Hard News: A Capital Idea?
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You know what would be truly radical? Have a scheme where people can relinguish their investment properties in return for the cash being put into Kiwisaver, and their property then rented out on a long term tenancy by either the government or (even better) a tenant owned cooperative.
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The demented arguments against a CGT raised by Deborah Coddington on Morning Report do not seem likely to convince anyone. WTF was that about anyway?
I guess since dog-fighting is illegal, grotesque and doesn't play on the wireless putting Coddington and Trotter in a studio is the next best thing. Really, that WTF-a-palooza was about as illuminating as being thrown down a longdrop with a sack over your head.
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Craig Ranapia, in reply to
You know what would be truly radical?
Having the stones to tell the middle classes that they can swallow the dead rat, pay tax on the capital gains from their houses and take one for Team New Zealand? I know, #yeahright
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Toby,
"WTF-a-palooza"? I thought Trotter was cogent.
Coddington, OTOH: "If every other country had child prostitution would you want to bring that in, too?"
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Isn't the problem politically *farmers* as much as residential property owners? Can't upset them, now..
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Russell Brown, in reply to
“WTF-a-palooza”? I thought Trotter was cogent.
He was.
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giovanni tiso, in reply to
I thought Trotter was cogent.
Yes, and God knows I don't say this very often. What was it exactly that you had issues with, Craig?
Also, if the child prostitution line is the best that the Right can do on this one, it bodes superbly well.
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Lucy Stewart, in reply to
Also, if the child prostitution line is the best that the Right can do on this one, it bodes superbly well.
Tau Henare has also been trying "but what possible reason could we have for wanting to stop people investing in property?" on Twitter.
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Craig Ranapia, in reply to
WTF-a-palooza”? I thought Trotter was cogent.
By comparison with Coddington, a baboon with electrodes on its privates would have been cogent. But given Trotter's track record of ‘Waitakere Man’ twatcockery in recent years, putting him in the same studio with Coddington was a risky move. It could have been a lot worse, which is saying something.
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giovanni tiso, in reply to
putting him in the same studio with Coddington could have gotten really putrid
So basically you're taking issue with the fact that he was there, not with what he actuallty had to say. Gotcha. I suppose.
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Russell Brown, in reply to
putting him in the same studio with Coddington could have gotten really putrid.
But on this occasion, did not.
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Sacha, in reply to
But on this occasion, did not
But that just proves. something
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Indeed, he should cop a line from Barack Obama and say “people like us should pay our way”.
OK that was my poorly-remembered paraphrase. The actual quote I was thinking of is:
They want to give people like me a $200,000 tax cut that’s paid for by asking 33 seniors each to pay $6,000 more in health costs. That's not right.
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Craig Ranapia, in reply to
o basically you’re taking issue with the fact that he was there, not with what he actuallty had to say. Gotcha. I suppose.
Yeah, I don’t have a lot of time for people who think criticising Winston Peters (or anyone in public life) is equivalent to gang rape or being murdered by racists being lynched. Any more than I find it tolerable to hear Coddington equating Labour’s capital gains tax (which doesn’t automatically send me to the ideological fainting couch, FWIW) to advocating child prostitution.
I actually turned the radio off when I heard the teaser because, frankly, neither Coddington nor Trotter have much of a track record of adding value or insight to my day. Only listened to it on-line because I couldn’t believe it was as awful as my Twitter feed was saying. Sorry to say, but Trotter not acting like a complete ass-troll (for once) didn’t make it less astoundingly unpleasant to hear.
On topic, I guess the devil is going to be in the details -- while I'd prefer the "family home" (however that gets defined) not be excluded from a CGT I get how that would be politically impossible, even if I don't understand the policy rationale. If Labour actually produced a well-designed policy that doesn't have loopholes a half-way competent tax advisor could drive the Death Star through - and the claimed benefits and costing are within coo-eee of reality -- I'll give credit where it's richly deserved. But we're going to have to wait until next week for that, aren't we?
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Also, it's ages since I've heard Coddington say anything about which I could think "OK I don't agree, but that's a reasonable position". Instead she gushes 90-95% utter tosh, while absolutely nailing it for a small minority of the time. What's up with that?
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I'm in no position to judge the merits of this paper, but it's one of the most relevant results on CGT in New Zealand that a quick Google turned up. The authors suggest that although home ownership will become more affordable under a CGT, rents might increase; so at first flush this seems like a win for "middle New Zealand" at the expense of the top and bottom.
On a personal note, we rent, and have trouble affording it already (although at least part of that is our chronic addiction to nice suburbs); a CGT might be the final straw that forces us into mortgagehood, for better or worse.
