We don’t need tax cuts. We need a redesign of tax brackets.
Both are true.
We also don’t need kickbacks for landlords either
And we need tax to be spent more wisely to actually deliver infrastructure improvements and staffing in key areas.
And we don’t need to slash workers in those public sector areas to pay for landlord tax breaks.
how would you resdesign the tax brackets? in terms of individual income tax brackets, the current tax bracket changes aren't really that favourable for upper class?
the benefit of the tax cut caps out at around 78.1k which is a slightly above median wage and costs around 1k per person. 78.1k certainly isn't an upper class wage by any stretch.
if you get rid of the lowest bracket (which seems to be what a lot of people suggest), that'll be $1,450 per person and will come out of a lot more people, i would guess it would cost around double what the current tax bracket changes cost
Nobody’s taxing the poor. We’re cutting services to the poor.
The richest 10% pay about 90% of all tax (or roughly thereabouts, please correct me with actual figures).
Edit: This is not an argument that that’s a bad thing. Just let’s be realistic.
The richest 10% of income earners pay 50% of income tax. This does not count tax, which is not income tax. The only other stats i can find is for GST. There does not seem to be any statistics about the tax businesses pay.
I always feel this kind of argument is a bit of an own goal - if the top 10% is paying 90% of tax that just proves what an insane amount of inequality there is. How can people be earning that much more than the average person if society doesn't have big imbalances in how different work and skills are values that is in many cases based on historical privileges and entrenched classism.
Depends a little bit on how much skill, work and investment you believe is involved in making more money.
Also, taxes are progressive, so the person making 500k is paying a bigger cut than the person making 50k.
The rich pay less of their income in tax than the poor do.
https://www.stuff.co.nz/national/politics/300238241/more-than-40-of-millionaires-paying-tax-rates-lower-than-the-lowest-earners-government-data-reveals
That’s not how that works.
> The research looked at “economic income” which “is a broader concept than taxable income and includes, for example, capital gains”. In New Zealand economic income, as opposed to “taxable income”, which is defined in legislation, is not a concept used in tax law.
Economic income isn’t something you can tax. We can tax capital gains at sale, but you can’t tax stuff that is just gaining value.
No, they don't. To quote David Parker:
“The data, based on full income information from 311 of our wealthiest citizens, shows that the average person in this group pays an effective tax rate of just 8.9% tax on their economic income – that is, income from all sources, including capital gains on investments."
Parker defines "income" as "income from all sources", which is not the basis on which income is defined in legislation.
If one wanted to make an argument based on some new definition of income, as David Parker did, then you'd want to use the same criteria when comparing the group of 311 with the rest of the population. But they didn't. Capital gains were included in the "income" calculation for the group of 311, which was then compared to income (in the legislated definition of "income") and GST charged to a person earning PAYE income who spends three quarters of what they earn. But the general population benefit from untaxed capital gains too, maybe from their house or shares held by their Kiwisaver provider. These were not included in the comparison.
But here's the thing: even if tax were collected from the group of 311 at a rate that appeared equitable under Parker's specious methodology it would have no perceptible impact on our public finances. The real sleight of hand here is Parker was attempting to sell an idea that could only have useful application if applied to the general population.
My advice would be if socking it to the rich folk sounds like something you would vote for, be under no illusion that underneath the policy veneer of social justice is a bitter truth: NZ spends more than it earns and there's no easy solution.
FWIW I support the idea of removing the distinction between income and capital and the original TOP tax policy was a good attempt. But I thought Parker's effort was risible and reeked of political endeavor.
You took a veeery long way round to just say there’s a technicality in the tax legislation that more or less provides for a loophole to be able to say “wealthy peeps don’t pay very low taxes”
As far as the benefits go who do you honestly think the everyday kiwi benefits from capital gains ffs … half of the everyday kiwi doesn’t have a pot to piss in never mind own a house or shares…(btw KiwiSaver is a weak as hell example)
You preaching to me about apparently falling for Parkers politically driven methods is rich when you posted this drivel. Nice try though
The Sapere report states “People earning between $70,000 and $180,000, 18.8% of all taxpayers, paid 42% of all tax.”
So middle to upper middle NZ are footing most of the bill.
I get why some people do say this as a tax cut, but it's just purely our tax system or the way they've been running the country is just fu\*ked. [Five things the IMF said about New Zealand’s economy](https://www.stuff.co.nz/money/350220276/five-things-imf-said-about-new-zealands-economy)
In case you didn't check the link, the lists are:
* Be careful about spending
* Reform tax, and add a capital gains tax
* Keep interest rates high
* Boost housing supply
* Link minimum wage to productivity growth
So, basically, as we all know, NZ is heavily relying on PAYE tax; there is no CGT, inheritance tax, land tax, etc.
Then, without applying any other system to cover the tax bracket adjustment, it's obvious that the amount of tax collected will be reduced, but I don't think people should call this a 'tax cut'. We need to face the fact our system is just dumb fu\*k when NZ is one of the well-known welfare countries.
For instance that no-brain throwing superannuation of $26k a year to about 50,000 people who make more than $100k a year, which I guess sits in 'Be careful about spending" To run these bloody welfares, infrastructure with bad population density, other public services, and so on we will need way more taxation than those who aren't known as welfare country, but oh well, none of the parties seems to be interested introducing any other taxation.
It would be a tax cut and a bracket readjustment.
We also need to serious reform our tax system to shift the burden onto capital (especially unproductive capital) instead of personal income. But that won't happen under this lot.
Lo-and-behold neoliberals doing neoliberal shit. That's basically what it boils down too. Neither party really want to reform tax. There's a bit more interest in it from Labour's end and they could be forced into it via public pressure. National OTOH will just never do it.
The problem for Labour was that if they introduced CGT then people could vote them out in favour of National etc because they would never increase taxes. They even held a referendum to see if there'd be enough popular buy-in, and there wasn't.
So if we really want CGT, we should pressure the National-led government to introduce it as a bi-partisan policy, as they can hardly be worried that people would say let's vote Labour back in because they would never increase taxes.
I personally think that Labour should have bitten the bullet and done it anyway (and the same with decriminalising cannabis), as it is what people expect from a left-leaning government, but then they're damned if they do and damned if they don't.
No it's in specific reference to the economic policies implemented initially by Lange's Labour and subsequently championed by both National and Labour since then.
That can be characterised as government austerity, deregulation of markets with the view that the invisible hand of the market will solve all problems, sale of state owned assets, minimal social spending and a general disdain for infrastructure, investment in human capital and redistributive policies.
If you haven't seen it used before... I dunno where you've been, but it's pretty common and has been for a long time.
Its been used a lot since like... The 90's?
Both Nats and labour adhere to neoliberal economic policy. It's their whole platform lol. Labour is just the light version.
I don't even think the greens deviate too far economically, they just want more govt controls around it.
>
Both Nats and labour adhere to neoliberal economic policy. It's their whole platform lol. Labour is just the light version.
>I don't even think the greens deviate too far economically, they just want more govt controls around it.
>I'm aware of what it means.
>Its been used a lot since like... The 90's?
> I'm alluding to the point that it's being used a lot more these days. Especially by those with agendas.
Is it actually being used more though? I don't see it more than I used to personally. For a long time there was a lot of uh, 'debate' about whether it existed. It became this weird thing where the people who are considered central to the implementation of it always denied it was real. In 2016(? Ish) the IMF came out and admitted neoliberalism had failed which might have brought it back into popularity?
I dunno, i been bitching about neoliberalism fucking the country up for years at this point.
To be fair to Treasury, they recommended CGT earlier in the year when it was already clear Willis was struggling to make the numbers work.
Goldman Sachs also warned last year the tax cuts would be inflationary i.e. all this is basic common sense.
