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@MajorRage said in NZ Politics:
@TeWaio said in NZ Politics:
@dogmeat said in NZ Politics:
@TeWaio Interesting perspective. I take your point but I think a zero tax rate (common overseas) for the bottom bracket really helps those in things like part time work or for whom the tax incentivises them to remain on a benefit because any monetary gain from employment is marginal at best. 20K is nowhere near 50% of the voting population. I also think that sector is already likely to either not bother to vote or vote for policies than penalise the greedy rich anyway
Yes I take your point in bold, I was more meaning the crowing from politicians (NZ, UK, US) how their tax reforms are taking more and more people out of income tax altogether. That's not a good thing or something to be aimed for IMO. Here in the UK the tax free "personal allowance" is £12.5k, and there is talk of it going up to £20k over time. The UK median income is £29,600.
Mitt Romney got hammered in 2012 by stating that 47% of the US don't pay any tax at all, and he could never win those voters over. It was true, but went down as well as Hillary's "deplorables" comment in 2016.
There definitely needs to be reform of the welfare systems so that people on the cusp of work / income tax aren't facing a net loss by moving off benefits and into work. I think that is a much more complex problem to overhaul than it seems and holds a lot of Western countries back.
The UK system is really sneaky though. By the time you add NI, the tax rates are significantly higher than what you read. Then lets not forget that once you get above 100k, you lose half your personal allowance for every dollar you earn above that. So if you are on 100k pay 34% to the government. then on your next 25k, you only earn another 10k in the hand. Effectively a 25% pay rise is taxed at 60%. Then whack in your employers NI on that ... suddenly for that 25k you are earning, you are effectively paying 73% out.
Now, obviously above that it settles somewhat, and the government has to find balance between tax and keeping high earners onshore. I get that. But where is the incentive for the 90k a year person to push to get that bit more?
Yes the National Insurance and removal of personal allowance >£100k in the UK is a total joke. I was going to write about it earlier but it is too depressing. My wife recently had a decent pay rise taking her right through that band so we stuck all the extra income into a pension, its just too wasteful not to.
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There definitely needs to be reform of the welfare systems so that people on the cusp of work / income tax aren't facing a net loss by moving off benefits and into work. I think that is a much more complex problem to overhaul than it seems and holds a lot of Western countries back.
I actually think TOP's UBI into a flat tax rate solves this the best.
off the top of my head 250 a week for every working age person then 33% flat tax rate on any income after that. Works out at a net in hand increase for everyone upto 120 k. They obviously plan to offset this with an asset tax which im not the biggest fan of but the tax plan is simple and solves some current issues.
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@reprobate said in NZ Politics:
@Snowy said in NZ Politics:
@JC said in NZ Politics:
If people systematically flick those houses for gain, they are taxed under the existing regime.
I am going to quote that because it is so true and most people don't get it. I also do it and pay tax.
"Tainting" can really do you over if you aren't careful as well, where all of your property is deemed to be tarred by the same brush as the one that you turned over for a profit (and paid tax on). Good explanation here:
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We basically have a capital gains tax now. Anyone that has dabbled in the housing market pays tax on short term gains. We just call it "tax" not capital gains tax. If you hold a property as a rental and are prepared to accept some low returns then you get the return at the end of a 10 year period whilst providing rental housing of which we are short of.
The information is all out there. The IRD website is a good place to start @reprobate .
Oh the IRD website, thanks for your help.
Firstly I'm not talking about developers, that's a business. I'm talking about property ownership. the bright line test is what, 5 years old? it's now up to having to hold a property for 5 years, previously was 2 yrs.
As for the fallacy that landlording provides an increase in rental housing, sure, if you build the house. Absolutely fuck all new rental houses on the market though eh, what does that tell you?Mine is.
And yes, we are taxed on property ownership, always have been it's not just brightline. I did this before it came in.
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@muddyriver said in NZ Politics:
There definitely needs to be reform of the welfare systems so that people on the cusp of work / income tax aren't facing a net loss by moving off benefits and into work. I think that is a much more complex problem to overhaul than it seems and holds a lot of Western countries back.
I actually think TOP's UBI into a flat tax rate solves this the best.
off the top of my head 250 a week for every working age person then 33% flat tax rate on any income after that. Works out at a net in hand increase for everyone upto 120 k. They obviously plan to offset this with an asset tax which im not the biggest fan of but the tax plan is simple and solves some current issues.
Yes UBI I think is a useful tool, especially as it removes a heap of the admin costs of the welfare system as everyone gets it. Then any income above that should have a non-zero tax rate, start it at a low % then ladder it up in a standard progressive fashion.
Trouble with UBI is after its enacted the left will bleat that "rich people don't need it" and campaign to get it taken away. Which adds costs.
Same thing happened with the UK personal allowance as per my previous post, which led to the farcical system of marginal rates >70% for a set band of income in the UK system, before settling back to 47% for income >£150k.
