By Chris Trotter*
A National Party bereft of substantial coalition partners and polling in the mid-to-high-30s has no chance of forming the next government. A Labour Party polling in the mid-40s, on the other hand, will find itself well-positioned to dominate the government of the country for the next three years. One of the many reforms which such a Labour-led government will claim a mandate for is some form of Capital Gains Tax (CGT).
In spite of the fact that he once warned Labour against the introduction of a CGT (describing it as a sure-fire way of retaining the Opposition benches for a decade), Sir Michael Cullen and his Tax Working Group (TWG) have made it pretty clear that the present tax-free status of capital gains (most particularly those relating to property), will be the target of significant reform.
Whatever form Labour’s CGT takes, its impact on the life-world of the average middle-class New Zealand family will be enormous. One of the principal reasons for National’s decade-long defiance of political gravity was the so-called “wealth effect” of rapidly rising property prices – especially in the critical electoral cockpit of Auckland. So long as property owners could monitor the burgeoning value of their family home; the batch they inherited from their grandparents; the rental property they bought with Mum and Dad’s legacy; they felt safe.
It was as if an entire social class had won Lotto. No matter how dark the world beyond New Zealand’s shores became; regardless of the stresses and pressures at work; always, at the back of their minds, sat a reassuringly large pile of $100 bills. If worse came to worst, then they could realise their capital gains and retire to one of the more respectable provincial cities.
The actor, Humphrey Bogart, liked to tell his Hollywood friends about the money he took care to salt away after every successful movie. His aim was to build the sum up to a point where, should the public turn fickle, or the moguls turn nasty, he would have enough money to simply shrug his shoulders and walk away. He called it his FU Fund.
That’s what John Key and the National Party’s hands-off policies allowed the New Zealand middle-class to build up – at least on paper. Their very own FU Fund. No wonder he and his party were so popular for so long. Low taxes are good – but no taxes at all are even better!
Labour’s promise that the family home will be exempt from any form of CGT is intended to reassure the middle-class that their FU Fund is safe. But, will it be enough? If the last 30 years have taught New Zealanders anything it is that no matter how modest the first step into forbidden territory may be, it is absolutely certain to be followed by another, slightly larger, step, and then another, and another, until, eventually, no forbidden territory remains at all.
Over that same period of time, from 1984 to the present, tax-free capital gains have taken the place of so many of the things the New Zealand middle-class once took for granted. A secure, well-paid job; the ability to save the deposit on a house; not having to save money to send yourself and your children to university. While these options remained open, the middle-class’s confidence that their own social status and the social status of their children were readily defendable remained intact. Anybody with a smidgen of talent and an ounce of gumption could aspire to a middle-class existence in New Zealand. Social advancement on the basis of merit continued to be a reasonable proposition.
But, as the world of paid employment became ever-more precarious; as the sum required to secure one’s first property soared beyond the reach of more-and-more middle-class adults; and as the user-pays philosophy made ever-deeper inroads into the territory of the post-war social-democratic bargain (that the working-class and the middle-class would ascend the social ladder together), then the wealth accruing from capital gain assumed an ever-greater degree of significance.
For the first time in a very long time the promise of inherited wealth is playing a key role in the ordinary, moderately affluent family’s ability to retain their class status. Where, for earlier generations, a small inheritance from one’s grandparents or parents might pay for an overseas trip or renovations to the family home; the present generation’s ability to preserve their social status is increasingly dependent on the borrowing power, or outright inheritance, of the assets of the Bank of Mum and Dad.
Just as Donald Trump’s tweets can send jitters through the world’s financial markets, the merest whisper of a downward plunge in the value of the middle-class Kiwis' property will likely send a devastating shock-wave through the New Zealand electorate.
Fear and greed, the economists tell us, are the prime human motivators. Any move in the direction of imposing a tax on the middle-class’s property-derived capital gains; any threat to the FU Fund they fondly believe their properties’ speculation-driven value represents; and the combination of the middle-class’s fear of falling with the greed it has been forced to nurture (ever since equity and fairness went out the window), will blow the political parties it deems responsible to smithereens.
The National Party’s numbers may be on the way down in November 2018 but that trend need not continue indefinitely. Mis-steps over the prospects and/or the timing of a CGT cost Labour dearly in the final fortnight of the 2017 election. Tell New Zealand’s middle-class voters that Labour, NZ First and the Greens are coming after their FU Fund, and their response is almost certain to be a very forceful ‘FU too!’
*Chris Trotter has been writing and commenting professionally about New Zealand politics for more than 30 years. His work may be found at http://bowalleyroad.blogspot.
205 Comments
Let's get this right from the outset: Chris Trotter (born c. 1956) is a left-leaning political commentator in New Zealand.[1] He is the editor of the occasional Political Review magazine, and is a regular speaker, orator and singer at left-wing, union and socialist events. (Wikipedia).
That aside, the above rings true. The left won't stop at a basic tax and the fear of loss is possibly the best way to motivate swing voters. I certainly use that with my children to indicate that Socialists have their eyes on their inheritance.
Ex Expat,
I am very much part of the middle class. I see myself as a Social Democrat. I spent most of my life in Scotland,where CGT was long part of the tax system and never once was it suggested that it be enlarged to include the family home.
There is no evidence that this would happen here and though I own shares and rental property,I support it being introduced here. This is not a Socialist government,but were it to move in that direction,I believe it would rapidly lose support. I hope your children are intelligent enough to make up their own minds.
"..the merest whisper of a downward plunge in the value of the middle-class Kiwis' property will likely send a devastating shock-wave through the New Zealand electorate."
Quite right. And guess what? We can all hear the whispers....and it's what we do about it before it becomes a loud cry that matters now.
Hi Ex Expat
That would be assuming that all the recent immigration was able to buy a house under the 'one house purchase, one vote for national policy' and wanted asset values to be maintained... I'm not sure if many of the recent immigrants can actually afford to buy a house, I think they just wanted a job... There will be a few who have an ability to purchase with the assistance of 300% of GDP Chinese bank debt, but there are a lot who won't have had the support of those very generous banks, but probably have a vote coming their way.
No doubt we'll get a corelogic update on the effects on Kohimarama..
Nic
Interesting post, thanks Chris.
It seems like we swing back and forth over history. On the one swing, people who work for a living gradually getting more of the pie, less exploitation, easier access to some capital of their own (to better participate in capitalism), a mix of tax bases (earned and unearned income, product of work and betterment of land)...Many of the things that helped middle classes grow and flourish. Meritocracy rather than inheritance-based wealth.