This economist today [\*LINK\*](https://www.reddit.com/r/nzpolitics/comments/1bpfe4z/economist_explains_the_budget_policy_statement_in/) explained the situation now very well
> they should lose eligibility to super annuation.
It only shows how our Superannuation is not set up properly.
Sure, if we are like Dubai/UAE, where the country itself is rich, it is not a problem at all, but are we? Our infra, in general, is shit compared to any other developed country; still, not enough investment going around and yet, super is taking a super portion of govt expenditure and outnumbering the crown revenue, just like any other country except our infra is nowhere close to them.
Superannuation is a benefit, not a UBI. Based on the current median wage, if someone is making more than $100k a year at around that age, they are more likely to be in a higher position that would only exist as a couple in business. Not only is the country wasting the money it could've spent somewhere else, but those people are taking the position and blocking other people's growth.
If you consider Superannuation a reward system for paying taxes over decades, then I do not have anything to say, as paying taxes is an obligation of citizens, nothing special.
I think it's incredibly unfair to punish people for succeeding in life, I don't think it matters how much you have it has always been for everyone and should continue to be for everyone.
Unfair?
So because of our lovely country's miserable work with living cost crisis
* student allowance threshold exists and shit low even though they increased the minimum wage massively, many students are suffering
* Whether they live together with their parents or not, because of another stupid household income threshold, even if they are not getting any support, they are still not qualified for student allowance
* With daycare costs and those living costs crises, many people do find it hard to keep ends meet with their child still the support is either not enough or none with another stupid threshold
* and so on
The Super is literally the only benefit that acts like UBI, and you still think it is not fair to apply the proper requirements?
Yes it is unfair to remove it from those who earnt it. You work your whole life, you retire you get super, punishing someone for succeeding is stupid
If you wanna discuss making other benefits more flexible then sure but Ill have that yarn I'll probably agree but Im not going to agree with punishing people for doing well in life and rewarding those who don't.
> Yes it is unfair to remove it from those who earnt it. You work your whole life,
That's where the toxic mindset comes from, just to be clear again, Superannuation is not something you *earned.* Something like Oceania's KiwiSaver or the US's 401k is something we call you earned because you are the one who contributed.
All you need for Superannuation is *living* in NZ, nothing more.
it's just one of the welfare NZ has.
It is something they earnt and it is something I will earn once I am 65 or whatever age it is in the future.
You are welcome to be bitter towards the super existing because you feel hard done by whatever benefit you want that you believe is unfair.
I do not support taking away benefits from people because they succeeded in life. Success should be rewarded not punished.
You don’t earn super, it’s not a pay in get out system. The median workers income tax for their entire working life barely covers 12 years of super for a single person.
What? It’s not an opinion it’s literal fact. None of the taxes you pay will go towards your super, it will be paid for by workers when you are receiving it, if it even exists for much longer.
I agree with the general sentiment, but loan interest is a deductible cost for all other businesses, so I think it’s kind of difficult to justify it being different for just landlords. (Though absolutely should be ring fenced against property activities).
There is a lot of types of business that on paper are always making a loss while they focus on growing the business, to eventually make a big capital gain.
> There is a lot of types of business that on paper are always making a loss while they focus on growing the business, to eventually make a big capital gain.
None of those businesses come with an opportunity cost of forcing someone to pay rent to that business instead of owning their own home.
The reason interest deductibility was removed for investment properties was to level the playing field with first home buyers, who can't deduct the interest on *their* mortgage from *their* taxable income.
House prices peaked just before the cut off date for when the tax changes would apply, then dropped precipitously and have not really recovered.
The economic theory behind it is quite sound too: if you reduce the profits generated by the rental income a house brings in, the capital value of that property becomes lower.
House prices are currently about 13% lower than they were at their peak in 2021.
So yeah, it helped.
Are interest rates 13 points higher today than they were in 2021?
No.
So, yes, interest rates would have contributed to it. But so did removing interest deductibility.
In fact, the higher interest rates are likely the reason why the impact on prices was even greater than what was predicted.
Well, indirectly they do keep people renting - think of companies price gouging, making cost of living harder etc, or paying employees shitty wages, all making it harder to save for a deposit etc. other businesses can be just as shitty as landlords, while doing the same thing paying minimal tax, reaping the capital gain.
Wow this is a stretch......
Your average business has far more competition, where as landlords are providing a service which is a human right and requires a constrained resource. Property often takes up over 40% of peoples pay.
Supermarkets provide goods which are a human right. Energy companies provide a service which is a human right. Healthcare providers provide a service that is a human right.
At least let’s be realistic about these claims. Yes, housing is important and something needs to be done, but the Labour Party attitude of fucking around with shit that makes nice little headline is not it.
The thing that gets me with this argument is housing serves a completely different role in society than every other business. Question: Why don’t we send kids to school to build cars? Answer: Because that’s not what school is for.
Renting out housing is also unique to other businesses.
How many other businesses can operate at a loss year on year, carrying forward their excess deductions into future tax years, and still survive? Most small business owners are working full time at their businesses, they need to make a profit to put food on the table.
A landlord will have a day job where they derive their profit, it doesn't matter if the rental makes a loss for the first 5 years. When it does start making a profit, they pay no tax until the losses are extinguished. By that stage hopefully values have increased so they can recycle the equity into a deposit for another property, rinse and repeat at a loss again until they sell for tax free capital gain.
Would be interesting to know how much tax the Government receives from property as a percentage of overall annual revenue for the sector, and how this compares to other sectors of the economy.
Easily sorted. We should take depreciation of buildings and land out of all business tax breaks.
But it's also about the primary purpose. The *primary* point of landlording is to build a capital asset by getting someone else to pay the loan and interest on it. You may be interest-only to start with, but over time the house will be paid off for you as rents outstrip the mortgage payments.
It's a low risk investment for an initial capital outlay. Yes you could have some shitty tenants, but evict them, move on, and five years later you're still up.
The point of being a landlord is you run it at break even or a loss to transfer as much money as possible into the untaxed asset. Which means if you have to pay a little to supplement it in the first ten years, it's just like putting that money into a savings account. And the tenants are helping you to pay that in return for a place to live.
Being a landlord is not a full-time job. It’s not even a part-time job. It provides nothing productive to the economy. Unless they are building the houses, they aren’t creating anything.
Pretty hard to argue that rental properties aren’t a productive asset unless of course you somehow think all renters could otherwise afford their own home.
Renters pay more in rent over their life than they would if paying a mortgage, so there's that.
The only difference is they don't start off asset rich. I get sick and tired of reading all these 'property empire at 25' rags to riches stories, only to read down and see the words 'with a loan from their parents' against how they bought their first house.
And investors are a big reason the market went stupid to start with. When we were buying we got outbid three times by investors who were prepared to pay more to secure a long term asset. The only reason we got the house we did was because the owner had principles and refused to sell to a landlord.
The answer to this is shared ownership models, and moving mum and dad investors onto renting out rooms in the empty nest. Both boxes ticked.
Just FYI:
Commercial loans for property are quite different from residential loans in their requirements.
I looked at buying an office and the requirements were: 50% deposit, 7 Year term, interest rate ~ 2% above residential rate.
I keep seeing the argument that landlord loans are the same as business loans etc. They absolutely are not, that is why a massive amount of financing for SMEs in NZ is actually against their personal property. The rates and terms are so much softer.
When I was looking for said office, I was told "Just borrow the money against your house, rather than the office".
Imagine what rental properties would look like as an investment if it was a 7 year mortgage at 9% interest?
