Major Tax Reform

Sounds more like backward thinking Green policy.
Lets punish the innovators,the ones who have the balls to set up ventures ,take the risks,put up the capital & employ people.

Who cares if the wealthy leave NZ?

Why would you punish people for making more money, this is why the wealthy leave nz.

The wealthy leaving isn't actually a problem.

Lets punish the innovators,the ones who have the balls to set up ventures ,take the risks,put up the capital & employ people.

You have to prove that it's the rich that are actually the innovators.

Or, to put it another way, if we distributed the wealth more equally we'd end up with more innovators because the majority of people wouldn't be prevented from being innovators by being poor.

I don't get why the word "punish" is used as soon as someone says increase tax of high income earners. The simple fact is that they earn more so therefore can be taxed more with out losing quality of life. They still have incentives to earn more and more. Also they would see the poverty drastically decreased along with crime rates and overall general public attitudes. It's a better world.

Dave Hargreaves
Sounds more like backward thinking Green policy.
Lets punish the innovators,the ones who have the balls to set up ventures ,take the risks,put up the capital & employ people.

The rich don't put up capital. They save. They become rich by taking more than they spend and the speculate with their accumulated saving.

It's the paradox of thrift.

Just started reading what's going to be an interesting book called:

The Myth of Ownership by Liam Murphy and Thomas Nagel

It covers why the present tax system, and most of the reforms here, are actually wrong because they all start with the wrong assumptions.

They become rich by taking more than they spend and the speculate with their accumulated saving.

They certainly take more than they spend but they don't do a lot of speculation with it. They're more likely to be looking for government guaranteed returns such as government bonds and government guaranteed bank deposits. Venture capitalists look for where they're going to get immediate returns from IPOs that have been backed by government funded research (The Entrepreneurial State by Mariana Mazzucato).

The rich aren't our saviours, they're the problem.

I think this discussion is a good example of the difference in perspectives on both sides of the coin and both sides of life experience. In my opinion,when you've worked hard to get somewhere, you don't want to have someone working against you (which in my opinion is what this tax break does). Life is not all equal and that's what makes it interesting. Opportunities need to exist for everyone and I'm all for closing the gaps and sharing wealth, but taxing higher income earners is not the way to do it. The reality is 95% of income earners earn too little in this country, the problem is bigger than just a gap we need to shift ALL incomes up, we need massive innovation in this country. When you look at the price of a house in Sydney vs Auckland, NY vs Sydney you can see how far behind we are in this space. Tax is not the answer, the money needs to come in more - not go out.

They're monetarists aren't they? So who cares what they think

To be fair, there are two tax breaks in this country - one for the corporations and one for the earners - that doesn't seem to be adressed here. The corporations are traditionally maxed out at a lesser percent than higher earning individuals which might be worth discussing.

I am hard working , getting 100 K . my college wend to Aussie and get 250 k for the same job.
I solve all problems to give all of you electricity.
No graduated engineer is doing it in NZ .
The graduated engineers have meeting's !Getting 250k +
doing nothing !Asking me what to do! TAX him, not me .
I have 4 children a old house to pay off and one child have a disability.I have to stand up 3 times a night to save here live . And you want to tax me 35% ....
F O .....

Draco T Bastard

I've no idea why that is addressed to me.

I've noticed recently the advantages that others have because they made better decisions than me. They have good lives because they didn't have kids too early, they chose a partner who happens to also have a good job - things like that. Someone in the same role ends up with double the money in their house - but I don't want to penalise them because they made good choices (or got lucky) let's educate others to make good choices too, education, innovation, family planning that sort of thing. That would go a lot further to addresing out nations problems. We are no longer a nation of european NZ'ers, we are a wonderful nation of mixed race and not all of our nation can make good choices. This is also a big part of the problem - not just how much they're taxed.

Re: Quentin Jackson
So what your saying is that the rich are rich because there hard workers so therefore why take away a higher % of tax. I think this mentality is wrong. Majority of the rich are rich because they came up with the idea first or where in the right place at the right time or mum and dad funded there
business idea. In reality taxing the wealthy at the same rate as average income earners is fundamentaly wrong. I really don't understand why this is hard to see.

No that's not what I'm saying. But I don't think I'm going to be able to explain it to you.