Then on the swing back we see unearned land betterment and unearned income being increasingly exempt, people who work for a living bearing more and more of the tax load (and the erosion of protections, e.g. through zero-hour contracts - thankfully banned in NZ), reversion to the ability to easily monopolise more of the land and assets, a move away from meritocracy toward a dependence on inherited wealth. Back to the 19th century.
Obviously one could never match Dr Cullen with regard to cynicism but would have to say whatever or however Labour reconfigure our taxation system the result will be an overall increase in their tax take. Sure there may be some token compensation to the long suffering PAYE providers, initially at least, but that will soon be grabbed back and more. Income tax is just such an easy target. History will repeat just as when the Clark/Cullen whacked up income tax over the top of GST that they had introduced and increased, as part of the previous Labour government.
Yep income tax and GST are regular, unavoidable, predictable cash flow taxes, so governments love them. CGTs are lumpy and sporadic, and governments get used to spending it when markets are high, then have a deficit when markets retreat. They also influence selling behaviours and wealthy people will just hold assets to avoid triggering CGT. It will hit mum and dad investors worst. And exempting the family home is just a gift to wealthy executives in Auckland. And a kick in the guts to regional business people who have proportionally much less in their houses and more in other investments. Should be a tax free threshold instead for homes if they introduce CGT on assets.
No surprises most of the land in the UK is still owned by aristocracy
No surprise that wage buying power in the USA has declined since the 1970s
The simple fact is the wealthy use their wealth to protect their wealth
Now Trump abolished death duties his family will save $1Billion alone after his death ( if there’s any fortune left after the various indictments)
If we think inequality is bad today just wait for the coming age of artificial intelligence which will eclipse all human intelligence
CGT will be unpopular, but at least there is a coherent and defensible argument behind it. Unlike ringfencing investment property losses. And certainly not as ideologically and morally bankrupt as TOP’s “wealth tax”.
Labour will need to try very hard to lose the next election, but CGT could do it.
TOP want to tax your family boat based on the imputed (imaginary) income that you are earning from it. And unlike income tax, you don't pay the tax just once. You pay tax on your boat's imaginary income year after year until the amount of tax paid exceeds the value of the boat. Paying tax in perpetuity based on income that does not exist. Can you explain how this is not morally and ideologically bankrupt?
And the boat analogy is not hyperbole. The leader of TOP, Geoff Simmons, used this example in an interview with Jenée Tibshraeny.
The fact that the income being taxed is imaginary means that there is a complete disconnect between ability to pay and requirement to pay. Not to mention the perverse incentives this would create not to save or be financially prudent. Also exceedingly difficult to enforce.
I wholeheartedly encourage all the loony Marxists here to vote TOP. It is a wasted vote as they won't be reaching 5%.
It's a wealth tax. There's nothing inherently 'morally and ideologically bankrupt' about that, just a decision that tax should be levied against people who 'own stuff' rather than 'earn money'. Hence, the incentives to earn money increase, and the incentives to hoard money or stuff reduce. Probably a net good for society, although obviously unpopular for people with lots of stuff.
I do, however, thoroughly enjoy your argument that boat ownership is synonymous with 'financial prudence'.
MFD so you will be pleased to see property taxes increase ? Large part of the hoarded wealth in Auckland is in the family home which being as its in Auckland doesn’t get much property tax placed on it at all Hence you have a near bankrupt city owing 6 to 7 $Billion
It’s OK though a city like Toronto owesvaroundv$312Billiom go figure how that could happen with that cities much higher property taxation
I like how you say that such a policy is morally and ideologically bankrupt, but then go on to imply that the policy is synonymous with Marxism.
You probably need to think through this whole perspective of yours again. Because it doesn't make sense.
"Not to mention the perverse incentives this would create not to save or be financially prudent."
Name some perverse incentives. Unless you are implying that productive investment is a perverse incentive?
That may fit well with the boat analogy - interesting fact; New Zealand has one of the highest boat ownership rates in the world.
Can you explain how encouraging more investment in productive areas will be achieved by assigning a deemed rate of return and taxing literally everything as if it was an income-earning asset?
Because all that's doing is reinforcing that all things have an investment value, including housing. Which is literally the opposite of what TOP is trying to achieve if they want to get NZ away from investing in housing.
Even stupider, the TOP plan only applies to the equity you own, not the part the banks own. The 'perverse incentive' here is interest-only mortgages which never get paid down, further locking in price expectations. Are we meant to believe that an entire economy financed by interest-only mortgages to Australian banks is somehow preferable to our current situation? And that's before you consider the efficiency losses of turning every single asset-owning Kiwi into a return-filing taxpayer and familiarising themselves with a regime which will probably end up looking like the FIF system of taxing unrealised gains; with its traps and pitfalls with enough rules that even qualified CAs get told to leave to people within their own firms who have more experience in dealing with them.
Thankfully, we have a system that proves why this is a bad idea already: Council rates. The councils set the values. They limit the land available. They have zero incentive to keep rates low, or deliver services in line with the rates they charge. So they don't. And this will somehow be different with Central Govt? We've seen how Wellington is prepared to ignore the problems in Auckland, with migration, housing and now infrastructure.
This is typical TOP policy: It's economists looking for problems to solve in ways that only economists can justify to other economists. Usually that means hideous unnecessary complexity to solve a problem, while creating about a dozen others in the process.
"Can you explain how encouraging more investment in productive areas will be achieved by assigning a deemed rate of return and taxing literally everything as if it was an income-earning asset?"
Well, removing the tax incentive to own property will reduce it's relative investment advantages. Those looking to invest will not misallocate excess funds into effectively risk free existing property producing supernormal returns. Remove the incentive, create a level playing field.
"The 'perverse incentive' here is interest-only mortgages which never get paid down, further locking in price expectations."
In the real world prices are determined by an arms length marginal buyer and seller. It only occurs if the two have the current fair value price expectation. So I really don't know what you mean?
The marginal buyers WTP is set as a function of interest rates (generally speaking). Equally on an interest only mortgage a sellers risk is also a function of this. So, I don't see what you are getting at...Surely the incentive is to pay down mortgage in order to minimise the risk of your investment, given yield is pretty much fixed?
I agree on the tax part. It would become an administrative nightmare
K_s, the TOP policy is tax the equity that someone owns in their house. The fair price is the mechanism that the purchase price gets set at, but the actual amount you own is a function of bank debt vs. what you've used as a deposit/paid down. If I'm going to be taxed on that, why would I ever pay down debt? As soon as I own the equity, I'm going to be taxed for an imputed return on it.
1 - Because your bank won't let you have zero equity in your property.
2 - Your money doesn't disappear. If you are only paying interest only, the difference must be allocated elsewhere.