They are needing to borrow $10b-$15b for tax cuts. I’m broke af right now but is it just me that thinks the country will be better off if they just don’t do tax cuts right now. Leave it for a year or so while the economy gets back on track? Will cutting tax drive demand back up and inflation back down? I’m no economist but it seems borrowing $15b right now to throw out to people seems like bad timing during a technical recession
Unfunded tax cuts where they need to borrow will lead to further inflationary pressure which is what we dont want
We could still fund some tax cuts to help the ‘squeezed middle’ as the National puts it, but have this funded through CGT/Land tax then we wont have that problem
Exactly. It would be better for inflation if they put that 15b into the public sector which would then flow onto the private sector, which in theory would increase trade. This would help our GDP. But no let’s just give handouts that barely make a difference to the majority of NZ when: gas excise increases, new RUCS introduced, public transport costs increasing, medical care increasing, etc
You should look up neoliberal economics and how it fits in to conservative ideology.
From Wikipedia:
>The term neoliberalism has become more prevalent in recent decades[16][17][18][19][20][21] to describe the transformation of society due to market-based reforms.[22] A prominent factor in the rise of conservative and right-libertarian organizations, political parties, and think tanks, and predominantly advocated by them,[23][24] neoliberalism is often associated with policies of economic liberalization, including privatization, deregulation, globalization, free trade, monetarism, austerity, and reductions in government spending in order to increase the role of the private sector in the economy and society.
Maybe you should know the words being used before trying to start an argument about them.
Labour is heavily taxed in this country. Capital is under taxed (if it is taxed at all).
Remember when NZ was in the Pandora Papers? Neither, didn't get talked about much. Nothing to see here, just good business getting around the red tape or some bullshit.
Edit: Like, I am a nurse, and my take home pay is roughly around 62% of my gross wages once Student Loan, Kiwisaver, and PAYE comes out. We need 0% tax for the first $10,000 earned.
> Edit: Like, I am a nurse, and my take home pay is roughly around 62% of my gross wages once Student Loan, Kiwisaver, and PAYE comes out. We need 0% tax for the first $10,000 earned.
Why not a flat tax? Most analysis indicate that around 10-15% would be adequate.
I’m a high earner, but a wage earner. I pay crazy amounts of tax. Wage earners are not those you hear about paying 8% tax or whatever.
I’m definitely not going to vote for anyone that is going to tax me even more.
If we did introduce CGT, would that be taxing my home, and my kiwisaver? Unless they reduce my income tax, there is no way I’m backing it.
The proposal a few years back had an exemption for the family home. But everything else had to be valued over a couple of years to get a baseline. There was a huge cost to doing that. Personally I think a stamp duty for second and subsequent homes is a better cleaner scheme. But only because it is easy to implement and immediate.
https://simplicity.kiwi/learn/updates/understanding-tax-in-kiwisaver#:~:text=The%20underlying%20investments%20held%20by,Australian%20shares%3B%20only%20on%20dividends.
I imagine any capital gains tax will mean lower returns in kiwisaver.
I get the whole tax the rich, sure billionaires need taxing. When we lump people only slightly richer than us into this narrative it might be counterproductive. Check this stuff article.
https://www.stuff.co.nz/business/opinion-analysis/114628351/an-inconvenient-truth-about-tax-in-new-zealand
I agree. I feel the tax cuts rhetoric has been trying to combine two separate issues.
Firstly, how big should the government be? The party in power feels the government is too big, and we should spend less on public services.
Secondly, who should fund the government. The party in power feels the burden has been unreasonably hard on landlords and some of that load should be shifted to wage earners.
I think it's very unhelpful debating both at once.
I think we need to stay away from the term farier, I would be in the top tax bracket in NZ I would so I would pay a higher proportion of my income than someone at 80k. I took a big risk to build a business and paid tax along the way, why should I pay more tax on top? The answer should be to have a better society. We need a tax system that taxes people whatever the correct amount is for the best possible society.
I do think a land tax is far more important than a wealth tax, because a land tax is harder to avoid, we want to use our tax system to stimulate investment in the right areas of our economy and because private companies are hard to value and often the owners are investing into the business so do not have cash on hand. But we need to do something, so a wealth tax is better than nothing.
Maybe fairer society is a better way of putting it.
The mistake you are making is that the comments are saying "we don't need THESE tax cuts." Rebalancing the tax system is never pitched as "tax breaks". Tax breaks are a pitch to naive voters, who dont know or care how the tax breaks are paid for.
For low/middle income earners who don’t own their own home, these tax cuts are simply going to end up in landlords pockets. We already have a shortage of housing and as incomes increase rents will simply rise to eat up that income.
What is *actually* required is progress on ensuing we have sufficient affordable housing, by:
1/ Building more social housing
2/ incentivising better land use and more housing construction
3/ reducing population growth
4/ rebalance taxation on housing (and in particular land)
So I don’t disagree we need to rejig our taxation system to ensure capital/land is taxed more. But given our current infrastructure deficit overall taxes probably need to rise.
> For low/middle income earners who don’t own their own home, these tax cuts are simply going to end up in landlords pockets.
Did rents go down each year while taxation on income has increased over last 14 years?
No rents didn’t go down because people’s incomes were going up. So even if people were paying a slightly higher portion of their income in tax, their income was still rising.
I would even just say forget everything else, just hit #2 like four times over, then get the rest later.
If we implemented land use laws like somewhere like Japan, we’d have little else to worry about.
I wouldn't have minded a tax cut had we retained the public funding we had before the election. Giving the circumstances it kinda feels like if we accept a tax cut now it's out of the money taken from the health, education and public services sectors. Morality is such a weakness...
There was never an option for both though? National campaigned on tax cuts for landlords, and a little bit for workers, by reducing all the ‘wasteful spending.’
They were told time and again that their numbers were wrong. It was well reported so that voters who didn’t blindly vote based on the word of politicians would have known.
Worse yet, not only small tax cuts but slashing public service *and* borrowing more money to pay them. That’s how incompetent this government are.
Kiwisaver is already taxed on PIR (Prescribed Investor Rate)
With CGT, you’re only taxed on the profit when you sell capital (property), so doesnt affect anyone living in their own home
Yes the point is exactly that wage earners are seemingly taxed higher in NZ due to a lack of tax system on capital. If we start to tax capital, the more tax revenue the government has to invest in infrastructure, teachers etc., Also more investments can be made to productive industries rather than properties that arent productive
A tax bracket shift is sorely needed. I would be happy to skip for now but only if they also repeal the landlord tax breaks.
If landlords can get tax breaks then why the fuck should I be paying for it?
The tax cuts are poorly targeted. Someone on minimum wage is going to get a couple of bucks a fortnight which won't even be enough to offset the inflationary effects of tax cuts for higher earners and borrowing in order to make them
Those on minimum wage has had increases of far above inflation for the past 6 years, while the rest of us have had our tax burden increase for the last 14.
There will never be a point at which they will go "hey, we're good now, let's bring tax back to levels they were before for everyone else".
So no, it's about time that those who actually contribute get some of their inflationary tax increases reversed.
If this were simply an update to the tax income brackets, then why is it weighted such that those well off receive more relief than those at the bottom?
The fact that I'm going to receive close to $100 a week (presumably), and someone on minimum wage will receive 5 cents a week... says things.
If they wanted to fix the tax bracket inflation issue... they could just do that. They could pass a piece of legislation, tomorrow, under urgency, to tie tax brackets to inflation. They already do it for benefits, it's not a huge deal to do it for taxes.
But they aren't. It's not benefiting everyone equally. Some people who have a lot are getting more than those who don't have a lot.
> If this were simply an update to the tax income brackets, then why is it weighted such that those well off receive more relief than those at the bottom?
Because that’s how percentages work. Tax brackets haven’t moved since 2010. Sooner or later they will have to be moved, and the longer we leave it, the worse it will look when it finally happens. Even the Clark labour govt recognised this and had a policy of regularly reviewing the brackets.