Re: Robert Weissmeyer
Your getting taxed 33% as it stands and the people on 250k are getting taxed 33%. Under this reform your tax will go up 2% but for the 250k earner it will increase by 23%. I belive in your situation you will benefit more from society being more equal then the lose of 2% of 100k.

Ok for about the fourth time I will present what I put in the forums months ago for discussion,

Firstly we have to raise about 56 billion to run the country so any tax adjustment needs to be able to raise that amount or more. So any tax you take away has to be replaced somehow, its about creating equity, opportunity, and bringing humanity back to this country.

I think that tax should only begin to be applied at a point where ones everyday living expenses are taken care of, I think that 35k is a good starting point and maximum tax really can never be over half of income regardless of amount, it just isnt fair, so top tax of 45%. The percentages and levels will have to be worked out with accurate data that I just dont have at my disposal, My data is incomplete and 3 years old, and to be honest im too busy struggling to survive to put any more time into this project.

Businesses should only pay tax after the 50K of profit so that they can afford to employ and grow, but tax after this point could be raised from present levels.

Business that don't employ people to make profit but rely on computers and mechanization should get taxed at higher rates as so they contribute to society, this should be based on turnover and profit verses the number of employed staff, If we dont do this we will all be sitting in our hovels one day unemployed while those that own the robots control everything, science fiction i know but its already happening.

Gst is a huge problem for small employers, we need to get rid of GST totally and replace it with a small financial transaction tax, 0.1% will probably be enough to replace the 27 billion that gst raises, but again that figure would have to be worked out with accurate data.

These changes would take the burden off of the people and give them hope, it would make a massive difference to small businesses who are the main employers in this country and it would send a message to the world that we actually care about the welfare of the people in this country.

There is more we need to do as well, we need to ban overseas investors fro buying domestic real estate, and give those who already have property a 3 year time period to sell or be sold, houses are for people not profit, If you think this isnt a problem there are about 1000 houses in Hamilton alone that are owned by overseas mainly Asian investors who dont even live here.

Also would it be too hard to plant fruit trees in cities for the benefit of the population ? its not like we dont plant enough flowers, we have the gardeners already.

While Im here, come on wake up, one Hydrothermal power plant off shore with almost no environmental impact and we can power all NZ for next to nothing, not to mention feeding our engineering industry building it, and the mining of the sludge that comes up for rare minerals and metals direct from the molten lava.

Hugo, most of that is a good idea - something good to think about I think.

Hugo I agree with this. Thanks for your input.

"Firstly we have to raise about 56 billion to run the country "

Can you explain what that means?

John lets not complicate the issue, its only counter productive, from my research tax revenue in 2012 was about 56 billion so any structural changes we make must benefit the people of New Zealand, the business that that we own and still maintain the upkeep of our necessary infrastructure.

I have read the posts on other forums all about money creation and govt spending, and it doesn't matter why we tax, whether its to take money out of an economy or to replace created money or just to pay stuff, the reality is that no matter what the reason we still need to do it and going by previous actual figures seem to be the best way to get an idea of the sort of amounts that need to be raised.

The important thing is to make it work so we can all have some hope, all have a house,and all feed our families first and foremost. There is still plenty left for those that want to fight over the surplus after the needs have been met.

Reality is counter-productive complication?

Let me reiterate.

Your taxes pay for nothing.

lol, fairly sure people have been arguing about reality since the beginning of time. The thing we want to do is to get the mandate to begin solving some problems and to do this we have to give the people hope. Real hope, and then back it up. Most people will never understand anything about the complexities of economics, and to be honest they don't care to , they just want things to be fair and have a chance to thrive, policy doesn't need to be specific to every detail , it doesn't need for everyone to understand how it works in every detail, it just needs to look fair be fair and work , its about the end result.

I think to take this kind of proposal seriously, you're really going to need to show some numbers to show that it balances, other wise you're just pulling things out of the air.

John G
Let me reiterate.

Your taxes pay for nothing.

Good luck getting the average person thats voting to understand this.

Maybe we can write a letter to the inland revenue and explain that when we refuse to pay taxes cause they dont need them if they pay for nothing, and see what kind of reply we get, my guess is that it wont be nice. Point I was making is that regardless of how it actually works or may actually work, voters have a perceived notion of how they think it work and that's all that's really important. And an extra $200 a week in my pocket will be very welcome indeed and I think most of them will agree with me there, so my ideas are designed to achieve that without disturbing the present balance.