3 - Thus, if you are paying interest only you are achieving the goal set out. For all intents and purposes you don't have a tax advantage over a renter.
I'm not a supporter of TOP but I do understand its reasoning that if you have to pay a deemed rate of return on your assets owners are more likely to want to make money on those assets.
E.g. Holiday home worth $1m owner uses for 2 weeks a year now is costing them a deemed rate of return of $40k per annum. Owner can rent for $50k per annum, start renting and no more holidays or sell.
In respect of 100% leveraging assets (1) why would anyone do that for a start (2) most banks won't let you go to 100% (3) the assets becomes productive in that the income to the banks is taxable so a gain is made on the value of the property albeit through he 100% financing of the house.
This is the policy objective to ensure there is no equity sitting around doing nothing and not being taxed. This is good news for those who own nothing and bearable for those who are super wealthy and can afford to essentially pay an annual rate for owing things.
Again, that's a big difference between someone with a holiday home worth $1m and someone with a family home being asked to pay a tax on the portion of the loan they've paid down. Do they get to claim the interest costs on the equity they've accumulated? To pay a tax that those with incomes which will allow higher gearing against a family home end up not paying?
My understanding is you don't claim interest costs as the deemed rate of return is only based on equity. Therefore, any portion subject to a mortgage (and therefore not included as equity) would not be taxed and therefore no deduction for interest in respect of that mortgage would be provided.
That would be fine, but when you consider business assets generate returns and let you deduct costs. Now we're being assigned returns on personal assets but not allowed to claim costs. Still getting taxed on the returns though. Not exactly a fair situation, is it.
Again, I'm just trying to point out the simple problems with what some tout as a silver bullet. It really isn't.
I understand that TOP will stop all deductions and merely require all asset owners to return a deemed rate on their equity. So if a landlord charges a low rent and has a high mortgage so that they are making a loss despite having $100k equity they will still have to pay tax on the deemed rate on the $100k equity.
The same result will apply to a homeowner with a $100k equity in their home.
Both would pay tax on a deemed return of $3k (I seem to recall 3% was the deemed rate TOP threw around).
I am not sure if they will require a landlord to calculate an income tax amount based on revenue less expenses and if it exceeds the 3% deemed rate on equity require them to return that amount instead (seems a bit cake and eat it toish). I don't understand TOP to be doing landlords any favors when compared to home owners.
TOP also has horrendous policies on stray cats
Is that old hippy e con omist still trying to appear relevant ?
I thought he said he was giving away all his money ?
Didn’t it turn into keeping all the money & drip feeding the odd million if each dollar was first matched by the NZ public ?
Gosh I’m glad I’m free of that voice
How do you even define what is a boat that is subject to taxation? If I make a boat out of sheet metal in my garage would I be taxed? Does power plant make a difference in taxation level ie would I be exempt for using oars? What about kayaks? Will the coast guard be stationed at various rivers conducting taxation spot checks on anyone riding an inflatable tube?
A deemed rate of return on wealth is not a profit tax. It is a very harsh regime that effectively undermines ownership by making people liable to pay for things they own and have paid for already (often paying for the asset from taxed income and paying GST on that asset).
And Income Tax - a tax on Effort - is commensurately dropped. What's not to like about a 10% flat Income Tax + an Assets Tax, especially if the 'value' of net assets falls? ( NB: Any borrowing is off-set against the value of the asset. That borrowing can then be freed up to be deployed into production, not speculation - which an Asset Tax discourages)
That's an asset tax. You use the term "gain" but you appear to be defining "gain" as a missed opportunity to make money.
So in your example if a person chooses to buy an asset rather than invest their money they should be taxed on the lost opportunity to invest their money and therefore should be required to pay tax "as if" they had invested their money.
e.g. John gets an after tax $100k bonus from his work. He could invest it and make interest gains of 4% pa which is taxed. Or he could buy a caravan for him and his family to go on holidays with and would be required to pay 4% pa for the right to own a caravan even if there is no monetary gain either in revenue (e.g. interest/rent( or capital e(.g. caravan's value does not increase).
By analogy you could do the same with gains of effort.
e.g. John is a lawyer works 80 hours a week and earns income of $300k a year. He is sick and tired of working long hours and wants a lifestyle change so changes jobs to work at McDonald's for $30k a year. The TOP party claim he is underemployed and will need to pay tax on a deemed income of $300k until he turns 65.
If TOP is all about consistency between the different gains and taxing unprofitable assets than why only focus on asset wealth, why not knowledge/personal services wealth? Maybe because it starts to look like servitude when you do it with effort whereas assets don't look so bad (to some i.e. the asset poor or the super rich)?
Caravans, boats and bicycles? There is no talk about taxing caravans ,boats and bicycles, just productive assets. So yes, if your boat is a large charter boat, and you run a business from it, there will be some tax to be paid if you try to run it at a loss as a tax writeoff.
And tax on being underemployed? Are you smoking something?
Sunshine, the boat example was given by leader of TOP, Geoff Simmons, in an interview with Jenée Tibshraeny.
Edit: And he wasn't talking about a charter boat. "Fancy boat" he says. Ideologically, why would the tax apply to a recreational boat, but not a bicycle?
I did not say it was TOP's policy but I drew an analogy to paying a deemed rate of return on an underutilized asset, that asset could be a house or a person's skills. Both have potential to generate a substantial income. Why only deem a return on the house and not a person's skills (obvious slavery versus subtle slavery was my summation).
Probably beyond your comprehension.
You make this bizarre analogy to point out how crazy TOP’s policy is, but you’ve probably unintentionally convinced a few people here that taxing a person’s unimplemented earning potential is a top notch policy. Must be careful what seeds you plant in these simple minds.
No its a tax on the increase in value of the asset.
"So in your example if a person chooses to buy an asset rather than invest their money they should be taxed on the lost opportunity to invest their money and therefore should be required to pay tax "as if" they had invested their money."
If that asset appreciates in value then yes they should pay tax on that gain. So buy a painting/house pay tax on any capital gain.
Did they, though?
Did they pay tax on any inheritances?
Did they pay any tax on the equity 'gift' that parents have given them to buy an asset?
Did they pay any tax on the speculative gain on the assets?
Did they pay tax on the sale of their business?
Sure, they may have been taxed on their 'incomes' at some point. But the neo rich in New Zealand don't make their wealth through being a wage slave.
I purchased my bicycle with income that was taxed. I also paid GST. Now TOP wants to tax the bicycle based on imaginary income that I am earning from it, year after year until the tax exceeds the value of the bicycle.