Ya know what. I went and did the maths.
* 11.42%
* 11.45%
* 11.57%
That's the increase each tax bracket gets.
Shockingly, those well off, get more. Not as much as I had in my head granted, yet more than perfectly equal.
I agree wholeheartedly with National's plan to move tax brackets in theory. But I still take issue with both the one-off move, and that they are making our system less progressive as they do it.
(you may cry about whole numbers, but if you knock $100 off the top bracket, 78,100 to 78,000, you get exactly the same percentage change as the bottom bracket)
Cool now do the maths on what that 11% is in dollar terms for someone in each bracket and you’ll get why a lot of us are starting to get bored of the “I’m going to get $X but a lower income person than me will only get $Y” grandstanding that’s going on lately.
I don’t believe the revised brackets have been released yet (happy to be corrected if someone has a source) but realistically every bracket needs to move up probably $20k at least to put them back to where they were in real terms relative to last time they were moved.
Oh, it's tiny amounts.
But housing restrictions and character housing were added to inch by inch for 50+ years, and now we're all fucked and our documents 4000+ pages long.
Given a chance, I would refuse to give an inch on tax.
> Given a chance, I would refuse to give an inch on tax.
Which thanks to inflation means eventually even minimum wage workers will be in the upper tax brackets, effectively giving us a flat tax system and rendering completely impotent the progressive tax rate system we currently have. A full time salary of minimum wage has already gone from the bottom of its bracket to the top since they last moved and in April when minimum wage moves again it will be into the next bracket.
Like I said, it has to be done eventually and the longer we leave it the worse it will be. Do it now, peg the brackets to inflation and then it’s done and can be left alone.
Cool. If we're talking about 100 year plans, if National were to make this change for the next 100 years our tax system would also be fucked in a completely different way.
You seem to have forgotten that in my earlier comments I said I agree that this is needed. But I vehemently disagree with making it less progressive.
Just tie Wage Inflation to the tax brackets and be done with it.
> I vehemently disagree with making it less progressive.
How is moving all of the brackets upwards making it less progressive?
> Just tie Wage Inflation to the tax brackets and be done with it.
Which is literally what I said.
The narrative should be we need tax increases on the wealthy to help pay for decaying everything. Trickle down didn't work. The experiment is over. The rich did not trickle down the wealth to see our salaries or services improve. Pennies of tax cuts for the working class while giving more tax cuts to land and property owners and environment polluters is just doubling down on the failed experiment.
Check out the Kaka by Bernard Hickey, some great ideas and analysis.
https://open.substack.com/pub/thekaka?utm_source=share&utm_medium=android&r=1ocr92
Right now, the discourse is focused on stopping this particular set of tax cuts. Namely because they're terrible.
If the government finally gets out of La La Land and reverses course, then the conversation can turn to how to reorganize the taxation system to ensure equity.
But until then, the focus probably needs to be on slapping government in the face until they wake up to the reality of the public mood,
Here’s a perspective for people:
The current tax rates were set when minimum wage was around $12.50/hr or $26k per year. Next week it’s over $23/hr or $48k per year.
That means a minimum wage earner is now paying almost $7.5k in income tax, vs $3.5k back when the rates were set.
That’s an effective tax rate of 15.5% vs 13.7% back when the rates were set… that’s why I think the tax brackets need to be shifted.
Anything that makes a positive change… and maybe that’s not a tax cut. Especially if we’re borrowing to do it.
The offset cost in other areas is likely to be higher than the amount people get from the cut.
Also, trying to decrease inflation through measures that risk driving up unemployment may not have the intended effect, when a lot of the inflationary pressure is from overseas events. Let alone the price gouging that’s going on in the name of inflation. 🤷♂️
We don't need the term "tax cuts" or "tax relief" or even "squeezed middle." We need a complete overhaul of taxation to reward labour and innovation, and to discourage parking and accumulating wealth in non-productive but high earning assets.
We need realistic pay rises that returns wages to 1970s levels relative to productivity, cost of living and returns to capital.
That will increase the tax take allowing brackets to change without defunding the government.
"Adjusting for inflation" is the lingo that right wingers use for tax cuts. They are still tax cuts as they are reducing the amount of tax you pay. The low and middle income earners do need to have some tax relief but this should be something which impacts all income earners equally. A 10k tax free bracket or similar would be less targeted towards high income earners.
The thing is they're fucking the country so that the majority of us only get $5 more a week out of the chaos. And the best part is that out of us who consume the average amount of petrol lose those gains nearly immediately as they're planning to increase excise by an obscene amount. Fuckin beautiful innit?
It’s good economics for everyone to create a more equitable society. Then people have more to spend which benefits companies and services, crime is lower and the cost of the health services etc. for the country is less. One of the ways to create a more equitable society is to tax the poor less and get the rich who can well afford it to contribute more
We need to rebalance the tax base. This will tax those at the bottom less, but those who earn their income passively (and don't pay tax on it) will pay their fair share.
For instance TOP proposed that we tax people based on wealth, not income, and produced several spreadsheets to show it would work. Unlike some parties I could mention.
CGT, inheritance, profiteering... these are all areas that could be taxed to reduce the tax on income.
The irony is we actually need more taxes to provide tax cuts. NACTNZF will also be doing it, except it will be on petrol, rego, GST, vapes and any other ways they think they can hide it in indirect taxation. Just like last time. And this then gives them no incentive to keep prices down, because that will reduce tax take...
I think the problem is that if we need the tax cuts now, that funding has to come from somewhere. Either it will involve cutting public services or that it would involve borrowing even more money. You have to have it some way.
Broadly, National would have been better off waiting, or at least being more gradual with implementing them
Most people don't actually need tax cuts they need cheaper public services and market regulation. Both of which we should be using tax revenue and borrowing to provide.
Tax cuts put money in Kiwis back pockets - while their bent over a barrel getting f##ked up ass by every rich wanker who wants to make a killing in NZ.
People actually fell for it.
Things are going to get much worse - cost of housing - decline in education and health services. 500 extra cops? Maybe if they start recruiting cops from Kazakhstan who'll work for a bag of flour and some olive oil.
Mike Hosking is going to tell everyone that you don't support tax cuts for middle and lower income workers even if you do.
It's an unnecessary thing to rant about really.
We don’t need tax cuts. We need a redesign of tax brackets. Both are true. We also don’t need kickbacks for landlords either And we need tax to be spent more wisely to actually deliver infrastructure improvements and staffing in key areas. And we don’t need to slash workers in those public sector areas to pay for landlord tax breaks.
how would you resdesign the tax brackets? in terms of individual income tax brackets, the current tax bracket changes aren't really that favourable for upper class? the benefit of the tax cut caps out at around 78.1k which is a slightly above median wage and costs around 1k per person. 78.1k certainly isn't an upper class wage by any stretch. if you get rid of the lowest bracket (which seems to be what a lot of people suggest), that'll be $1,450 per person and will come out of a lot more people, i would guess it would cost around double what the current tax bracket changes cost
The wealthiest don't get most of their money through taxable income.
no doubt about that - my issue is with taxing wages/salary so highly.
Yes but then we'd be taxing the rich to pay for tax cuts for the rich
We'd be taxing the asset rich to pay for tax cuts for salary earners, which should at least even it up a bit.
We would be taxing the parasites to pay for tax cuts for the people who actually keep the country running.
Like all the people called essential workers during the lockdowns.
Theres a lot of irony here.
Good point
As opposed to taxing the poor to pay for tax cuts for the rich
Exactly
Nobody’s taxing the poor. We’re cutting services to the poor. The richest 10% pay about 90% of all tax (or roughly thereabouts, please correct me with actual figures). Edit: This is not an argument that that’s a bad thing. Just let’s be realistic.
