. All mouth and no substance.

The first thing that came to mind in regard to "All mouth and no substance" is Luxon.

Who am I to argue on that one? 

We have a surfeit of Not Very Good Politicians on all sides of the political spectrum.

[Lilith7]

The first thing that came to mind in regard to "All mouth and no substance" is Luxon.

Who am I to argue on that one? 

We have a surfeit of Not Very Good Politicians on all sides of the political spectrum.

And that would be a very fair comment. 

 As well as very restrained...

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I get really cross when people who should know better start talking about the 'unproductive', the 'lazy', and the 'greedy'. Especially so when they fail to acknowledge a good chunk of their own wealth is generated by others, by good fortune, and the ever increasing values of the property market.

Because that is how capitalism works. It is a giant pyramid scheme that relies on a broad base of those very same heavily exploited low income workers and tax payers. Because the fact is, NO ONE in this country escapes being a taxpayer, except the very few extremely wealthy at the top of that same pyramid.

---

The wealth tax kicks in at $2m NET assets (or $4m NET for a couple).   Most family homes, even in Auckland, are valued at less than $2m, and most are subject to mortgages securing loans,.  The policy is not targeting the general population who own one home.

You missed a word - proposed.

It is a long way from being fixed in anything other than hot air, so we don't actually know how it will work or kick in...

"I get really cross when people who should know better start talking about the 'unproductive', the 'lazy', and the 'greedy'. Especially so when they fail to acknowledge a good chunk of their own wealth is generated by others, by good fortune, and the ever increasing values of the property market."


 Its othering really; & once you manage to 'other' any group it becomes possible to treat them in all sorts of quite nasty ways. As we really should know from history.

[harm_less]

The first thing that came to mind in regard to "All mouth and no substance" is Luxon.

Case in point: https://www.1news.co.nz/2023/06/11/luxon...-than-you/

[Oh_hunnihunni]

A minor party, puts out a policy that threatens taxing the wealthy, and this board explodes.

I love this place

VOTE GREEN!!!

[Lilith7]

The first thing that came to mind in regard to "All mouth and no substance" is Luxon.

Case in point: https://www.1news.co.nz/2023/06/11/luxon...-than-you/

They really seem to genuinely have no idea at all on just how difficult it is for some on a low income these days & it has to be said that if they actually wanted to know then the information isn't that hard to find.

[Olive]

A minor party, puts out a policy that threatens taxing the wealthy, and this board explodes.

I love this place

VOTE GREEN!!!

And NZ Twitter is bursting at the seams with new sock puppet accounts, all repeating identical misinformation.  So much so that this morning I briefly wondered if I had misread the Greens' proposals and in fact they were proposing to tax every "retired couple" that owned a house.   But I hadn't, it was just a deluge of falsehoods designed to convince those who didn't bother to read the actual policy.

[Lilith7]

And then there's this - Luxon refers to NZ as 'wet, whiny, inward looking country' when trying to get the farmers vote.


https://www.newshub.co.nz/home/politics/...oking.html

How lovely of him - insult his fellow Kiwis in order to ensure traditional Nat voters - the farmers - vote for his lot.

[Oh_hunnihunni]

I liked his 'NZ has a spending problem'. I guess reducing incomes across the lower half will take care of that.

[Wainuiguy]

A minor party, puts out a policy that threatens taxing the wealthy, and this board explodes.

I love this place

VOTE GREEN!!!

Well I guess if you call 2 pages exploding......but for this message board 2 pages is a major achievement. 

I hate to say it but this will not be the vote catcher they or some here think it will be.  Here is an open letter to Ms Swarbrick from Ian Taylor who is less than impressed with her language  around the policy:


"Dear Chloe,

Let me put this open letter in context for you.

An ex-colleague of mine recently accused me of being a “chardonnay socialist” because of the views I shared in an article I wrote around inequities in our tax system, my support of a capital gains tax, and my willingness to pay more tax - not less.

The article that had raised his ire was one I had titled “Let’s talk about tax”.

In it, I questioned the terms usually associated with the word tax here in Aotearoa New Zealand. Terms like “tax avoidance” and “tax burden”.

Why couldn’t we talk about being “proud to pay tax” as part of the social contract we had with each other to create a fair and equitable society? A society that placed a value on education, health and the wellbeing of everyone with whom we shared that society.

The “chardonnay socialist” comment highlighted the tribalism that has become an increasing part of our political discourse. A recent article featuring your suggested “wealth tax” accentuates that tribalism.

The introductory blurb on top of that article read “The golden age of stashing vast sums of money in trusts, or indeed, anywhere, may be over.” You yourself went on to add, “wealth in Aotearoa is concentrated in the back pockets of a wealthy few. It’s time we got on and fixed this.”