The example's you've given could be addressed through Estate tax, Gift duty and CGT. A wealth tax is fundamentally and radically different.
"I purchased my bicycle with income that was taxed. I also paid GST. Now TOP wants to tax the bicycle based on imaginary income that I am earning from it, year after year until the tax exceeds the value of the bicycle."
How do they tax you on a value greater than that of the asset? Remember that this is on the productive return of the bicycle...Essentially the productive potential of the bicycle to generate utility.
"The example's you've given could be addressed through Estate tax, Gift duty and CGT. A wealth tax is fundamentally and radically different."
That's not the argument.
You said "They paid tax on the income that was used to purchase the asset..."
I gave you instances where they likely avoided tax completely. Now you say let's introduce other taxes to address those. What is it you are arguing? You think these taxes are efficient?
"How do they tax you on a value greater than that of the asset?" The bicycle is taxed a certain amount per year based on the imaginary income that I earn from it. Eventually the amount that I'm taxed will exceed the amount that I initially paid for the bicycle. Depending on the value of imaginary income generated, this would either happen over a long period or not so long period.
Nowhere did I suggest that other taxes should be introduced to address your examples. I only pointed out that if one did want to go down this route (which I don't believe we should), there are other fairer and more enforceable traditional taxes that would be far better than a radical "wealth tax".
All the best, got work to do so I'm going to leave it at that.
The reason it is so unpalatable is because it is so illogical, unfair, counter-productive.
The wealth tax is a very simple principle - the vast majority of the general public would understand it if it was explained to them. But this is precisely the opposite of what TOP wants - they keep this radical policy lurking in the shadows, lest the populous realise how undesirable and contrary to their values it is. They prefer to focus on more on more popular policies like universal basic income to win voters. Snakes in the grass.
Nope. The point just keeps getting missed (or deliberately ignored). And it's quite simple. Invest $1 mill in the bank, the return is interest and is taxed. Invest 1 mill in your home, the return is the rent you are not paying (with taxed paid income) elsewhere. You do get an investment return, but we don't tax it.
Now stick with this simple little point and defend it from an equality of taxation point.
Wrong. Read my previous comments more closely. For starters, the one taxable income you refer to is real (interest), the other is imaginary (imputed rent). The “return” you refer to does not exist - already this tax doesn’t pass a basic sense test. There is a fundamental disconnect between requirement to pay and ability to pay. Most people paid income tax on the money they used to purchase their home, they aren’t getting off without paying tax. The tax would also be almost impossible to enforce. The tax would also be totally out of proportion because over time the tax would exceed the value of the asset being taxed.
Enforcement on land / housing values is trivial as done by councils already - called rates. Would only need to add another line for the Crown.
The other assets - excluding stocks and shares - where income is already taxed at 33% are more difficult.
By making intelligent trade-offs for ease of implementation - you end up back at a land tax - which NZ has had previously.
Forgotten in the bicycle debate above is that an asset tax provides an incentive to purchase another asset with earning capability.
We have not heard much above of the other side of TOP's policy of a large reduction in personal and company tax rates with a revenue neutral outcome to the Crown.
NZ does currently have a major issue with untaxed capital gains which is income by any definition and it needs to be addressed. Every international commentator has identified this year after year. They are not all fools !
TOP's policy may be a little esoteric and unpopular but it is theoretically rigorous.
So answer this. I have a mill, you have a $200k. I put the mill into a house, save myself $600 a week in rent and pay no tax. You put your $200k in the bank because you cant afford a home. You are taxed on the interest which you put towards your rent - a long with your taxed paye income.
Or raise it to a mill you have invested..so you pay maybe $9k in tax and i pay nought.
How are you feeling now?
You've just put the exact same question to me.
We both paid income tax on our funds when we earned it. You aren't getting off without paying tax, so that is fair. In fact, you probably paid more tax earning your $1M than I did earning my $200K. And if the funds were inherited, make an argument for an estate tax.
Your house house isn't earning income. Why would I be upset that you aren't paying tax on non-existent income?
My 200K is earning income, so makes sense that the income is taxed.
1. You are not saving $600.00 a week in rent. What does rent cover?
Rates, insurance, maintenance, repairs, etc...
You are still paying this when you own a home. So really the imputed rent should only be the "profit" to the landlord. Say $50? Just how much admin would you be doing to chase up a few dollars a week from everyone.
2. But why does it apply to a house? and not a...
Think about what the larger implications are.
Everything by economic definition can have an opportunity cost. TOP want to tax the Opportunity Cost.
Buy a house, and get taxed on the rent you save.
So
Buy a bicycle, and get taxed on the petrol you save?
Buy a painting, and get taxed on the museum trips (GST) you saved?
Bought 4 bananas and only ate 3 so threw it out when it went rotten. Should I get taxed on the 4th Banana for the cost I could have onsold it?
Grow veges, pay GST on the price they are worth at the local organics shop.
The list is endless.
3. Does the bank pay tax on its imputed rent? or do I pay it all.
For example.
$1mil house rents at say $1k a week
I have 20% equity, so why am I up for the full 100% of rent?
Does that mean if the neighbour lends me a rake to sweep up the leaves in my yard. That them/me should be paying tax on the lost sale at Mitre 10?
Yes they are some idiotic examples. But that is the can of worms that this tax would open.
A real life example of how it ends is the GST in Australia.
Wow I didn't realise so many cannot grasp the basics of tax and inequality of it! And no, I'm not arguing for the TOP policy. Just pointing out that the absence of a tax on an investment in a home has a tax free status that distort tax equality (against non owners). This fact is inescapable...to argue it does not shows the level of ignorance on how the tax system works.
...how do you know I am not also? (I don't bleat about my personal to avoid typecasting). It ain't they high ground. It a simple tax issue. well debated and well understood by tax specialist that non taxing the home is a distortion to the tax system. Perhaps you missed the tax classes? In saying so, I'm not advocating, just highlighting.
No, I mean harsh because somebody just starting out in their working life, all of a sudden is only paying 10% on income earned, plus 10% on deemed capital value of their assets. Somebody not far from exiting the working force at the end of their working life has paid significantly more than 10% on their income through their life.
Well, for a start, liberalising planning rules, ending character overlays, stamp duties, extending the Brightline (which we already have), ending negative gearing (which we've done) and LVRs aimed at investors but flexible enough to allow first home buyers to still get on the market?
I mean sure, it's not as sexy as a hugely complicated total rejigging of the very concept of 'income' that might get economists off at night, but it's probably going to achieve the desired outcome.
If your proposal to fix the tax system broadens the fee base for accountants more than it does the tax base, it's a bad idea.