A golden rule for all tax systems is the marginal rate at any point of income should never exceed the top rate. That especially needs to apply at the low end as people move off benefits!
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@Snowy said in NZ Politics:
@reprobate said in NZ Politics:
@Snowy said in NZ Politics:
@JC said in NZ Politics:
If people systematically flick those houses for gain, they are taxed under the existing regime.
I am going to quote that because it is so true and most people don't get it. I also do it and pay tax.
"Tainting" can really do you over if you aren't careful as well, where all of your property is deemed to be tarred by the same brush as the one that you turned over for a profit (and paid tax on). Good explanation here:
.
We basically have a capital gains tax now. Anyone that has dabbled in the housing market pays tax on short term gains. We just call it "tax" not capital gains tax. If you hold a property as a rental and are prepared to accept some low returns then you get the return at the end of a 10 year period whilst providing rental housing of which we are short of.
The information is all out there. The IRD website is a good place to start @reprobate .
Oh the IRD website, thanks for your help.
Firstly I'm not talking about developers, that's a business. I'm talking about property ownership. the bright line test is what, 5 years old? it's now up to having to hold a property for 5 years, previously was 2 yrs.
As for the fallacy that landlording provides an increase in rental housing, sure, if you build the house. Absolutely fuck all new rental houses on the market though eh, what does that tell you?Mine is.
And yes, we are taxed on property ownership, always have been it's not just brightline. I did this before it came in.
That's good, but it doesn't change the truth of the general situation re rentals. The vast majority are old and were not built by the landlord, and they have not increased the availability of housing.
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@reprobate said in NZ Politics:
The vast majority are old and were not built by the landlord, and they have not increased the availability of housing.
You are moving the discussion there. This was about tax - not supply.
Which is in as much demand as properties for first home buyers. Those two markets are in direct competition most of the time.
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@reprobate "As for the fallacy that landlording provides an increase in rental housing, sure, if you build the house."
That is not a fallacy. Of course it does if you build, but as for landlording existing properties, it reduces the available stock for purchase, but it increases it for rental. Rental availability goes up and affects market rent prices too.
I spent six months at night school (and a large amount of money) looking at property investment, from what, where, when. Then to tax, entities, structures, real estate laws.
Our tax structure covers capital gains on property. The exception is the family home generally but even that can be encapsulated with the word "intent". If you buy and sell in a short space of time, even if you live in the house, you will be looked at for taxation.
If all of that is incorrect I need to sack two accountants a bunch of property investors and I am due a large tax refund.
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@reprobate said in NZ Politics:
@JC It's artificial in that it is not taxed properly, so people take advantage of that, which drives up demand.
I guess what constitutes "properly" depends on your viewpoint. CGT is such a minefield that compliance and admin costs will likely be high. It may solve what you see as unfair but create different types of unfairness itself. Given that people who speculate in property operate in the same tax environment of any other company, is your issue with people making a gain on their family home?
i haven't said anything in favour of the greens' wealth tax, because i'm not in favour of it.
agreed on migration, that is the pretend growth touted by governments, GDP goes up, GDP per capita does not.
absolutely there should be no tax until the profit/income is realised, agreed.Should the tax be levied on the entire sales proceed? Or the notional "profit" (difference between sale and purchase price)? Or an actual profit adjusted for inflation? What happens if the property is sold at a loss , which you yourself have acknowledged is a very likely side effect of introducing a CWT on property?
what's not to follow? if you can't afford to buy a house, you get taxed on all your income. if you can afford to buy a house, you have the option of investing and not being taxed on that income. it is structurally unfair to those with low incomes. i don't want them to get a freebie, i just want to stop the freebie for those more wealthy than them.
That amounts to an argument that poor people never get the opportunity to pay tax. In the same way that rich people never get the opportunity to receive many benefits. Both are entirely theoretical. IMO you can argue that the rich people aren't paying enough, but the fact you aren't taxed on selling your family home is an odd kind of a privilege. Again, if you are owning and selling multiple properties you don't get any freebies at all.
i'm using 'rich' here as a relative term. home-owners are richer than non. hopefully it's obvious that i don't think that all home owners are super wealthy and ought to be paying a wealth tax. i just think people should pay tax on all of their sources of income, particularly when some of those untaxed sources are not available to the poorest people.
The counter-argument to that is the people who own homes are far more likely to be the ones paying any tax at all, net of benefits. And as I said relatively few people own their homes outright. Most of them are older so whatever they've got likely has to see them out for the remainder of their lives.
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@Snowy said in NZ Politics:
Of course it does if you build, but as for landlording existing properties, it reduces the available stock for purchase, but it increases it for rental. Rental availability goes up and affects market rent prices too.
yep, if the people who sell thier house to an investor, go and build themselves, adding the investment property in the rental market it is increasing the available housing
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This discussion on housing investment seems to be ignoring what is probably one of the most common forms which is long term investment as a savings vehicle.
