The Greens wealth tax

[Lilith7]

The Greens unveiled their wealth tax earlier; approximately 2 milliseconds later, the Nats started finger pointing & proclaiming loudly 'politics of envy' thus revealing to the entire country their complete & utter lack of even basic understanding of how difficult daily life now is for many in this country.

They either ignore or do not comprehend that across the country parents tend to go hungry sometimes in order to feed their kids; ignore or don't understand that for some the 'choice' comes down to whether to pay rent & keep the roof over their heads, or buy groceries.

Realistically, this could  more accurately be called 'the politics of fairness'.

I'm wondering just what might happen if every last person now affected by poverty to some extent was to vote Green in the next election.

 I'm not certain but I'm reasonably sure that there are more of us now struggling than there are wealthy people...



https://www.odt.co.nz/star-news/star-nat...6AwhaB4V4s

"A small number of New Zealanders have hundreds of billions of dollars in assets stashed in trusts, the New Zealand Herald has revealed.

It comes as the Green Party moves to reopen one of the most contentious topics of the 2020 election: whether New Zealand needs to begin taxing wealth. With Labour having almost no choice but to govern with the Greens after the election, a Green Party wealth tax will likely be one of the defining topics of the election.
The data is striking: of the 201,100 trusts that filed returns for the 2021-22 income year, 149,500 disclosed an astonishing $469 billion in assets - $3.1 million on average.
Those trusts also have $160b in liabilities, leaving a net $309b in equity - an average of $2m per trust.
That’s almost as much as New Zealand’s entire GDP, which is about $390b this year, and compares favourably with the assets owned by the Government, which were worth $519.2b this year.

But the golden age of stashing vast sums of money in trusts, or indeed anywhere, may be over, with the Green Party set to unveil a wealth tax to take to the 2023 election.

On Sunday morning, the Green party will march into Grey Lynn, the heart of New Zealand’s capital-gains economy, to unveil its wealth and income policy. It includes a massive overhaul of the way the Government handles income support, using tools like working for families to lift minimum incomes. It will lift the minimum income that everyone from individuals to families has to live on.

The expensive change will be paid for by taxing the assets held by New Zealand’s wealthiest few, better known as a wealth tax.
The Green Party’s revenue spokeswoman Chlöe Swarbrick said, “wealth in Aotearoa is concentrated in the back pockets of a wealthy few. It’s time we get on and fix this”.



 

Hipkins will almost certainly need the help of the Greens and Te Pāti Māori to form a government after the election. Both parties have backed a wealth tax in the past.

Swarbrick said the trust data “reveals the enormous level of wealth hidden in trusts”.

She is concerned people are stashing their money in trusts for tax purposes, taking advantage of the fact the trust tax was 33 per cent - lower than the 39 per cent top income tax rate.

“Trusts and their contents should not just be the focus of Parliament when there are political points to be scored, such as this week, but as requiring transparency in a fair tax system and economy,” Swarbrick said."

[zqwerty]

I believe that Chlöe Swarbrick is a future Prime minister.

[Oh_hunnihunni]

Me too zqwerty. And I love this policy. The politics of envy? Well, it will show up those who choose not to play well with others.

[Lilith7]

I believe that Chlöe Swarbrick is a future Prime minister.

Me too, Zqwerty; hope I'm still around to see it.


Think positively - could be very very soon; this year, next.

A great big fat scandal around the ACT party could come in handy as well...

[Zurdo]

''Grey Lynn, the heart of New Zealand’s capital-gains economy''

30 years ago Grey Lynn was the heart of poverty stricken New Zealand.

[Wainuiguy]

I believe that Chlöe Swarbrick is a future Prime minister.

Only way Swarbrick becomes PM is if she moves to another party.  Which is highly unlikely.

[Olive]

''Grey Lynn, the heart of New Zealand’s capital-gains economy''

30 years ago Grey Lynn was the heart of poverty stricken New Zealand.

More like 40 years ago.  I bought a house in Grey Lynn in 1990 and gentrification was already well on the way.

[zqwerty]

New generations are on the way and they really dislike people like Luxon and his ilk.

[Zurdo]

More like 40 years ago.  I bought a house in Grey Lynn in 1990 and gentrification was already well on the way.

Yes, it started in Ponsonby and gradually moved south to Grey Lynn. I had friends who were living in what were practically slums in the '80's...in the '70's it was the same thing going on in Ponsonby. I remember I always thought why would people buy these dumps at the time. The inner city was always a dive even over 100 years ago...who woulda thought eh ?

[dken31]

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.

[Kenj]

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.

Thank you for your words of wisdom. You are looking deeper into it than the previous posters. 

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

[king1]

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.

Trusts are a vehicle that wealthy have used for decades to hide their wealth, of course it is going to be targeted. As someone in the industry you probably shouldn't be surprised by this, although I do understand a policy like this might directly affect your business, so your position is probably understandable....

I would think the issue most ordinary New Zealanders have is that the wealthy are not paying their fair share of tax in NZ period - from what I read in the news it would seem a lot of the wealthy New Zealanders don't think they are either...  

But personally I don't think you will find too many people here or elsewhere feeling sorry for someone with say a 1.5M dollar property in a trust whose tax bill goes up by $25,000.  I presume she is making a bit of money off that asset in order to have a tax liability?   Is it not simply a cost of ownership and doing business?

[Oh_hunnihunni]

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.

Personally, I would never consider a relationship where either party had a trust to protect possessions from the other party as one worth having. Such an obvious lack of trust would be a huge red flag to me.

And, if in the case you mention her income is under the line the Greens propose, her income tax would drop significantly. So, if she reassessed her life she could have both a tax break and a solid open relationship...