Name one that doesn't create more distortionary effects than the proposed tax and associated income tax reduction. And don't forget that the mortgage interest could be claimed back against the imputed rent, so for the first 10 years of property ownership you are paying less income tax, and probably not paying any so called imputed rent.
If someone buys a section to camp on with their family in 2008 for $150k and sells it after 10 years for $150k there has been no profit of wealth gain (IMHO but correct me if I am wrong). Nevertheless TOP would still want to tax a deemed rate of return on the $150k section; this is not a profit/gain tax but rather an asset tax.
If people are concerned that people should be taxed on all gains they make/receive then a tax on effort, a tax on capital gains and a tax on inheritance would be easier to justify than a tax on owning things.
While yes no profit in your example and allowing for inflation an actual loss there is a gain/profit from its use.
The simple case would be if you camped at an approved camping site for 2 weeks every year you would pay for this and there would be a GST component, ergo for your own land you should be paying tax on the "free" 20 weeks rent. It is imputed rent.
Of course in reality few land sections in nice locations do not gain in value. So its far more likely that the $150k section is worth $250k after 10 years in which case tax on 100k should be paid.
If you actually look at TOPs policy I think its more focused on the gains being taxed.
(think this is the latest)
Are you saying TOP would only tax the family batch based on imputed rent for two weeks. What if you have a $3m home in Auckland you use for 2 weeks of the year? Are TOP only wanting to tax an imputed 2 weeks rent and then a capital gain on eventual sale of the house?
That's not what I understand their policy to be. I think you are making up your own policy on what you think is fair.
Don't know where this is coming from. In my opinion benefits should be limited to people who have no assets or income. My understanding is that beneficiaries won't get the dole if the have $10m cash but a super-annuitant will get super even if they don't need it. That has always struck me as indefensible greed by a generation who has rogered every last cent out of NZ.
Welfare support payments and taxation are not analogous. Most justified tax regimes tax gains and consumption. Sure in the past there have been taxes on windows, wives and other crazy shit but that was just... crazy. There are a couple of fringe regimes (e.g. FIF regime also uses deemed income concepts but that is due to the expense and difficulties of determining offshore gains as I understand it) but on the whole gains and consumption are the most principled based IMHO..
Where is it coming from. Its your hypothetical challenge. You want us to accept there is no income from your assets for taxation....but I assume would have a real problem if we applied said same rules for other purposes (such as benefit testing).
Try not to fluff around the question this time eh?
I'll dumb it down for you.
Government should not give money to someone who is asset rich. The government would be taking money from other people to give it to asset rich people who do not need the welfare. Asset rich people can sell their asset and live comfortably, benefits should be for poor people (poor as in no income or assets). Making someone use their resources before begging off others is common sense.
Government shouldn't take money of people just because they have assets. Making someone sell an asset to give you money is theft and will eventually beggar them. If you tax income the Government takes a percentage of a gain the person has, this ensures they have an income and the Government has an income, such a tax does not drive someone to poverty. For example, if you make an elderly widow sell her freehold house because she does not have enough money to pay a tax based pretend income (e.g. a % applied to the value of her home) as she has no real income she will be beggared and buggered.
This is why TOP crashed and burned in the last election and will never get close to getting elected. The majority of NZers know stupid when the see it. You obviously don't despite looking at it in the mirror every day:)
I'm not talking policy but notions of income. Policy comes next. The income from a home is the return of not paying rent. If you don''t want to charge this as taxable income, then give those that can't afford a home the same tax break - tax deductible rent for example. Problem is you a confusing a policy with a fact. I'm not debating policy, trying to get you to understand the bias against our renters (of which I am not one by the way). Can you not see this bias?
No, you have misinterpreted income. People who buy a house so they do not have to pay rent are not deriving income, they are avoiding an expense, same as people who grow vegetables instead of buying them from the supermarket or find a sexual partner instead of paying for a prostitute.
It would be stupid for someone to say "I have to pay for a prostitute and buy my vegetables from a shop at $300 a week so as you grow your own vegetables and have a wife you should pay tax on $300 a week. And if you don't agree you have a bias against single people and people without green thumbs!"
Why you think this is not a stupid argument when applied to houses (maybe you don't?) is beyond me.
...it does require some open thinking to 'get it'. Go back to the analogy. $500k in the bank, interest taxed. $500k in the home, no tax. The guy who hasn't a home is taxed, the one who has a home is is not - even though they have the same net wealth.
The question is then should this be remedied by way of a change in tax policy to give renters a level field? if so how?
Now who is not answering the question. Should the married man who grows vegetables pay tax on $300?
Yes or no? If no why?
As to your example no tax should be paid by the home owner as they are not making any income. The investor is making an income and he gets to keep 2/3rds (thereby getting richer) and the government clips the ticket for 1/3. Win win.
Not a very good argument.
In fact it highlights the pertinence of taxing a deemed return on the land.
In your analogy the man grows his vegetables tax free due to the ownership of the property.
All other people must purchase said vegetables from a vendor whose willingness to sell is based on a tax burden.
You can argue all day. However, at the end of it (like most of your arguments), you are incorrect. You can argue about the ideology of it, but cannot dismiss the fact that property ownership (investment) is a tax distortion.
Oh god. Another one of your arbitrary "but what ifs"
Fine.
Again. The analogy is stupid because it misses the point.
The man who grows vegetables on some common ground somewhere (if he now doesn't own it) is nowhere related to this situation.
He has no assets to tax. All his investment has been taxed - seeds, fertiliser, etc. The only thing that isn't taxed is his labor. But no one is arguing to tax labor. In fact the opposite under the TOP policy.
There is no asset to tax. Unless he has some plant - which should be taxed because it is a conscious allocation of capital to produce something.
TOP's policy is to assign every asset an income, the family home for example would earn a rent from its occupants and you would then pay tax on that as though it where income. It means if you pay off your home and wanted to live self sufficiently they would tax the property out from under you. It literally makes us all serf again.
The land in your example would not generate two weeks of pretend income, it would generate 52 weeks of pretend income. You would then realize, wow, owning this land sucks because I pay for 52 weeks but only use it for 2 weeks. So you sell the land and make use of public camp sites. TOP thinks thats great because its the most efficient use of resources. Things like holiday homes would basically cease to exist because you pay tax on your income and save some of that, then when you spend it on a product to enjoy like a holiday home you have to start paying tax all over again. In effect what TOP suggests is that we only lease things and genuine ownership ceases to exist. After that its just one last step to accept that all assets are owned by the state and we just occupy them based on need, you know what, lets just have a state agency decide on our needs and then allocate assets to us based on the most efficient allocation principal, kinda cuts out the BS yeah, and you know what, we expect 80% of NZ to be better off so all good, no need to ask more questions.