As equity increases in one property you leverage it to buy another and add it to the rental market.
That is where the view that property as an investment that 'isn't taxed' comes from.
Place that money into other investments and the gains are taxed.
Yes, it increases the number of rentals but at the same time swallows up availability to buy and decreases supply.
If it was tax neutral (over long periods) then it would still be an option but perhaps not as easy as a managed fund.
The managed fund then invests back into the country increasing the amount of money available for developments.
That is a very simplistic view but I'm trying to explain that there is a middle ground between family homes and speculators. Long term investors. -
@taniwharugby said in NZ Politics:
@Crucial maybe I'm a bit naive here, but many people will have investment homes in a trust or under an LLC, meaning they will have pay tax?
I have no idea.
As I said it was more to point out that there is a middle ground between the extremes being held up in the discussion. -
To be honest I'm not sure anymore what the driver is for the posters who advocate for a CG tax on property sales. Is it to I improve "fairness" or to reduce house prices?
My take on it is that as usual the most inelastic parts of a market bear the brunt of any tax burden. In other words the tax will be borne by the party most able to pay it. Given the majority of property sellers have mortgages there are effective lowest prices in play for each. No seller will sell, without compulsion, at a price that means after they've repaid a mortgage and any break fees and relocation costs they either make a loss or can't afford to purchase a replacement property. If the tax meant that the seller would be in such a position they aren't going to lower the price. They are inelastic. Any tax would need to be additional to the price the seller wants, leading the buyer to pay. All that is a convoluted way of saying that if buyers are able to borrow more than sellers owe, they buyer will end up taking the hit and prices may increase.
It may deter people from taking on a second property, theoretically leaving more stock for first time buyers (and potentially lowering the price). But if more sellers are deterred from putting their properties on the market for fear of making a loss there could be a shortage.
Ironically in a very constrained housing market taxes could create shortages that end up inflating house prices.
Of course if everyone unloads their properties at the same time there would be a deflation in house prices.
The fact is nobody knows. As always, economics is great at interpreting what happened in the past but really poor at predicting what people will actually do.
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@taniwharugby said in NZ Politics:
@Crucial maybe I'm a bit naive here, but surely many of those with investment properties, will have them in a trust or under an LLC, meaning they will have pay tax?
Yes. Simple as that.
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@Crucial said in NZ Politics:
This discussion on housing investment seems to be ignoring what is probably one of the most common forms which is long term investment as a savings vehicle.
As equity increases in one property you leverage it to buy another and add it to the rental market.
That is where the view that property as an investment that 'isn't taxed' comes from.
Place that money into other investments and the gains are taxed.
Yes, it increases the number of rentals but at the same time swallows up availability to buy and decreases supply.
If it was tax neutral (over long periods) then it would still be an option but perhaps not as easy as a managed fund.
The managed fund then invests back into the country increasing the amount of money available for developments.
That is a very simplistic view but I'm trying to explain that there is a middle ground between family homes and speculators. Long term investors.Agree with almost all of that, but of course tax isn't taken until gains are realised. Hence some people thinking that it isn't taxed at all I suppose (already mentioned the family home side of things).
I wouldn't say that there is any middle ground. The tax laws are what the IRD stipulate and have to be paid, or you are in breach. There really isn't much grey about it. As I said "intent" isn't actually that hard to prove. Fall on the wrong side of that and you are going to have issues.
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@Kirwan said in NZ Politics:
I'm still scratching my head at someone unironically calling a home owner with a huge mortgage "rich".
The politics of envy indeed.
i assume that's directed at me, so as i said previously:
i'm using 'rich' here as a relative term. home-owners are richer than non. hopefully it's obvious that i don't think that all home owners are super wealthy and ought to be paying a wealth tax. i just think people should pay tax on all of their sources of income, particularly when some of those untaxed sources are not available to the poorest people. -
@reprobate said in NZ Politics:
sources of income,
How is a home owner richer, and more importantly generating income? What are these untaxed sources?
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@reprobate said in NZ Politics:
@Kirwan said in NZ Politics:
I'm still scratching my head at someone unironically calling a home owner with a huge mortgage "rich".
The politics of envy indeed.
i assume that's directed at me, so as i said previously:
i'm using 'rich' here as a relative term. home-owners are richer than non. hopefully it's obvious that i don't think that all home owners are super wealthy and ought to be paying a wealth tax. i just think people should pay tax on all of their sources of income, particularly when some of those untaxed sources are not available to the poorest people.Not overly directed, was trying to be more general.
How can a home owner at -$700,000 be richer than a renter at $0 debt? Or even $10,000 of credit card debt?
It doesn’t stack up.
NZ Politics