Exactly David, the numbers have to add up and my data is incomplete and out of date , all I had was enough to a basic shape to my ideas which i have been forming for over 5 years, however I know Im in the ballpark on this, a more full post was made some time back in the forums before they were opened to general discussion. I would like to see our party analysts find more current data to create a better policy proposal. I did ask but was refused help.

So this 56 billion stuff is a load of crap?

Hugo Kappes

Maybe the average voter is smarter than you?

would be great if the government don't taxes people who on a benefit and only earning 15k that a estimate of $36.62 that at a current 10.5% i work out $348.78-10.5% extra who on a benefit that would help out a lot to a single guy like myself on a supported living benefit and even better for a family aswell

You are saying its OK to punish people who earn more, because some people earn less?
So people who are tall should have their legs shortened because some people are shorter?

How about A 1% Transaction Tax on all outgoing financial transactions (i.e. when you draw $500.00 from your account, you pay 1% or $5.00); This Transaction Tax will replace GST, Income Tax, Company Tax, Provisional Tax, Petrol Tax and ALL other taxes including the many "hidden" taxes.
The simplicity of this taxation system is incredible; software programmed into New Zealand Reserve Bank’s electronic clearing system will achieve the desired results;
1. Every hour of the day money is withdrawn from savings accounts, cheque accounts, insurance companies, business and investment organisations, and financial institutions of all kinds. Indeed, ALL monetary transactions are withdrawn from some type of bank or financial institution that holds money in trust.
2. New Zealand Reserve Bank electronic clearing system Report will clearly state the average of what is transacted through the banking system EVERY WORKING DAY in ordinary business trading.
3. Just one simple and moderate Transaction Tax of say for example 1 percent (1%) on all monies transacted, will provide New Zealand Treasury with annual operating revenue sufficient to build upon monetary reforms. This is calculated on 260 working days at the average of total transactions providing a total transacted amount per annum sufficient to address public requirements; this is how we arrive at a revenue generation figure based per annum at just 1% of total transactions made.
4. It will be sufficient to control any fluctuation in the economy and help pay for the required Government expenditure.
The introduction of a Transaction Tax could be seamlessly implemented under the current economic conditions and in conjunction with the Monetary Reforms.
Some may be of the opinion that by applying a Transaction Tax (and therefore increasing taxation revenue), this would have a negative effect on the economy, as if to diminish its capital value. This is a completely false notion and will, in fact, have a beneficial effect on the economy through its effectiveness in being able to tax the 5% of the people that hold 90% of the wealth through tax avoidance and careful manipulation of the current system - including the banks.

@ainsleylewis

The problem is that some people have far too much income. With out limited economy we can't actually afford to have people with million dollar incomes. And those with million dollar incomes usually don't earn it - they skim it from other people earnings.

The problem with this discussion is a common one. It starting by defining a solution first instead of the problem. Let's define the problem first, then people can talk about if they agree with the problem and what solutions might address it - otherwise we will go around in circles. Perhaps we could edit the title to read something like, "How to make the cost of living lower for struggling New Zealanders"? That probably isn't quite correct either, but you get the idea...

@quentinjackson

I've been thinking along those lines as well. I think the big problem is that most people don't actually know what the economy is or its purpose and we need to sort that out first.

“Look after the unemployment, and the budget will look after itself”.

Keynes.

Slogans do not an argument make.

Well, I'll argue for full employment over quibbling about tax rates every time.

And it isn't a slogan, it was a macroeconomic observation by John Maynard Keynes. Maybe you've heard of him?

How did you work this out? How would you know this would be fair?