Consider this, if your own home is a rental that you rent to yourself, then you both earn a rent and pay a rent, and that is a net $0 sum. The tax on $0 sir is how much? And yet TOP only thinks that half that equation matters. In effect TOP wants you to buy the house twice, and that is because TOP is very stupid.
You last paragraph is the key to the inequality and shows the level of ignorance. it is not a net $0 outcome. Receive rent of $30k and you are taxed on $30ks as income. You get no deduction on the rent paid as it is a personal expense. This is the issue...you just scored an own goal.
Steven
I’d be concerned about any party singling out the wealthy
That’s a con for the masses to believe
The real plan is to collect tax off the average Joe & Mary who will accept and pay
Since when did you ever see the wealthy not find ways to successfully avoid taxes ?
I rest my assumption your honour
By definition,
a) you seem to be admitting that the present system is broken, yet are perfectly happy with keeping this broken system because you perceive that any replacement system will be equally broken (or worse).
b) You are then putting on a un-substantiated theory that really its a dis-honest plan to tax those paying the rump of tax even more heavily. Yet at the same time seem to be ignoring that if the promises TOP is making are not lived up to they can be reversed/fixed. Its really easy if not obvious. If most PAYE find their tax bill has not dropped overall and they are not NET better off that 80% can vote accordingly very quickly.
Assumption, yes certainly not any fact I can see.
Once there is a capital gains tax id agree. Currently IRD allows you to have a nebulous sense that you will one day sell your rentals and that is still non taxable.
Most rental owners however are in the business of been a landlord for a long time but ultimately are in the business of making capital gains.
If you buy with the intention to sell then any gain is taxable and a majority of rental owners actually do clearly understand that they will sell, often to fund retirement. Under law the gain should be taxable but IRD has a stated internal policy not to pursue this beyond 10 years.
Its clear enough that capital gains on rentals should generally be taxed but they arnt so ring fencing is a partial solution. The real solution is to tax capital gains on investments and to cut the personal income tax rate or GST.
There are farmers who never pay any tax at all but have Lamborghini's in the garage and retire with millions in the bank. Its clear enough that this doesnt make any sense.
Its pretty obvious that by treating rentals harshly it removes the will to own one. Isnt that the point in all of this ? Swapping houses amongst ourselves (now that johnny foreigner has been given the push) at ever increasing value is about as unproductive and unimaginative as it gets.
BLSH...they are not like any other business. Simply because those that live in a home cannot claim tax breaks, those that rent them out can. So a permanent in built bias against the home owner. So any cost the landlord gets loaded with that the home owner doesn't is excellent news.... until the equity is restored.
Chris Trotter disappoints in this article. While he rants on his resentment of the middle classes sitting on untaxed capital gains, but blithely ignoring the fact that unless the family property is sold, it is unrealised, so effectively means nothing. He ignores the bigger problem and the precipice on which the world teeters.
That is the problem of the free market economy that the US imposed on the world from the 1960s onwards, that has led to globalisation, and permitted the creation of mega corporations that have lead to the undermining of democracy. He expresses no concerns of billion dollar profits (probably because they are legal) taken from our society by our banks. He fails to provide any indication that he understands that it is all connected. He fails utterly to explore the political failings that have led to those untaxed capital gains, instead sounding as if he wants families to pay a tax on a change in value of their home, that has occurred without their control, and with money they will likely not have, thus consigning them to poverty. This may probably part of a socialist agenda that is designed to keep people down rather lift them up.
With his political journalistic background, I would have preferred an in depth analysis, as opposed to a blinkered, politically correct one that we so often see, of what led to the housing crisis and what can be done to fix it. Like so many he focuses on just one small piece of minutiae, trying to appear erudite, while expounding a political agenda that helps few.
".. unless the family property is sold, it is unrealised.."
Unless the equity in the asset has been borrowed against? That's the same as 'selling it to yourself' and given the cult-like following the property investing has in this country, I'd suggest many, if not most, property has been 'leveraged' for the tax advantages if nothing else.. That will be the coming problem - debt is fixed; asset values are variable.
Of course there is a productive debt to generate income and a non-productive debt for consumption. I just had to buy a "new" car to replace the one someone just wrote off, a car is at the end of the day pretty essential as that is how we have built our entire economy/city/country. Time will change that however.
Agreed, there are several ways to realise the change in value and borrowing against it is one of them.
I beg to differ that most is leveraged for tax purposes. Most whom I know do not seem to really understand this. For them the problem is simple - they need money for some reason. Sometimes the reason is frivolous, other times it is not. The easiest way to get it is to rock up to the bank and up the mortgage because the house value has appreciated. Usually the bank tries to explain the implications to them, but mostly they don't get it or just don't care. they are in the Jerry McGuire state - "SHOW ME THE MONEY!" I think they also fall into a common area that most people blissfully lead their lives in, that is bad shit only ever happens to other people.
Too often we get told that one of society's biggest problem is Joe Cabbage Public's financial illiteracy. this is a manifestation of it.
I think you are taking a rather narrow and incorrect view. This is not the case of a PAYE who only owns their own home. The "middleclass" in this case owns significant other property that in effect the capital gains of which is all un-taxed. If you have a read on TOP's policy on this taxing the un-taxed would significantly decrease the tax for ppl actually paying tax.
In terms of the National party decline, I think CT is a little premature. That long term decline in support is matched by Labour, the swing voter "camp" is taxing the numbers off both.
"He ignores the bigger problem and the precipice on which the world teeters."
that can be another thread.
"Labour’s promise that the family home will be exempt from any form of CGT is intended to reassure the middle-class that their FU Fund is safe. But, will it be enough? "
Labour misses the significant point that many middle class have an iron in this fire ie at least 1 rental so saying your family home is safe is moot, its the rentals they own that they are protecting by voting National.
This frankly is utter rubbish " thus consigning them to poverty. " the very point is if following TOPs policy is there would be a huge reduction in PAYE more than compensating for the extra tax paid as land tax / CGT for 80% of people.
Steven you make a big assumption where yo say "if following TOPs policy ". CT doesn't espouse this at all. He just talks about taxing something, and I am not even sure he wants the family home exempted.
I tend to agree with you that the intent should be focused on the second etc homes, beach bach and so on.
In fact most commenters here seem to assume he is regurgitating TOPs policy, but knowing CT I am not so sure, unless he explicitly says so.