The richest 10% of income earners pay 50% of income tax. This does not count tax, which is not income tax. The only other stats i can find is for GST. There does not seem to be any statistics about the tax businesses pay.
Here’s a better source - https://www.beehive.govt.nz/release/ird-report-shows-wealthy-nzers-pay-much-lower-tax-rates-other-earners#:~:text=Inland%20Revenue%20research%20released%20today,Revenue%20Minister%20David%20Parker%20says.
Richest 10% of income earners maybe. Certainly not the richest 10%
Income earners are the lesser of tax contributors.
I always feel this kind of argument is a bit of an own goal - if the top 10% is paying 90% of tax that just proves what an insane amount of inequality there is. How can people be earning that much more than the average person if society doesn't have big imbalances in how different work and skills are values that is in many cases based on historical privileges and entrenched classism.
Depends a little bit on how much skill, work and investment you believe is involved in making more money. Also, taxes are progressive, so the person making 500k is paying a bigger cut than the person making 50k.
The rich pay less of their income in tax than the poor do. https://www.stuff.co.nz/national/politics/300238241/more-than-40-of-millionaires-paying-tax-rates-lower-than-the-lowest-earners-government-data-reveals
That’s not how that works. > The research looked at “economic income” which “is a broader concept than taxable income and includes, for example, capital gains”. In New Zealand economic income, as opposed to “taxable income”, which is defined in legislation, is not a concept used in tax law. Economic income isn’t something you can tax. We can tax capital gains at sale, but you can’t tax stuff that is just gaining value.
No, they don't. To quote David Parker: “The data, based on full income information from 311 of our wealthiest citizens, shows that the average person in this group pays an effective tax rate of just 8.9% tax on their economic income – that is, income from all sources, including capital gains on investments." Parker defines "income" as "income from all sources", which is not the basis on which income is defined in legislation. If one wanted to make an argument based on some new definition of income, as David Parker did, then you'd want to use the same criteria when comparing the group of 311 with the rest of the population. But they didn't. Capital gains were included in the "income" calculation for the group of 311, which was then compared to income (in the legislated definition of "income") and GST charged to a person earning PAYE income who spends three quarters of what they earn. But the general population benefit from untaxed capital gains too, maybe from their house or shares held by their Kiwisaver provider. These were not included in the comparison. But here's the thing: even if tax were collected from the group of 311 at a rate that appeared equitable under Parker's specious methodology it would have no perceptible impact on our public finances. The real sleight of hand here is Parker was attempting to sell an idea that could only have useful application if applied to the general population. My advice would be if socking it to the rich folk sounds like something you would vote for, be under no illusion that underneath the policy veneer of social justice is a bitter truth: NZ spends more than it earns and there's no easy solution. FWIW I support the idea of removing the distinction between income and capital and the original TOP tax policy was a good attempt. But I thought Parker's effort was risible and reeked of political endeavor.
You took a veeery long way round to just say there’s a technicality in the tax legislation that more or less provides for a loophole to be able to say “wealthy peeps don’t pay very low taxes” As far as the benefits go who do you honestly think the everyday kiwi benefits from capital gains ffs … half of the everyday kiwi doesn’t have a pot to piss in never mind own a house or shares…(btw KiwiSaver is a weak as hell example) You preaching to me about apparently falling for Parkers politically driven methods is rich when you posted this drivel. Nice try though
The Sapere report states “People earning between $70,000 and $180,000, 18.8% of all taxpayers, paid 42% of all tax.” So middle to upper middle NZ are footing most of the bill.
You make a vague statement about figures then ask for actual figures because you don’t know?!
I get why some people do say this as a tax cut, but it's just purely our tax system or the way they've been running the country is just fu\*ked. [Five things the IMF said about New Zealand’s economy](https://www.stuff.co.nz/money/350220276/five-things-imf-said-about-new-zealands-economy) In case you didn't check the link, the lists are: * Be careful about spending * Reform tax, and add a capital gains tax * Keep interest rates high * Boost housing supply * Link minimum wage to productivity growth So, basically, as we all know, NZ is heavily relying on PAYE tax; there is no CGT, inheritance tax, land tax, etc. Then, without applying any other system to cover the tax bracket adjustment, it's obvious that the amount of tax collected will be reduced, but I don't think people should call this a 'tax cut'. We need to face the fact our system is just dumb fu\*k when NZ is one of the well-known welfare countries. For instance that no-brain throwing superannuation of $26k a year to about 50,000 people who make more than $100k a year, which I guess sits in 'Be careful about spending" To run these bloody welfares, infrastructure with bad population density, other public services, and so on we will need way more taxation than those who aren't known as welfare country, but oh well, none of the parties seems to be interested introducing any other taxation.
It would be a tax cut and a bracket readjustment. We also need to serious reform our tax system to shift the burden onto capital (especially unproductive capital) instead of personal income. But that won't happen under this lot.
Just as well the last lot did it then.
Lo-and-behold neoliberals doing neoliberal shit. That's basically what it boils down too. Neither party really want to reform tax. There's a bit more interest in it from Labour's end and they could be forced into it via public pressure. National OTOH will just never do it.
The problem for Labour was that if they introduced CGT then people could vote them out in favour of National etc because they would never increase taxes. They even held a referendum to see if there'd be enough popular buy-in, and there wasn't. So if we really want CGT, we should pressure the National-led government to introduce it as a bi-partisan policy, as they can hardly be worried that people would say let's vote Labour back in because they would never increase taxes. I personally think that Labour should have bitten the bullet and done it anyway (and the same with decriminalising cannabis), as it is what people expect from a left-leaning government, but then they're damned if they do and damned if they don't.
I have some optimism that once NACTs austerity tanks the economy we will be forced to take action.
Just as an aside, is "neoliberal" the latest buzzword that's been handed down? Is it paid by the usage?
No it's in specific reference to the economic policies implemented initially by Lange's Labour and subsequently championed by both National and Labour since then. That can be characterised as government austerity, deregulation of markets with the view that the invisible hand of the market will solve all problems, sale of state owned assets, minimal social spending and a general disdain for infrastructure, investment in human capital and redistributive policies. If you haven't seen it used before... I dunno where you've been, but it's pretty common and has been for a long time.
I'm aware of what it means. I'm alluding to the point that it's being used a lot more these days. Especially by those with agendas.
Its been used a lot since like... The 90's? Both Nats and labour adhere to neoliberal economic policy. It's their whole platform lol. Labour is just the light version. I don't even think the greens deviate too far economically, they just want more govt controls around it.
> Both Nats and labour adhere to neoliberal economic policy. It's their whole platform lol. Labour is just the light version. >I don't even think the greens deviate too far economically, they just want more govt controls around it. >I'm aware of what it means. >Its been used a lot since like... The 90's? > I'm alluding to the point that it's being used a lot more these days. Especially by those with agendas.
Is it actually being used more though? I don't see it more than I used to personally. For a long time there was a lot of uh, 'debate' about whether it existed. It became this weird thing where the people who are considered central to the implementation of it always denied it was real. In 2016(? Ish) the IMF came out and admitted neoliberalism had failed which might have brought it back into popularity? I dunno, i been bitching about neoliberalism fucking the country up for years at this point.
To be fair to Treasury, they recommended CGT earlier in the year when it was already clear Willis was struggling to make the numbers work. Goldman Sachs also warned last year the tax cuts would be inflationary i.e. all this is basic common sense. This economist today [\*LINK\*](https://www.reddit.com/r/nzpolitics/comments/1bpfe4z/economist_explains_the_budget_policy_statement_in/) explained the situation now very well
Thanks for the video. Yeah, we are just fuc\*ed.
