Posts by Matthew Poole
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Hard News: A Capital Idea?, in reply to Rich of Observationz,
Also, let me tell you what will happen to 2degrees if they succeed.
Vodafone (or maybe Telecom) will buy them.
umm, no, they won't. Well, not unless Act destroy the Commerce Commission, which I grant is a possibility.
There's no chance under our current arrangements that permission to buy out 2degrees would be granted to either Vodafone or Telecom. -
Hard News: A Capital Idea?, in reply to Rich of Observationz,
I’d dispute that. We’d be better off with a natural monopoly like telecoms being community owned through something like a worker/customer coop. I’d be happy to see such an enterprise pay negligible tax, as the profits are going to people entitled to them, not wealthy rentiers.
I think the key difference between us is that you want to improve capitalism, whereas I want to get rid of it.
1) I dispute that telecommunications as a whole is a natural monopoly. The infrastructure side may be, but the provision of services is absolutely not.
2) What, exactly, do you think a cooperative is? Communism? It's still a capitalist structure, just not a corporate one. There's property ownership other than by the state, and there's an exchange of money for goods/services provided. What were you saying about improving capitalism?
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Hard News: A Capital Idea?, in reply to JackElder,
As I said above, now that the depreciation loophole is closed the incentives are lower. But when you could set the rent at a level to just cover expenses, deduct the mortgage interest payments as an expense, and deduct depreciation, you weren't paying a cent out of your personal income but you still got a healthy tax loss. Without depreciation there's less to be deducted, but you still get to deduct the mortgage interest payments as an expense, plus any repairs, and a lot of landlords will have their rent set at a level such that they're probably only just making money once mortgage repayments and maintenance costs are covered.
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Hard News: A Capital Idea?, in reply to Rich of Observationz,
tax basis of large corporations
Is what I said. Not new businesses. And one could easily envisage an exception for startups of scale
What's "large"? 2degrees probably fits into any reasonable definition - annual revenue is eight figures, annual expenditure is eight to nine figures. And what's a startup? 2degrees has existed in various guises for a decade, and probably won't make a gross profit for several more years despite having been taking general customers for nearly two years and having achieved market penetration to at least 1/3 the level of its major competitors.
Seeing the problem yet? How do you achieve workable definitions without creating loopholes that will be exploited by the corporations you're trying to attack. We need 2degrees to succeed, but I see no feasible way of exempting them, except possibly through a schedule of excepted companies, without introducing opportunities for other organisations to avoid tax. Not to mention that you'd create an incredible incentive to do so.
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Hard News: A Capital Idea?, in reply to Rich of Observationz,
Move to a structure where the average profit for each industry is designated (e.g. 25% for telecoms) and applied to the firms sales in NZ + exports from NZ. That’s the minimum taxable income, even if they purport to have made a loss.
And watch new entrants go to the wall in short order, perpetuating cosy duopolies forever.
Seriously, 2degrees would never have opened its doors under such a tax structure, because they’d be deemed to be making the average return of the likes of Vodafone and Telecom – both of whom do make quite healthy net profits – from their very first customer. Their massive, necessary expenditure on network kit would, under your delusional fantasy, be completely irrelevant and not only would their investors need to fund the capital build-out they’d also have to fund endless tax bills on a deemed profit that bears absolutely no fucking resemblance to the income truth. It will be years before 2degrees turns a gross profit, and quite a few more before the accumulated tax credits for losses carried forward are consumed, and that is not at all unreasonable in a world where we want businesses to start and try to challenge entrenched players. To take risks. To try and drag us out of our collective national productivity malaise.Do you really want to destroy new businesses? Because that would be the net result; an indescribably efficient way to discourage any innovation, any risk-taking, and ensure a steady supply of business bankruptcies to keep the courts and the IRD busy.
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Hard News: A Capital Idea?, in reply to Danielle,
So if you’re keeping the house, why should it affect rent except in some sort of nebulous future sense?
Because the rent only just keeps up with expenses, since the property is meant to make a loss now and make the owner money at the time of sale. If the gain at time of sale is reduced (and not by much, let's be honest), the income must be higher in order to offset the reduction in lifetime profit.
That's only applicable to landlords who are "property investors" *cough cough*, but the current tax structure very strongly encourages such behaviour. The removal of the depreciation loophole will help change that thinking over the medium term, and a CGT will change it further. Once you can't deduct large losses from the property to offset against your personal income, you're better to make an annual net profit and treat the capital gain as gravy. Thinking so far has been to make an annual net loss and use the capital gain to make up for it.
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Hard News: A Capital Idea?, in reply to Craig Ranapia,
It also risks opening up a self-inflicted credibility gap if a CGT (of as yet unknown scope and reach) doesn’t cover their promises.
Possibly, but it's also an exercise in changing the political landscape. I don't see National being willing to reverse out a CGT that's Labour's creation, at least in part because it's been recommended by so bloody many tax reviews over the last few decades. If Labour have to take the heat for introducing one, National won't complain because it becomes something they don't have to do.
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Hard News: A Capital Idea?, in reply to giovanni tiso,
On this logic, why have taxes at all?
See my comment above. That'll answer your question.
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Hard News: A Capital Idea?, in reply to Jeremy Eade,
Or maybe the government could make T.V’s and the dude could become a highly paid international modern tradesman. Big Store Retail is hardwork and poorly paid.
In a thread where Nick Kearney has raised his head, I think that borders on trolling.
Keep up the good work :P
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Hard News: A Capital Idea?, in reply to Craig Ranapia,
Everyone has to live somewhere.
How's that?
Expanded, if you sell the home in which you live, you're probably going to buy somewhere else. Or you're going to a retirement home. There aren't too many other common options. In either case, whatever you make on the sale is a) retiring any remaining debt on the sold property, and b) going into your future living arrangements.Alternatively: To tax the home in which you live is to tax something that is not a source of income for you, and that is not fair within the wider taxation context.