Actually I dont think the family home should be exempted but compensated for in paying less tax elsewhere. Now whether CT wants to simply tax more V TOP who wants to be tax neutral I dont know for sure. However based on past experience it would be a concern coming from the likes of CT (far left) for sure but TOP isnt terribly left let alone far left.
Look further. What is the most salient point in Mr Trotter’s article is that National is in disarray,and worse, they have no coalition prospects worth a hoot that can and/or would support them sufficiently to form a government. Where have they gone. NZ First, Bolger and Key cauterised that. ACT, self destructed. United, shriveled on the vine. suspect veiled somewhere in this contribution is Mr Trotter’s outright glee that MMP has outdone the National Party and perhaps the simple fact that MMP answers to “the people’s voice” a whole lot more than the corporate world that National covets.
Generally, yes I agree. National could have friends and indeed I see NZF as continuing to pay the king maker and wield considerable influence under MMP. MMP does indeed seem to be keeping politics generally closer to the centre than FPP so I think I am all for it continuing.
Well it will be quite a test for NZF if WP is no longer there. But to expand a little on your point about MMP believe that confirms why a lot of us voted for MMP in the first place. Personally I was shocked by the antics of Muldoon, during his last years in power, & then the absolute tyranny of withholding the keys of office from Labour, while the country suffered direly. So best to have the power base & authority spread. But don’t think NZr’s as electors have yet fully grasped the consequences of MMP hence the popular view, from the right,that we have a minority government sort of. Having said all that agree totally for a country of NZ’s size and position anything that keeps things steering down the middle is welcome.
I think that we are kidding ourselves about the influence that any government can have on the economy while there is no control and a complete lack of regulation of the 'creators of money.'
NZ has no idea how much of our housing debt has been created on-shore nor, and possibly more important to the future how much has been created off-shore and arrived in New Zealand as 'cash'
The economy been manipulated by those that know the game at the expense of those that didn't know the game are now realizing that they have been sold a lemon to chew on.
Hi Nic. I think you’ll appreciate this video: https://m.youtube.com/watch?v=fjhLp8AHAYc
It’s a great look at what will likely cause change and reinforces your above point.
If the home is to be exempt, then i hope the tax working group has the foresight to work around this by offering all other tax payers a tax free break on investments of a comparable amount.
So if the average house rent is say $600 per week (or some other formulate), then non asset owning class joe can have a tax free income of the equivalent. The $600 of value is the return on that investment in the home.
When you realise the impact of this, perhaps the penny might drop as to how unfairly from a tax perspective treated the non asset owning class is.
Disagree. The non-asset owning class make a choice to spend their money in other ways, likely to create a lifestyle, which the home owning people have forgone. There are prices to pay for either choice and benefits for either. Why should one group suffer a penalty because the other suddenly woke up and realised the cost of their choices?
The problem wouldn't exist if the Govt put rent controls in place to make renting a property affordable, rather than a rip off.
The bulk of our capital gains were created by Len Brown (LAB) and Phil Goff (LAB) making land supply cuts to Auckland City - a constriction that the incoming LAB Government promised to end, but did not do so. The only "remedies" the LAB party will actually attempt are to invest public money to keep the bubble inflated.
LAB party are just as bad as NAT party.
I don't think Labour is as bad as National. I can see signs of progress towards a comprehensive housing, transport and urbanisation plan. I believe the Coalition Government is aware that the housing market affects productivity via the proper functioning of the labour market. And inequality directly.
Recent progress includes upcoming legislation for infrastructure financing via targeted rates and bond financing and legislation for Urban Development Authorities.
I have written about the implications of this for integrated land-use and infrastructure provision for Greater Christchurch here.
https://medium.com/land-buildings-identity-and-values/greater-christchu…
The real elephant here is the stupid house prices, mainly at the behest of cheap debt from national and international sources. The person selling up in Awkland and moving to the regions has created nothing other than one off personal gain, and putting pressure on everyone else by expanding the debt bubble. This pressure is then transfer that further around the country pressuring a local in the region relocated to trying to survive on a regional wage.
This has always be the case to some extent but the degree to which this gap has opened up is wider than ever.
Morgans wealth based tax is technically interesting as it targets the elephant in how much cash/wealth is tied up expanding that bubble of stupid house prices vs something constructive crating employment and export revenue. If a capital gains tax does arrive the reality is that the speculators have no one to blame but themselves.
Trotter largely positions his argument in a real estate context - the vehicle by which most kiwi intergenerational wealth is passed down but the issue is wider than that. A significant hit on kiwsaver fund balances, confiscation of a retiring business owners equity and double taxation rules that will mean Kiwis pay CGT but much of the 45% of our sharemarket owned by foreigners will likely be exempt are downplayed by the comrades, including crafty Cullen. put your capital into a Paratai drive monstrosity to leave your kids and CGT won't apply (assuming it is your place of residence when you cark it - 'keep the old bugger out of a retirement village') but invest your capital into NZ businesses and the socialist will thieve part of it. Remove one of the few remaining incentives to invest in NZ equities and watch while capital takes flight. The NZX will become moribund and the ratio of overseas ownership will increase. We'll be poorer but it'll be a 'fairer' form of poverty so that's alright.
David Chaston I would love you or your team to try to define what is middle class and how has it changed over time. A lot of passages within published articles and comments refer to the middle class but we have little definition of what exactly that represents.
Is middle class based on income, asset value, cashflow.... how does it differ to Australia, US, Europe etc...
Would help drive great conversations if we can shake out a loose definition on middle class. Would help put inequality into perspective as well...
The Middle Class is that to which you and I and all nice people belong, because no one claims to belong to the "ruling class", the "upper class" or the "propertied class", no one wishes to be seen as "lower class", it is unfashionable to be "working class" even if you're a trade union organiser, and "petty-bourgeois" is a goner.
https://en.m.wikipedia.org/wiki/Middle_class
The middle class being the middle 60% is an interesting definition of middle class. It certainly seems to be more of what is fashionable than realistic.Thomas Piketty has an interesting definition (not of class but actual income) of the lowest 50%, middle 40% and highest earners at 10%. Although that's for the purpose of examining inequality.
This article states that 50% of income earners in NZ make $28k or less.
https://thestandard.org.nz/left-side-story-what-do-new-zealanders-actua…
How much of the middle class is middle class by income versus perceived social standing?
Perfect comment that proves my point. We don't know who the middle class are but we do know that the term 'middle class' is popular. Inequality skews this greatly but how much has inequality actually impacted this? If you take inflation into account was the median citizen in NZ better off in terms of income and assets in 1980 then the median person in 2018?