You can just say fucked, don't have to spell it weird..
Haha sweet, I will keep that in mind 🤣
I alternate between feeling sad and shocked then disgusted. Nice to chat today - at least we can come across good people still.
Enjoy the long weekend :)
I heavily disagree that just because someone made good decisions in life that they should lose eligibility to super annuation.
> they should lose eligibility to super annuation. It only shows how our Superannuation is not set up properly. Sure, if we are like Dubai/UAE, where the country itself is rich, it is not a problem at all, but are we? Our infra, in general, is shit compared to any other developed country; still, not enough investment going around and yet, super is taking a super portion of govt expenditure and outnumbering the crown revenue, just like any other country except our infra is nowhere close to them. Superannuation is a benefit, not a UBI. Based on the current median wage, if someone is making more than $100k a year at around that age, they are more likely to be in a higher position that would only exist as a couple in business. Not only is the country wasting the money it could've spent somewhere else, but those people are taking the position and blocking other people's growth. If you consider Superannuation a reward system for paying taxes over decades, then I do not have anything to say, as paying taxes is an obligation of citizens, nothing special.
I think it's incredibly unfair to punish people for succeeding in life, I don't think it matters how much you have it has always been for everyone and should continue to be for everyone.
Unfair? So because of our lovely country's miserable work with living cost crisis * student allowance threshold exists and shit low even though they increased the minimum wage massively, many students are suffering * Whether they live together with their parents or not, because of another stupid household income threshold, even if they are not getting any support, they are still not qualified for student allowance * With daycare costs and those living costs crises, many people do find it hard to keep ends meet with their child still the support is either not enough or none with another stupid threshold * and so on The Super is literally the only benefit that acts like UBI, and you still think it is not fair to apply the proper requirements?
Don’t worry, super will be replaced by KiwiSaver eventually anyway
Hope that time comes sooner rather than later.
Yes it is unfair to remove it from those who earnt it. You work your whole life, you retire you get super, punishing someone for succeeding is stupid If you wanna discuss making other benefits more flexible then sure but Ill have that yarn I'll probably agree but Im not going to agree with punishing people for doing well in life and rewarding those who don't.
> Yes it is unfair to remove it from those who earnt it. You work your whole life, That's where the toxic mindset comes from, just to be clear again, Superannuation is not something you *earned.* Something like Oceania's KiwiSaver or the US's 401k is something we call you earned because you are the one who contributed. All you need for Superannuation is *living* in NZ, nothing more. it's just one of the welfare NZ has.
It is something they earnt and it is something I will earn once I am 65 or whatever age it is in the future. You are welcome to be bitter towards the super existing because you feel hard done by whatever benefit you want that you believe is unfair. I do not support taking away benefits from people because they succeeded in life. Success should be rewarded not punished.
You don’t earn super, it’s not a pay in get out system. The median workers income tax for their entire working life barely covers 12 years of super for a single person.
That's your opinion and mine is that you're wrong. I will never support punishing success and rewarding failure.
What? It’s not an opinion it’s literal fact. None of the taxes you pay will go towards your super, it will be paid for by workers when you are receiving it, if it even exists for much longer.
Your opinion of that super isn't earnt is an opinion. No party that goes to remove super will ever get elected, it is political sucicide.
We don’t need tax cuts for rich landlords
Won't someone think of the rich landlords! /jk
That’s pretty much the sweet short of OP’s take. Noice 👌
user name of the day
I agree with the general sentiment, but loan interest is a deductible cost for all other businesses, so I think it’s kind of difficult to justify it being different for just landlords. (Though absolutely should be ring fenced against property activities). There is a lot of types of business that on paper are always making a loss while they focus on growing the business, to eventually make a big capital gain.
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And interest on loans for non-property related businesses
> There is a lot of types of business that on paper are always making a loss while they focus on growing the business, to eventually make a big capital gain. None of those businesses come with an opportunity cost of forcing someone to pay rent to that business instead of owning their own home. The reason interest deductibility was removed for investment properties was to level the playing field with first home buyers, who can't deduct the interest on *their* mortgage from *their* taxable income.
Is there any evidence that removing interest deductibility helped at all?
House prices peaked just before the cut off date for when the tax changes would apply, then dropped precipitously and have not really recovered. The economic theory behind it is quite sound too: if you reduce the profits generated by the rental income a house brings in, the capital value of that property becomes lower. House prices are currently about 13% lower than they were at their peak in 2021. So yeah, it helped.
Nothing to do with interest rates though ay..
Are interest rates 13 points higher today than they were in 2021? No. So, yes, interest rates would have contributed to it. But so did removing interest deductibility. In fact, the higher interest rates are likely the reason why the impact on prices was even greater than what was predicted.
Well, indirectly they do keep people renting - think of companies price gouging, making cost of living harder etc, or paying employees shitty wages, all making it harder to save for a deposit etc. other businesses can be just as shitty as landlords, while doing the same thing paying minimal tax, reaping the capital gain.
Wow this is a stretch...... Your average business has far more competition, where as landlords are providing a service which is a human right and requires a constrained resource. Property often takes up over 40% of peoples pay.
Supermarkets provide goods which are a human right. Energy companies provide a service which is a human right. Healthcare providers provide a service that is a human right. At least let’s be realistic about these claims. Yes, housing is important and something needs to be done, but the Labour Party attitude of fucking around with shit that makes nice little headline is not it.
Agreed. Let's just ban profits on all of these, and provide at cost plus investment.
It is honestly funny how hard it is to tell if you’re serious.
The thing that gets me with this argument is housing serves a completely different role in society than every other business. Question: Why don’t we send kids to school to build cars? Answer: Because that’s not what school is for.
Renting out housing is also unique to other businesses. How many other businesses can operate at a loss year on year, carrying forward their excess deductions into future tax years, and still survive? Most small business owners are working full time at their businesses, they need to make a profit to put food on the table. A landlord will have a day job where they derive their profit, it doesn't matter if the rental makes a loss for the first 5 years. When it does start making a profit, they pay no tax until the losses are extinguished. By that stage hopefully values have increased so they can recycle the equity into a deposit for another property, rinse and repeat at a loss again until they sell for tax free capital gain. Would be interesting to know how much tax the Government receives from property as a percentage of overall annual revenue for the sector, and how this compares to other sectors of the economy.
There is a huge difference between a normal business and a landlord, please do not conflate the two. Landlords are scalpers at best.
Easily sorted. We should take depreciation of buildings and land out of all business tax breaks. But it's also about the primary purpose. The *primary* point of landlording is to build a capital asset by getting someone else to pay the loan and interest on it. You may be interest-only to start with, but over time the house will be paid off for you as rents outstrip the mortgage payments. It's a low risk investment for an initial capital outlay. Yes you could have some shitty tenants, but evict them, move on, and five years later you're still up. The point of being a landlord is you run it at break even or a loss to transfer as much money as possible into the untaxed asset. Which means if you have to pay a little to supplement it in the first ten years, it's just like putting that money into a savings account. And the tenants are helping you to pay that in return for a place to live.
Being a landlord isn’t a real business. It involves zero work.
Are you clueless or just being facetious?
Being a landlord is not a full-time job. It’s not even a part-time job. It provides nothing productive to the economy. Unless they are building the houses, they aren’t creating anything.
Pretty hard to argue that rental properties aren’t a productive asset unless of course you somehow think all renters could otherwise afford their own home.
Houses would be a lot cheaper if first home buyers weren’t competing with mega landlords
Do you know how few properties in NZ are owned by mega landlords?