There goes the tribalism again. Bad people “stashing vast sums of money in trusts” or the “wealthy few” stashing it in their back pockets.

So, Chlöe, in the interest of complete transparency, something politicians appear to be struggling with these days, I need to declare that I have one of those family trusts. I am assuming that you don’t, so let me share with you why I do.

More than 30 years ago I set up a business in Dunedin, not because I wanted to be rich, but because I had found the place I wanted to live and had decided I wanted to create a company that built high-value jobs for others who wanted to live here.

To do that I had to borrow $500,000 to get started and, as part of that, I had to guarantee that loan using our family home, on which my wife and I were paying a mortgage with interest rates of over 20 per cent.

Within two years, working with some incredibly talented people who would have normally moved north, we built a technology company employing more than 30 people. All of them paying PAYE tax from the jobs we had created. All of them paying GST on the goods they bought, with the salaries they got, from the jobs we had created.

I am not sure how many of your colleagues fully appreciate the risks involved in starting a business that creates real jobs. As I look around the debating chamber, I am not sure how many have ever created a business themselves. Perhaps, more tellingly, the question might be, how many have spent most, if not all, of their working lives based on income that comes directly from taxes we pay.

Tax that is generated by people who have taken the risks that are inherent in starting a business.


In 2008, I faced that risk head-on when I had to explain to my wife that the business we had built was on the verge of going under because of conditions beyond our control. This meant that the family home, where we lived with our two young sons, would have to be sold.

People who have never created a business probably won’t ever appreciate the sense of failure that comes as they face the prospect of sharing this message with their staff, and the family who have built the business with them.

As you may have gathered, we did find a way around this, but that’s another story.

However, what I vowed from that experience was that as soon as I could, I would find a way to pay off that loan and get my family home in a trust to protect it, and them.

It took more than 20 years to get to the position where I could remove the need to continually put our house up as security against the bank loans that were needed to keep the business running and people gainfully employed.

Today, the trust holds more than our family home and it pays tax on income generated. That tax is set by the government of the day and I am more than happy that it is paid.

I don’t share this story because I think I am special. I share it because I know there are countless people out there who will have been through the same things. This is the reality of building a business that creates jobs - that pay taxes.

So, Chlöe, instead of joining in on the tribalism, why not lead from the front, do things differently, and avoid getting caught up in the nonsense that politics has become?

We could start by agreeing this is a discussion we need to have, but let’s have it in the context of a celebration of the success of people who have placed so much at risk to create the jobs that pay taxes in the first place.

People like a friend of mine who runs a hugely successful business that generates $80 million in annual revenue. I imagine that many reading the story on your wealth tax would place him in the “wealthy” category - stashing money in a trust, or his back pocket, so he doesn’t have to pay tax.

So, let’s look at the tax he does pay, or collect for the IRD, based on that $80m revenue:

$26m in PAYE and company tax. That’s tax that exists because of the jobs he created and the success he has made of his business;
$12m in GST. That’s tax that exists because of the business he built and the income that business generates;
$2m is made up of KiwiSaver contributions, ACC levies, fuel taxes, local council rates and car registrations. Those are all taxes that occur as a result of the business he has created, and the risks he has taken.
That is $40m in tax, annually, generated by one person who had the courage to build a business and create those jobs. Yes, he is wealthy (I prefer “successful”) but how many people can you identify in that debating chamber who generate that much revenue for you to spend, every year?

This leads me to my final point.

The annual tax take is $113 billion a year. Of that, $19b is spent on health, $17b is spent on education. Both are on the verge of collapse.

So, Chlöe, my question of you is: When will you start to give those who take the risks to create jobs that pay tax the confidence that, were we to pay more, you will spend it well and not pour it down a seemingly endless drain with little or no accountability?

Sir Ian Taylor is the founder and managing director of Animation Research.

[Oh_hunnihunni]

Did he also sign that plea from the group of wealthy business people - most of whom were also celebrated philanthropists, who begged the government to re examine the tax system that enabled each of them to have a much lower tax burden than the supermarket checkout operator who sorted their shopping for them?

I grew up playing in the showroom of the business my family started back in the forties, importing ceramics and fabrics and creating the lighting kiwis couldn't import. They took huge risks too, and the company did really well, employing makers and sales people and supplying top end retailers nationwide. Then the import laws changed and competition ramped up, and focusing on the top end quality meant they simply couldn't sustain their place in the market. Like Crown Lynn, the family business sank beneath the waves...

But lots of people benefited while it was one of the top manufacturing companies in the mid century design world.