---

Btw, frothing at the mouth?

So derogatory...

[Kenj]

king1 said:
But personally I don't think you will find too many people here or elsewhere feeling sorry for someone with say a 1.5M dollar property in a trust whose tax bill goes up by $25,000.  I presume she is making a bit of money off that asset in order to have a tax liability?  Is it not simply a cost of ownership and doing business?

Pardon? 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.

Ridiculous idea!

[king1]

king1 said:
But personally I don't think you will find too many people here or elsewhere feeling sorry for someone with say a 1.5M dollar property in a trust whose tax bill goes up by $25,000.  I presume she is making a bit of money off that asset in order to have a tax liability?  Is it not simply a cost of ownership and doing business?

Pardon? 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.

Ridiculous idea!

If the Trust has a tax liability, it is because the Trust is making taxable income - subsequently it needs to pay a fair share of tax...   At a guess I would say that house in the trust that dken1 mentioned is being rented out, but the tax liability would seem to be a bit excessive for a single rental - more details on that would be needed...

Edit: I assumed the tax liability (currently paying 20K?) was the trusts, which would suggest the Trust is making taxable income? Maybe i'm mistaken on that?

The wealth tax also being proposed is a different matter where people like yourself would need to find the cash, or the liability deferred until the asset is sold or some such...  Not sure I agree with that one...

[harm_less]

....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.

[SueDonim]

When we read the articles yesterday, DH's first comment was about it's impact on inflation. I just thought "help, there's no way we could afford that". For us, we fall into the low income category that would have less income tax to pay, but the "wealth" tax on our properties would take up pretty much all our income, on top of the income tax we already pay. But at least as landlords, there is always a remedy - rent. The average rental house is probably worth around $800k, and the extra tax on that would be $385 per week. I wonder if that's how the greens came up with that number as a minimum income. Probably just coincidence since that is the extra rent on top of what people already pay.

Then you need to look at everything else we consume - starting with food. If a farmer has a $10m property, they would be forking out an extra $250k per year on top of their costs and the income tax they already pay. So whether they are growing carrots or beef, that's a cost we would all have to bear at the supermarket.

And so on. It would affect every part of our society.

This idea for the tax is a poorly thought out "hammer the working" in order to give to the non-productive. Only the unthinking would give it any consideration in the ballot box. The trouble is we have far too many unthinking people out there.

And before you start throwing back at me that I'm just hitting the undeserving poor - no I'm not. I have and always will support help for those who need it. I just object to spending a lifetime working towards a reasonable retirement to have it taken away by the greedy and lazy who don't see a need to at least look after themselves.

I fully agree that our tax system needs a proper overhaul, but it needs to be done in a way that stimulates productivity and doesn't squash it. Society can't look after the poor if everyone is poor.

And no, I don't see Swarbrick becoming PM, but I am watching Nicola Willis.

[harm_less]

Pardon? 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.

Ridiculous idea!

If the Trust has a tax liability (currently paying 20K), it is because the Trust is making taxable income - subsequently it needs to pay a fair share of tax...   At a guess I would say that house in the trust that dken1 mentioned is being rented out, but the tax liability would seem to be a bit excessive for a single rental - more details on that would be needed...

The wealth tax also being proposed (not sure if it was a Green agenda or not) is a different matter where people like yourself would need to find the cash, or the liability deferred until the asset is sold or some such...  Not sure I agree with that one...

Seems that all incumbant parties are going out of their way to avoid actually addressing the CGT 'elephant in the room'.

For those owning commercial/industrial investment properties the capital gain occurring for that property is taxed by way of its eventual sale price and any depreciation claimed over the period of ownership becomes additional to the return gained so is in effect also taxed. The ability for residental properties (other than the family's own home) to not be taxed in a similar way is an obvious investment loophole that is being taken advantage of by significant numbers of New Zealanders to the detriment of New Zealand's housing availability to first home buyers. We need to address this anomaly in our housing ownership model to bring it in line with most other countries.

[Oh_hunnihunni]

No party is going to bring in a tax that people have no way of covering. It is time though for the tiny percentage who control most of the wealth - and power - and who currently pay less tax than the meanest among us, to ante up and pay their fair share. Most of them have wealth that simply self generates - and that 'dream' needs to wake up and smell the coffee. Not as if they'd really notice it...

BTW< that Stuff article on Luxon - and the numbers of MPs who are multiple property owners is interesting.

[harm_less]

No party is going to bring in a tax that people have no way of covering. It is time though for the tiny percentage who control most of the wealth - and power - and who currently pay less tax than the meanest among us, to ante up and pay their fair share. Most of them have wealth that simply self generates - and that 'dream' needs to wake up and smell the coffee. Not as if they'd really notice it...

BTW< that Stuff article on Luxon - and the numbers of MPs who are multiple property owners is interesting.

If you're referring to a CGT what do you mean by "covering it"?

The introduction of a CGT would involve all properties owned by private individuals (and trusts) being valued as at the time of that tax being implemented. A boom time for registered valuers I expect as many wouldn't trust QV to get this right. After that any property sale would have its sale price compared with its recorded value (or purchase price if acquired after the start of CGT) and if an increase in value had occurred then this is taxed as income.

No payment of tax would be required until such time that a (secondary) property is onsold. It's therefore up to the intending seller of the property to factor this into the investment potential of the property as any astute individual does before considering the sale or purchase of major items.

The other option is to adopt a significant stamp duty payment at the time of property purchase as Australia does which essentially captures the same market items but at the top end. A CGT seems to me a more fair and accurate method than saddling the house market with an additional ingoing cost.