It is all speculation, but i would like to see a proper team (Interest.co.nz reporters) try to tackle this and see where they end up
Since we are not talking about taxing retrospectively the gains of the past that are already banked. New Zealanders have 175 Billion of funds on term deposit. Where did all that money come from? New Zealand has a massively overvalued residential property market and off the charts debt to income ratios. The best hope we have is that the government and reserve bank can prevent any further price falls and property values stagnate (they will still fall relative to inflation) for the medium term while incomes somehow catch up (up the workers !!). There won't be any CG for the T.
I think I mostly agree with this but:
It’s not that National is pro middle class and Labour is anti middle class. That is a distortion that drives NZ politics. Rising house prices disadvantage most people in the middle class (unless the own multiple homes).
Let’s face it, there are two groups who pay tax. The middle class and the rich. The middle class might get a minor benefit from asset price appreciation but since it’s one house in and one house out for them (especially if you take the multi-generational view) they are really just on a tread mill - that is they feel like they are going forward but are actually standing still.
The trick National and the media pulled is to say ‘you are getting rich’ and ‘you are earning more money from your house than your job’. And so many middle class people feel they need to protect house prices by sacrificing the rest of their lives (policy wise). But once you realise rising house prices are neutral at best for middle class wealth and very likely a drag it’s much easier for people to vote in their interest.
Just to be clear the Labour/National divide isn’t a takers and makers difference. It’s a ‘what should we tax divide.’ The middle class will have to pay the tax, it’s just a question of whether they pay it on their wages or their house. I think the house creates better incentives.
Hardly. While housing is still the overwhelmingly largest store of wealth for kiwis, the balance is gradually changing. For the middle class KiwSaver is developing as an increasingly significant asset and the coalition will need to tread carefully. Applying a CGT to KS will depress returns through the direct taxation effect but also by making managers more cautious about switching investments. But exempting the scheme from CGT is also fraught as it would hit direct investment and increase offshore ownership of the NZ bourse.
Silly old Trotter, trotting out the same old tired rubbish he learned when he was a teenager. Labour and National are equally responsible for the silly position we find ourselves in. Both enabled house price and immigration booms. The lefty Bureaucrats have a huge responsibility here too. We have chosen to sell our country to overseas mega corporations, primarily the Aussie banks and the bureaucracy has been a key enabler. Labour and National have both worked to encourage low productivity businesses like Immigration and Tourism and to discourage high productivity ones. Capital gains tax doesn't address any of the key reasons why we are getting poorer, it just gives us something to argue about, setting us against one another. Quelle horreur.
I don't think we consciously chose to sell our country to foreigners, maybe you did when you voted, but most were deceived by propaganda into thinking National had national interests at heart. Remember the asset sale referendum (67% said no) which National ignored, then sold state assets anyway?
It's disingenuous to say 'both did it' because while that was somewhat true in the past (Labour in the 1980's), times have changed and it's been 10 years since Labour have enabled anything of the kind. A lot has changed in those 10 years, and it's been nearly 20 years since Labour cut the neoliberal rot out it it's ranks. The immigration boom National oversaw is also orders of magnitude bigger than anything Labour enabled.
Blaming bureaucrats makes zero sense. They do the work of elected officials. The irony of treasury, with it's neoliberal reputation, shooting down some of National's policies as being too far ideological was not lost on me.
https://www.interest.co.nz/charts/real-estate/median-price-reinz
House prices went up more under the last 9 years of Labour than under the 9 years under National. From memory 100% under Clarke and Cullen, against 63% under key/English. Both parties are equally useless in this regard, despite their protestations and promises.
A CGT is a great idea, especially if the money is used to improve the life of those who don't work, do drugs and live in emergency accommodation. This will teach people that we live in an equal society where everyone is entitled to the same quality of life regardless of race or gender.
This is a facile statement. The people who need help will need help regardless and the people will always pay tax in proportion to what they are earn. It’s not about who pays tax or who gets benefits from the state, it’s about what the tax is leveraged on. At the moment tax is disproprotionately leveraged on labour which disadvantages people who work.
Hardly. Personal tax rates on investment income are at the same rate as on labour. In response to your assertion of disadvantage between capital and labour taxes, I suggest the fact that 45% of households pay no income tax and the 15% of households where investment capital is concentrated pays 75%, shows where the 'disproportionality' already lies.
That's what Labour is banking on, voters willing to vote in a CGT as long as only those dirty money grubbing slumlords and greedy business owners are nailed. Their slogan will be:
"Labour - a party for the workers who only own 1 house, the one they live in!"
Divide and conquer. Landlords vote National anyway so the policy shouldn't impact on the Labour voter base as long as Labour stresses that only slumlords and rich people who own businesses or expensive toys will be nailed.
HeavyG. The naive comrades assume the owners of capital will quietly sit by and allow themselves to be milked. They seem not to understand the international mobility of capital and the various tax efficient ways to extract equity from many private businesses, other than through a sale process. Avoidance will become a blood sport, just as it is in other countries with capital taxes. Except that tinpot NZ with its narrow markets is more exposed to capital flight.
America is so much Greater than we are...Their 'Houses" are so reasonable...it ain't true.
https://www.nytimes.com/2018/11/15/upshot/housing-market-slumping-despi…
Comparatively, we is so much better.....off...we is affordable, we is rich as all get out. We can reach the Sky, we can milk the system, like none before..we can live like royalty...We is immune from all contagion...ya can bet yer life on it, yer last cent.....and most often....Do.....do they not?
My next speculation, is a gas....I thunk....maybe a house ain't as bad as I once thought....Sure as eggs is eggs...they don't tank....but it could be an Option....like these people ...thwart....short.
https://www.zerohedge.com/news/2018-11-18/one-hedge-funds-instant-destr…
Everyone knows "MERIT" is a Trump, Nazi, Racist, Fascist, Misogynist dog-whistle (with no disrespect to dogs) for "white male". I'm so stunned to see this word on a respectable publication like interest.co.nz. Can we not move on to a more progressive society where equality means equal outcomes instead of the outdated 'equal opportunity'. This is 2018 people!
Why should equality mean equal outcomes? I mean, to a point, in that we should all have warm housing, medical care and access to food and transport at cheaper prices.
But 'equality of outcome' is not progressive. You need people to do well to finance the people who don't. This country is hugely reliant on a very small group of taxpayers underwriting swathes of people who pay no tax at all.
The Question being how will the wealth of the Babyboomers who took the wealth of there inheritance from their parents, the wealth from their generations work, stole a large amount of the wealth from their children's generation, and the wealth of their children's children's generation via government policy of the time/immigration due to insane property inflation, The Question how will this be returned before their death, my guess is it won't. But if it will be, id like to know how.
I agree largely with the article.
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