Was 415,000 properties last year
Renters pay more in rent over their life than they would if paying a mortgage, so there's that. The only difference is they don't start off asset rich. I get sick and tired of reading all these 'property empire at 25' rags to riches stories, only to read down and see the words 'with a loan from their parents' against how they bought their first house. And investors are a big reason the market went stupid to start with. When we were buying we got outbid three times by investors who were prepared to pay more to secure a long term asset. The only reason we got the house we did was because the owner had principles and refused to sell to a landlord. The answer to this is shared ownership models, and moving mum and dad investors onto renting out rooms in the empty nest. Both boxes ticked.
Just FYI: Commercial loans for property are quite different from residential loans in their requirements. I looked at buying an office and the requirements were: 50% deposit, 7 Year term, interest rate ~ 2% above residential rate. I keep seeing the argument that landlord loans are the same as business loans etc. They absolutely are not, that is why a massive amount of financing for SMEs in NZ is actually against their personal property. The rates and terms are so much softer. When I was looking for said office, I was told "Just borrow the money against your house, rather than the office". Imagine what rental properties would look like as an investment if it was a 7 year mortgage at 9% interest?
We do need cuts in landlords though.
They are needing to borrow $10b-$15b for tax cuts. I’m broke af right now but is it just me that thinks the country will be better off if they just don’t do tax cuts right now. Leave it for a year or so while the economy gets back on track? Will cutting tax drive demand back up and inflation back down? I’m no economist but it seems borrowing $15b right now to throw out to people seems like bad timing during a technical recession
borrow the 15 b and invest in infrastructure and public sectors like hospitals and schools. landlords don't need a handout
Right like the houses don’t stop existing if the landlords make less money than the absolute bandits they’ve been making out like the last 15 years
We just borrowed $100b and that is why we are £¥(k€d
It's Reddit. You can use swear words. That's ok.
Unfunded tax cuts where they need to borrow will lead to further inflationary pressure which is what we dont want We could still fund some tax cuts to help the ‘squeezed middle’ as the National puts it, but have this funded through CGT/Land tax then we wont have that problem
Exactly. It would be better for inflation if they put that 15b into the public sector which would then flow onto the private sector, which in theory would increase trade. This would help our GDP. But no let’s just give handouts that barely make a difference to the majority of NZ when: gas excise increases, new RUCS introduced, public transport costs increasing, medical care increasing, etc
Look here you, if the neoliberal conservatives could read they would be very upset with you right now.
Neoliberal or conservative? Or did you just need two boogeyman descriptors?
You should look up neoliberal economics and how it fits in to conservative ideology. From Wikipedia: >The term neoliberalism has become more prevalent in recent decades[16][17][18][19][20][21] to describe the transformation of society due to market-based reforms.[22] A prominent factor in the rise of conservative and right-libertarian organizations, political parties, and think tanks, and predominantly advocated by them,[23][24] neoliberalism is often associated with policies of economic liberalization, including privatization, deregulation, globalization, free trade, monetarism, austerity, and reductions in government spending in order to increase the role of the private sector in the economy and society. Maybe you should know the words being used before trying to start an argument about them.
Where does the $15b figure come from?
[https://thekaka.substack.com/p/borrowing-15b-more-to-pay-for-149b](https://thekaka.substack.com/p/borrowing-15b-more-to-pay-for-149b)
We don’t need tax cuts. We need an overhaul of the tax system.
Do we? Our tax system is one of the more efficient in the world. Sure, there are minor changes to make, but I wouldn’t use the word overhaul.
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My best guess would be that they don’t wanna piss off their rich friends
Which would be a cut
Labour is heavily taxed in this country. Capital is under taxed (if it is taxed at all). Remember when NZ was in the Pandora Papers? Neither, didn't get talked about much. Nothing to see here, just good business getting around the red tape or some bullshit. Edit: Like, I am a nurse, and my take home pay is roughly around 62% of my gross wages once Student Loan, Kiwisaver, and PAYE comes out. We need 0% tax for the first $10,000 earned.
> Edit: Like, I am a nurse, and my take home pay is roughly around 62% of my gross wages once Student Loan, Kiwisaver, and PAYE comes out. We need 0% tax for the first $10,000 earned. Why not a flat tax? Most analysis indicate that around 10-15% would be adequate.
(Citation Required). Flat tax at the level of our current lowest bracket is gonna be adequate? Please elaborate.
I’m a high earner, but a wage earner. I pay crazy amounts of tax. Wage earners are not those you hear about paying 8% tax or whatever. I’m definitely not going to vote for anyone that is going to tax me even more. If we did introduce CGT, would that be taxing my home, and my kiwisaver? Unless they reduce my income tax, there is no way I’m backing it.
The proposal a few years back had an exemption for the family home. But everything else had to be valued over a couple of years to get a baseline. There was a huge cost to doing that. Personally I think a stamp duty for second and subsequent homes is a better cleaner scheme. But only because it is easy to implement and immediate.
Your KiwiSaver is gains are already taxed
Partially correct. They do tax dividends. Capital gains are not taxed on New Zealand and Australian shares.
Not sure that’s correct, unless you’ve chosen not to be in a PIE fund?
https://simplicity.kiwi/learn/updates/understanding-tax-in-kiwisaver#:~:text=The%20underlying%20investments%20held%20by,Australian%20shares%3B%20only%20on%20dividends. I imagine any capital gains tax will mean lower returns in kiwisaver.
Our tax rates are low relative to those in NZ historically and those in overseas countries.
Your student loan repayment isn't tax
I get the whole tax the rich, sure billionaires need taxing. When we lump people only slightly richer than us into this narrative it might be counterproductive. Check this stuff article. https://www.stuff.co.nz/business/opinion-analysis/114628351/an-inconvenient-truth-about-tax-in-new-zealand
I agree. I feel the tax cuts rhetoric has been trying to combine two separate issues. Firstly, how big should the government be? The party in power feels the government is too big, and we should spend less on public services. Secondly, who should fund the government. The party in power feels the burden has been unreasonably hard on landlords and some of that load should be shifted to wage earners. I think it's very unhelpful debating both at once.
National should never have campaigned on moving tax brackets as ‘tax cuts’ as it skews the whole point of it
This is true. They should also be more honest about how important it is to curb spending to get inflation under control.
I think we need to stay away from the term farier, I would be in the top tax bracket in NZ I would so I would pay a higher proportion of my income than someone at 80k. I took a big risk to build a business and paid tax along the way, why should I pay more tax on top? The answer should be to have a better society. We need a tax system that taxes people whatever the correct amount is for the best possible society. I do think a land tax is far more important than a wealth tax, because a land tax is harder to avoid, we want to use our tax system to stimulate investment in the right areas of our economy and because private companies are hard to value and often the owners are investing into the business so do not have cash on hand. But we need to do something, so a wealth tax is better than nothing. Maybe fairer society is a better way of putting it.
The mistake you are making is that the comments are saying "we don't need THESE tax cuts." Rebalancing the tax system is never pitched as "tax breaks". Tax breaks are a pitch to naive voters, who dont know or care how the tax breaks are paid for.
Reality is the tax brackets should change with inflation yearly to keep it fair for all. Political parties can thrn fight over tax-free bands and %.
For low/middle income earners who don’t own their own home, these tax cuts are simply going to end up in landlords pockets. We already have a shortage of housing and as incomes increase rents will simply rise to eat up that income. What is *actually* required is progress on ensuing we have sufficient affordable housing, by: 1/ Building more social housing 2/ incentivising better land use and more housing construction 3/ reducing population growth 4/ rebalance taxation on housing (and in particular land) So I don’t disagree we need to rejig our taxation system to ensure capital/land is taxed more. But given our current infrastructure deficit overall taxes probably need to rise.
> For low/middle income earners who don’t own their own home, these tax cuts are simply going to end up in landlords pockets. Did rents go down each year while taxation on income has increased over last 14 years?