That's life. It isn't fair, or predictable, and there are always winners and losers. However, when the gap between those two sections of the community is so wide, when so few own so much of the communities wealth, it is up to that community to re examine the basis on which it operates. We are a wealthy, educated first world country. Surely we can do better than the way we operate today and do that without opening that schism any further.

[harm_less]

And then there's this - Luxon refers to NZ as 'wet, whiny, inward looking country' when trying to get the farmers vote.


https://www.newshub.co.nz/home/politics/...oking.html

How lovely of him - insult his fellow Kiwis in order to ensure traditional Nat voters - the farmers - vote for his lot.

Great retort from Chippy on that: https://twitter.com/i/status/1668120638685609985

[Oh_hunnihunni]

I agree... That was a nice one. And delivered straight faced too, lol...

[king1]

A minor party, puts out a policy that threatens taxing the wealthy, and this board explodes.

I love this place

VOTE GREEN!!!

...

So, Chlöe, my question of you is: When will you start to give those who take the risks to create jobs that pay tax the confidence that, were we to pay more, you will spend it well and not pour it down a seemingly endless drain with little or no accountability?

Sir Ian Taylor is the founder and managing director of Animation Research.

Well all I can say to that little sob story is governments are voted in and out to run the country and spend the tax take as they see fit, on behalf of the people.

As an individual tax payer you are not entitled to 'confidence' that your tax will be spent well, you are simply required to pay your fair share, whatever that might be determined to be...   unless you think you are special and shouldn't have to live by the rules...

[king1]

And then there's this - Luxon refers to NZ as 'wet, whiny, inward looking country' when trying to get the farmers vote.


https://www.newshub.co.nz/home/politics/...oking.html

How lovely of him - insult his fellow Kiwis in order to ensure traditional Nat voters - the farmers - vote for his lot.

Great retort from Chippy on that: https://twitter.com/i/status/1668120638685609985

That was so nonchalant - Mr Luxon makes it so easy though...

[Wainuiguy]

So you're all frothing at the thought of more money being taken from "the rich" to be given to you...and yet they're the greedy ones?

Also, the Green's policy is poorly thought out and the policy document is written either by people that don't actually understand how the tax system works or they're being deliberately dishonest and misleading; I suspect its probably a combination of the two.

People have this idea that trusts are only used by "rich people" to dodge tax, when that just isn't true for so many people who set one up. For almost all of my many clients who have trusts, any tax benefit (and often there isn't any) is a secondary "bonus" rather than the reason for having a trust. And yet they would all be hammered by the proposed 1.5% trusts tax despite many being on pretty modest incomes. By way of an example, one client is on a salary of $90K and has her own home in a trust to keep it out of relationship property (why should any guy she lives with for 3years get half of it when he never put a cent towards its purchase). Under the Green's tax policy, her annual tax bill would increase from the current $20k she pays up to $45K! And there are plenty more like her.

Agree.  Most trust arre not set up for Tax advantages but to protect property.

And this is virtual copy of their 2020 plan but for some reason the wealth tax has now increased 150% to 2.5% of net assets greater than $1,000,000.

[Zurdo]

No talk about the no tax under a certain income, which is a great idea, and something Aust has had for a long time.

[dken31]

The idea that "trusts are used by rich people to hide their wealth and avoid tax" is a total misconception. Trusts actually do the opposite becaue reporting requirements for trusts are a lot more rigorous than for individuals which means trust assets are far better documented than if held in your own name. And tax benefits only really apply when there is a difference between the top marginal tax rate and the trust rate. Which, recently, has only been the case for the last couple of years and ends at the end of this current year. I know it is a super common misconception, but I work with plenty of "wealthy" clients and there is no rich person loophole that allows them to avoid paying large amounts of tax.

Also, a lot of definitely not rich people have trusts (for various non-tax related reasons). The proposed "Trusts Tax" (aka the wealth tax for trusts) has no threshold (the $2/$4M applies to individuals only) with the 1.5% being on every dollar of trust assets. So a retired couple with a $1.5M house in a trust (that they live in, rather than renting out) who get the pension and a bit of interest from their $300K life savings (a super common scenario) would get stung with an annual $22,500 "wealth" tax. Sure, they'll get to defer that till they sell the house, but that still doesn't feel "fair" to me. Also, yes they could wind up the trust and transfer the house into their own names, but that'll cost them $4K+ in legal/accounting fees.

And to clarify, the lady in my earlier example who would end up paying $45K tax from $90K income lives in the home held in a trust. So she's getting no income from that property but still paying $26K tax on it. Yes, she would get a slight reduction in income tax from the updated rates, but the reduction would be $2K vs the new $26K wealth tax. And sure, you can suggest that keeping a house out of relationship property is no way to build a solid relationship with your partner, but I think she should be free to make that decision for her self, rather than be forced into having to share it based due to tax rules.