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Honestly I think they haven't gone far enough - do what the US does - tax capital gains at people's marginal tax rates, like GST everything gets taxed the same - then carve out lower capital gains rates for things that are economically important (long term capital investments in things that make jobs or exports) or politically important (the family home)
In the US there's no CGT on your house if you trade up within a year (buy a more expensive house) - there used to be a one time (at retirement) CGT freebie when you trade down - now days you can claim it (up to $500k) every 5 years or so - you can't buy a house, move into it, do it up, flip it 6 months later and avoid CGT - in practice this means most people never pay CGT on the family home.
In the US a "Capital Gains Tax" generally has a different meaning than in NZ - when they say they have a 25% CGT - they really mean that for qualifying long term investments they have a lower tax than normal (there a CGT is a lower tax not a higher one - so a good thing rather than a bad thing as far as the low-tax zealots are concerned)
If we want to make more jobs, high value tech jobs, here we need lots more capital investment - much of that's stuck in our overvalued property market, sucking it out can only be a good thing.
And yes Deborah Coddington sounded a touch disconnected from reality this morning.
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giovanni tiso, in reply to
Honestly I think they haven’t gone far enough
Yes, but even I doubt that they could have. There is a history of antypathy for land tax and CGT in New Zealand, we can't expect that Labour will be able to frame a bolder argument (supposing they even wanted to) in the absence of stronger social demand for changing how we tax property. A fairer and more progressive taxation needs to be advocated outside of the party structure as well.
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Kumara Republic, in reply to
Coddington, OTOH: “If every other country had child prostitution would you want to bring that in, too?"
Ah yes, the classic Hitler Ate Sugar argument. I was struggling not to snigger during that interview.
And Trotter isn’t usually the optimistic type, so the CGT must have struck a chord.
Best way to re-frame a land tax – how about a “McMansion” tax? Even the Aussies have gotten in on the act.
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Antypathy? Is that where the cute ants go for walks?
(On point: property is a productive asset, it makes shelter. That's pretty handy. Also, this CGT is a really good idea, and best of all, it's Labour going on the offensive and on policy for once.)
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Paul Campbell, in reply to
Giovanni: I think that it's important to treat day trading and its equivalents the same way we treat house flipping, or currency speculation - they're all things that have no real economic benefit other than enabling bubbles - they suck capital out of more long term things that take years rather than days or minutes and that create jobs and create real wealth - the trick is to encourage investments in those real things - Kiwisaver was a great start but really we need more - Key keeps talking about moving salaries to be the same as Oz - to do that we need actual local investment (not investment from the Oz retirement system)
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Craig Ranapia, in reply to
And yes Deborah Coddington sounded a touch disconnected from reality this morning.
It was more like waking up in an "over there" episode of Fringe -- talkback is an oasis of calm, measured analysis of the issues of the day and National Radio has gone insane in the membrain. :)
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Antypathy? Is that where the cute ants go for walks?
We must tax those mounds!
Giovanni: I think that it’s important to treat day trading and its equivalents the same way we treat house flipping, or currency speculation
You don't need to convince me. Believe me.
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Paul Campbell, in reply to
It was more like waking up in an "over there" episode of Fringe -- talkback is an oasis of calm, measured analysis of the issues of the day and National Radio has gone insane in the membrain. :)
I was going to use the words "demented weasel" but I thought that might be unkind
(to weasels)
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It probably won’t bring in as much revenue as Labour says it will, but it will make Labour’s other tax policy – the tax-free threshold – much more credible.
It may bring in more, if the evidence from South Africa is to be believed. Depends how broadly the cloth is cut.
One thing that concerns me is that there’s no mention of taxing sales of farms. I have no problem with farmers deducting losses and expenses against income, as is the right of any other business, but the compensation must be tax on the capital gain. Other businesses don’t hold on for years, barely breaking even, to cash in with a big tax-free pay-day when the income-generating assets are sold.
Were I writing the law, I’d invert the current exemption that affects rental properties, namely the sale of income-generating properties, such that the sale of an income-generating property is required to be taxed on any profits. That would exempt the family home, but catch rental and agricultural properties. It’d be a hard one for current tax-payers to avoid, too, because the IRD would have records related to the use of the property for generation of income. Toss in some extra to enforce the current rules for speculators – and make a bright-line test for how long a property must be owned before it’s no longer speculation – and there are very few loopholes and a very easy way of catching people who are using property as a loss-leader before their big capital windfall.
ETA - Quote from the linked article: Studies have concluded that most countries vastly underestimate the revenue generated by such a tax before implementing it.
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