Hard News by Russell Brown

Read Post

Hard News: So long, and thanks for all the fish ...

365 Responses

First ←Older Page 1 11 12 13 14 15 Newer→ Last

  • Matthew Poole, in reply to Deborah,

    I think that what you’re suggesting is something along the lines of taxing income that is held by the trustees in proportion to the underlying beneficiaries rates. But that wouldn’t really work, because beneficiaries don’t actually own the trust, and usually trustees are free to give more income to some beneficiaries than others. So it’s not clear what proportion of income which has been retained in the trust, can be attributed to each beneficiary. And that means that you can’t establish overall tax rates fairly.

    Nope, no proportionality whatsoever. Find the median marginal rate for all the beneficiaries (whether or not they got a distribution) for their all-sources income, then apply that rate, rounded up to the nearest bracket, to all the retained income.
    Alternatively, stop worrying about retained income entirely and just tax distributions; something that would work even better if we had stamp duty or some other kind of property transaction tax. Tax the trust for non-cash distributions at the marginal rate of the beneficiary to whom the distributions are made (or is that already the case? Trust taxation made my eyes glaze over), ignore trust income that’s not distributed, and continue to tax cash distributions at the beneficiary’s marginal rate.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Carol Stewart, in reply to Matthew Poole,

    We are kind of the opposite to what you are describing here. We own a little rental cottage in Christchurch and rent it out to an overseas student couple at WELL below market rates because they are great tenants and can't afford any more. To be honest, we barely cover our costs, which have already increased substantially on the insurance premium front. Getting hit with more costs would probably cause us to reconsider our philanthropic approach.

    Wellington • Since Jul 2008 • 821 posts Report Reply

  • Carol Stewart, in reply to Matthew Poole,

    Nobody needs to own more than one house

    So where do rental properties come from?

    Wellington • Since Jul 2008 • 821 posts Report Reply

  • Matthew Poole, in reply to Carol Stewart,

    Nobody needs to own more than one house

    So where do rental properties come from?

    In this country? From private landlords who don't need to be in that game, mostly. Once upon a time it was considered legitimate for the state to be a landlord. In much of Europe, it still is.That this country has extended private greed into the provision of housing does not mean it is right, or the only way to do things.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Matthew Poole, in reply to Carol Stewart,

    Getting hit with more costs would probably cause us to reconsider our philanthropic approach.

    Which is unfortunate, but you’re also a distinct minority. Plus, if you’re not making an income from it you’re obviously holding it for capital gain. Which makes you a prime example of the landlord-who-doesn’t-care-about-income-because-they’ll-make-a-tax-free-pile-at-sale class. Not a personal attack, just an observation that landlords either own for the income or for the capital gain. If the gain at sale was going to be taxed, by your own admission you’d adjust what you did about income.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Carol Stewart,

    I don't agree that private provision of rental properties necessarily has to be a bad thing, as I hope my example showed.

    Wellington • Since Jul 2008 • 821 posts Report Reply

  • Carol Stewart, in reply to Matthew Poole,

    Plus, if you're not making money from it you're obviously holding it for capital gain.

    Not really. We just like our little house. But sure, point taken that we are almost certainly a minority.

    Wellington • Since Jul 2008 • 821 posts Report Reply

  • Chris Waugh, in reply to Matthew Poole,

    There’s zero regulatory protection for tenants.

    I think this is the point where somebody explains the protections for tenants in many European countries. I don't know much about it, but I'm sure somebody hereabouts could enlighten us, because it does seem to make for an interesting comparison.

    Wellington • Since Jan 2007 • 2401 posts Report Reply

  • Matthew Poole, in reply to Carol Stewart,

    I don’t agree that private provision of rental properties necessarily has to be a bad thing, as I hope my example showed.

    No, it doesn't, but because it introduces a private profit motive (and in this country gives tenants very, very little protection against bad landlords) it's not an activity which is broadly socially beneficial. You do sound like a good landlord, and I have never personally encountered a landlord from hell, but I know people who have. My brother used to work for DBH, and some of the stories would make your hair curl.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Matthew Poole, in reply to Chris Waugh,

    I think this is the point where somebody explains the protections for tenants in many European countries.

    I think a key one is a requirement for cause before terminating a tenancy. In NZ a landlord can give 90 days’ notice and that’s the end of the matter. There is no right of appeal (unless it’s breaking a fixed-term tenancy without mutual agreement), and no requirement for there to be any reason. Could have been a day ending with a ‘y’ when the landlord made the decision, and that’s more than sufficient.

    ETA: This is not a recent change, either. It's been the law for many years.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • BenWilson, in reply to Matthew Poole,

    No, it doesn’t, but because it introduces a private profit motive (and in this country gives tenants very, very little protection against bad landlords) it’s not an activity which is broadly socially beneficial.

    I'm not sure that it's clearly broadly socially detrimental either. A landlord is taking all the risk on for the property. Many people are simply not in a position to do this, hence they rent. Without landlords of some kind (even if they are the state) there would be no rental properties, and people who can't get a deposit together, or a loan from a bank, would be homeless.

    The social detriment is a complex function of how expensive property has become, and how many people this excludes from owning. That goes to equity of capital and income - when property is in fewer and fewer hands, that means pretty much all the capital is too (since property is most of the nation's capital).

    Essentially, if private property ownership is possible at all, then there are always going to be landlords. The problem of landlords is not their existence, it is their relative wealth. The two can work in a feedback loop, however, when becoming a landlord becomes one of the most effective means to wealth. The "real" landlord is in most cases a bank, and they have become obscenely wealthy.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • Sacha, in reply to Keir Leslie,

    should the Greens firmly punish anyone who slags Labour?

    Yes

    Ak • Since May 2008 • 19686 posts Report Reply

  • anth, in reply to Matthew Poole,

    In NZ a landlord can give 90 days’ notice and that’s the end of the matter

    Or 42 days in some circumstances where it'd be particularly useful for the landlord.

    Since Nov 2006 • 77 posts Report Reply

  • Kumara Republic, in reply to BenWilson,

    Essentially, if private property ownership is possible at all, then there are always going to be landlords. The problem of landlords is not their existence, it is their relative wealth. The two can work in a feedback loop, however, when becoming a landlord becomes one of the most effective means to wealth. The "real" landlord is in most cases a bank, and they have become obscenely wealthy.

    To cut a long story short, the housing market in NZ has effectively become a textbook economic cartel. And recent proposals to weaken that cartel, such as the Unitary Plan, have been met with an orchestrated litany of wolf cries.

    And the underlying snobbery behind much of the anti-UP propaganda implies that NZ society itself has become cartellised to a certain degree, for lack of a better analogy.

    The southernmost capital … • Since Nov 2006 • 5418 posts Report Reply

  • BenWilson, in reply to Kumara Republic,

    The iron law of oligarchy at work?

    Auckland • Since Nov 2006 • 10633 posts Report Reply

First ←Older Page 1 11 12 13 14 15 Newer→ Last

Post your response…

Please sign in using your Public Address credentials…

Login

You may also create an account or retrieve your password.