Ps. I'm a fan of innovation. For me, policy should be focused on socially responsible entreprenuers - i.e. NZ is a small country. Turn the obvious abuse of most workers on its head and go back to a balanced, ethical capitalism. It is possible if people/thinkers/policy makers and business itself looks at NZ in a diferent way. To do this people in business shouldn't make profit their central concern. Of course they want to make a profit but the law can be changed to ensure that profit and business doesn't obstruct social and eocnomic wellbeing for all people. It is possible in this small country. So all it requires is that government only recognise sensible businesses and corporations. We could make it illegal in NZ for corporations and businesses to do as they please - as they currently - basically are permitted to. Ideologues on both sides can't see this possibility - only reasonable, ethical people can. We need a values based economic policy in NZ. Its possible here - 4.4 million people, massive potential in terms of resources, talent, land etc. And lots of wealth. The richest of the rich should be required to make a choice - if they want to do business here - they MUST be ethical and interested in excellence instead of mediocrity. Medicocrity is easy - NZ business is a prime example of that - excellence takes work. Excellence means making a profit, providing the higehest quality products and services - and that means the highest quality staff - to have that business needs to invest in people generously and with a trust approach - not just see people as dispensible. If it wasn't for superb people, great businesses would suffer.

fairly sure that Keynes guy was mentioned in all my economics classes at Waikato, but then again it was some years ago and the Alzheimer is setting in, but back in my day, , ?/ what were we talking about again ?

Business is for the most part driven by only one motivator, Profit, and rather than trying to encourage business owners to have a different motivation and goal which will never work, all we can do is to make the playing field as fair as possible, make the rich pay enough to give the poor some dignity in life and let the game continue. The problem we have at the moment is that the rich dont, the poor are kicked to the sidelines with no hope of getting back in the game. Its not about making everyone the same , or about making the game all soft and fuzzy, the game is hard thats just how it is but we gotta change the rules a bit so those that fall are at least helped back to their feet so they can try again.

The rich changed the game back in the 70s and have played class war ever since.

And topically, they did so by overturning the Keynesian macroeconomic principles that had overseen the greatest economic expansion in human history from the end of WW2.

and rather than trying to encourage business owners to have a different motivation and goal which will never work, all we can do is to make the playing field as fair as possible

Or we could get rid of the business owners and have the businesses run as self-owned cooperatives with a social mandate.

I agree Hugo. So is it not feasible for government to provide a mix of encouragement and regulation? E.g. I think its wrong that places like McDs and Starbucks have the right to impose that scheduling technology where they can predict customer numbers and tailor rosters to their needs instead of workers. I think that sort of technology should be banned if not reviewed so that it doesn't disadvantage a person's right to work. If we framed 'work' as a human right and then added meaningful work, decent wages, consistent work - as a 'norm' for NZ'ers - like an expectation that all NZ'ers grow up to understand that making a living shouldn't be a struggle but should be an entitlement - then wouldn't employers HAVE to change?

http://en.wikipedia.org/wiki/Mondragon_Corporation

seann paurini

http://en.wikipedia.org/wiki/Job_guarantee

Thank's John, I'll reaquaint - I do like the Mondragon model. The thing is - in NZ there are some prertty responsible businesspeople already - perhaps the Party could organise an economic policy forum for members and some of NZ's best social entreprenuers? Its not like capitalism is going to just go away - but its the ravages - the 'bad' capitalism that needs to be ended. Greed is still rife in NZ as elsewhere. We're small enough to change this.

No they won't go away. They need to be put in a small box though.

The trick is keeping them there.

We lost our attention in the 70s and let them run rampant so it's going to be a battle to get them them back in that box.

The politics of envy seem to be at work in this discussion.

Colin Davies

Nothing to do with envy.

https://www.youtube.com/watch?v=6zsXUDQXKuQ

Why even have income tax at all? Its absurd. Its the easiest tax for the wealthy to avoid. I say remove ALL current taxes, levies, GST, stamp duty etc and replace it with a 1% transaction tax. That affects EVRYBODY and you cant get out of it. Best of all its self regulating - those who earn the most, spend the most and therefore pay the most tax. Those who earn the least spend the least and pay the least tax. Banks of course would HATE this idea because they would pay the most since they MUST transact with the RBNZ at the end of each working day and I believe that is why we don't have this system. There is no need to have any other tax or gst as this would raise sufficient income to cover everything. Go with this policy and you should automatically get votes.

@markgarner

Its absurd. Its the easiest tax for the wealthy to avoid.

Exactly!!

But I bet Transaction Tax will be easy to avoid, but only for the wealthy.

Mark Garner
The people who earn the most income spend the least of their income. And most of their income is in capital gains which wouldn't get taxed.

you can never stop the rich from finding some way to avoid tax, its what they do, and honestly it dosent matter as long as they pay enough to make it so we dont have to tax the poor.

We can, and must, stop the rich from avoiding taxes. It may take some work but it's better than allowing them to continue to rip off the poor.

The first order of business should be to end poverty by providing a living income to all through a government jobs scheme.

You don't need to pick an extra fight with the elites to do that.

Then you can worry about taxing the rich.

It's the same fight. The reason why people are't paid enough is because the rich want the money for themselves.

I think a Government Jobs Guarantee would be much easier to sell to the public than a class war style confrontation.

Well that's a monetarist's view. The government has no real world financial constraint though, so that sort thinking should have disappeared with the gold standard.

@colinengland

It’s the same fight. The reason why people are’t paid enough is because the rich want the money for themselves.

I believe what we need to do is to is.
'Make the best place for the wealthy to put their money into areas that will create employment for all NZ'ers.'
Taxation is just one method of influencing the wealthy to do this, but an effective method.
High taxation does have the ability to cause capital to fly out of the country.
Unfortunately the best place for wealthy to put there money in NZ is into property.

The very wealthy don't invest in the economic sense (building productive capacity), they speculate, which only tends to drive up the values of their own asset classes.

To get private investment in productive ventures you have to demonstrate that there will be a demand for the product.

We have a demand crisis due to a whole series of factors that have come home to roost since the GFC.

So you have to increase demand somehow and the only way to do that is to increase income where it will do the most good. And that is at the bottom end of the scale.

And that is at the bottom end of the scale.

Easist way to do that is to reduce or eliminate income tax rates for the lowest paid.

I think you have to boost income above poverty levels too. A government jobs scheme would solve that problem.

Progressive tax systems only go so far. Capital will never provide full employment. It is against their interests to do so.

The government has all the tools it needs to employ surplus labour but neoliberal policy is to use unemployment as a tool to 'control inflation'.

It is immoral, socially disruptive and economically wrong.

It is immoral, socially disruptive and economically wrong.

That is something I can agree with you about.

I find that the real problem is, whether we raise minimum wage, cut income tax, eliminate GST, ban pokies. Then the property market sucks up the excess in a short time and the poor are back to where they were before.

The property market is a separate issue. Solve unemployment first, because it is society's greatest ill, then work on the other stuff.

The government has no real world financial constraint though, so that sort thinking should have disappeared with the gold standard.

That I can agree with. The rich don't like it though as it removes the power from them.

High taxation does have the ability to cause capital to fly out of the country.

Not really. The rich like to say that it does to hold the nation to ransom but, as @johng1 says, the government isn't financially limited. In other words, the rich can leave if they want and it really won't make any difference to us. Especially once we ban offshore ownership.

The only question is whether there is enough real capacity in the economy (available resources and output space) for the extra government spending.

http://bilbo.economicoutlook.net/blog/?p=23719

What is a Job Guarantee?

@colindavies A transaction tax is impossible to avoid. The richest cant avoid it because every time they spend any money they incur the transaction tax. They currently offset their tax by minimising their earnings but transaction tax gets around that - its not based on earnings but expenditure

@markgarner

A transaction tax is impossible to avoid.

They said the same in Sweden and were proven wrong.
France said the same and was proven wrong.

Lets learn from their mistakes.

How will Bitcoin or other digital currencies be taxed.
Whats to stop speculators to use contracts instead of cash for speculation.
All major NZ Banks have Aussie Parents, one phone call and an investor can move everything out of the country before it is implemented. Similar to when David Lange dropped the dollar the first time.

As these loopholes are filled more loopholes will appear, similar to how the income tax avoidance happens now.

@colindavies

Yep, a transaction tax for transacting in NZ$ could be impossible to avoid but it requires rather drastic action on the part of government. Essentially, the government would have to make all NZ$ exist only on their server. No cash, no accounts with private banking institutions. Every person holding NZ$ would have a RBNZ account and a NZ IRD number. Every transaction in NZ$ would go through the RBNZs server and be taxed.

Make contracts have to be registered to be legal and collect the tax then.

Personally, I think we should do it.

@colinengland
Ok, if implementing FTT includes all that and a few other things we haven't yet thought up. Most loopholes will be closed. There will obviously be other effects on the economy but I'm sure FTT would be collected.

Oh, I think we should do all that even if we don't do a FTT. I'm thinking it has a number of advantages over the present system.