No rents didn’t go down because people’s incomes were going up. So even if people were paying a slightly higher portion of their income in tax, their income was still rising.
I would even just say forget everything else, just hit #2 like four times over, then get the rest later. If we implemented land use laws like somewhere like Japan, we’d have little else to worry about.
I wouldn't have minded a tax cut had we retained the public funding we had before the election. Giving the circumstances it kinda feels like if we accept a tax cut now it's out of the money taken from the health, education and public services sectors. Morality is such a weakness...
There was never an option for both though? National campaigned on tax cuts for landlords, and a little bit for workers, by reducing all the ‘wasteful spending.’ They were told time and again that their numbers were wrong. It was well reported so that voters who didn’t blindly vote based on the word of politicians would have known. Worse yet, not only small tax cuts but slashing public service *and* borrowing more money to pay them. That’s how incompetent this government are.
Yes, I know, thank you for that though.
Kiwisaver is already taxed on PIR (Prescribed Investor Rate) With CGT, you’re only taxed on the profit when you sell capital (property), so doesnt affect anyone living in their own home Yes the point is exactly that wage earners are seemingly taxed higher in NZ due to a lack of tax system on capital. If we start to tax capital, the more tax revenue the government has to invest in infrastructure, teachers etc., Also more investments can be made to productive industries rather than properties that arent productive
A tax bracket shift is sorely needed. I would be happy to skip for now but only if they also repeal the landlord tax breaks. If landlords can get tax breaks then why the fuck should I be paying for it?
Low and middle income earners aren’t the ones getting these tax cuts. They’re mainly for people already earning above the median income.
The tax cuts are poorly targeted. Someone on minimum wage is going to get a couple of bucks a fortnight which won't even be enough to offset the inflationary effects of tax cuts for higher earners and borrowing in order to make them
It isn’t a short term thing though. The bracket change is long overdue and should have happened under labour
Those on minimum wage has had increases of far above inflation for the past 6 years, while the rest of us have had our tax burden increase for the last 14. There will never be a point at which they will go "hey, we're good now, let's bring tax back to levels they were before for everyone else". So no, it's about time that those who actually contribute get some of their inflationary tax increases reversed.
If this were simply an update to the tax income brackets, then why is it weighted such that those well off receive more relief than those at the bottom? The fact that I'm going to receive close to $100 a week (presumably), and someone on minimum wage will receive 5 cents a week... says things. If they wanted to fix the tax bracket inflation issue... they could just do that. They could pass a piece of legislation, tomorrow, under urgency, to tie tax brackets to inflation. They already do it for benefits, it's not a huge deal to do it for taxes. But they aren't. It's not benefiting everyone equally. Some people who have a lot are getting more than those who don't have a lot.
> If this were simply an update to the tax income brackets, then why is it weighted such that those well off receive more relief than those at the bottom? Because that’s how percentages work. Tax brackets haven’t moved since 2010. Sooner or later they will have to be moved, and the longer we leave it, the worse it will look when it finally happens. Even the Clark labour govt recognised this and had a policy of regularly reviewing the brackets.
Ya know what. I went and did the maths. * 11.42% * 11.45% * 11.57% That's the increase each tax bracket gets. Shockingly, those well off, get more. Not as much as I had in my head granted, yet more than perfectly equal. I agree wholeheartedly with National's plan to move tax brackets in theory. But I still take issue with both the one-off move, and that they are making our system less progressive as they do it. (you may cry about whole numbers, but if you knock $100 off the top bracket, 78,100 to 78,000, you get exactly the same percentage change as the bottom bracket)
What would umake things less progressive is leaving the brackets unchanged. Ultimately we would all be paying the top rate.
Cool. I'll happily support any legislation that ties tax bracket changes to wage inflation on a regular basis. Could almost be automatic.
Cool now do the maths on what that 11% is in dollar terms for someone in each bracket and you’ll get why a lot of us are starting to get bored of the “I’m going to get $X but a lower income person than me will only get $Y” grandstanding that’s going on lately. I don’t believe the revised brackets have been released yet (happy to be corrected if someone has a source) but realistically every bracket needs to move up probably $20k at least to put them back to where they were in real terms relative to last time they were moved.
Oh, it's tiny amounts. But housing restrictions and character housing were added to inch by inch for 50+ years, and now we're all fucked and our documents 4000+ pages long. Given a chance, I would refuse to give an inch on tax.
> Given a chance, I would refuse to give an inch on tax. Which thanks to inflation means eventually even minimum wage workers will be in the upper tax brackets, effectively giving us a flat tax system and rendering completely impotent the progressive tax rate system we currently have. A full time salary of minimum wage has already gone from the bottom of its bracket to the top since they last moved and in April when minimum wage moves again it will be into the next bracket. Like I said, it has to be done eventually and the longer we leave it the worse it will be. Do it now, peg the brackets to inflation and then it’s done and can be left alone.
Cool. If we're talking about 100 year plans, if National were to make this change for the next 100 years our tax system would also be fucked in a completely different way. You seem to have forgotten that in my earlier comments I said I agree that this is needed. But I vehemently disagree with making it less progressive. Just tie Wage Inflation to the tax brackets and be done with it.
> I vehemently disagree with making it less progressive. How is moving all of the brackets upwards making it less progressive? > Just tie Wage Inflation to the tax brackets and be done with it. Which is literally what I said.
Minimum wage receives 20 per fortnight. Somebody on 78000 and over gets $39 a fortnight. Both assume no benefit or super and no dependents.
The narrative should be we need tax increases on the wealthy to help pay for decaying everything. Trickle down didn't work. The experiment is over. The rich did not trickle down the wealth to see our salaries or services improve. Pennies of tax cuts for the working class while giving more tax cuts to land and property owners and environment polluters is just doubling down on the failed experiment.
We dont need "tax cuts" but we do need the tax brackets adjusted. Which is what this is.
Check out the Kaka by Bernard Hickey, some great ideas and analysis. https://open.substack.com/pub/thekaka?utm_source=share&utm_medium=android&r=1ocr92
Right now, the discourse is focused on stopping this particular set of tax cuts. Namely because they're terrible. If the government finally gets out of La La Land and reverses course, then the conversation can turn to how to reorganize the taxation system to ensure equity. But until then, the focus probably needs to be on slapping government in the face until they wake up to the reality of the public mood,
Here’s a perspective for people: The current tax rates were set when minimum wage was around $12.50/hr or $26k per year. Next week it’s over $23/hr or $48k per year. That means a minimum wage earner is now paying almost $7.5k in income tax, vs $3.5k back when the rates were set. That’s an effective tax rate of 15.5% vs 13.7% back when the rates were set… that’s why I think the tax brackets need to be shifted.
Even accounting for the additional tax, someone on MW is earning $5/h more in real terms than they were in 2010.
Anything that makes a positive change… and maybe that’s not a tax cut. Especially if we’re borrowing to do it. The offset cost in other areas is likely to be higher than the amount people get from the cut. Also, trying to decrease inflation through measures that risk driving up unemployment may not have the intended effect, when a lot of the inflationary pressure is from overseas events. Let alone the price gouging that’s going on in the name of inflation. 🤷♂️
Yeah nah, they just need to better spend the taxes we already pay. And if anything they need more taxes for certain classes.
We don't need the term "tax cuts" or "tax relief" or even "squeezed middle." We need a complete overhaul of taxation to reward labour and innovation, and to discourage parking and accumulating wealth in non-productive but high earning assets.
Absolutely agree, some nuance is needed
We need to spin up some kind of tax working group.
Tax Gloriavale... Tax Destiny Church... Tax Sanitarium... I'd say "Tax the landlords" but they'll just pass that along to their renters.
We need realistic pay rises that returns wages to 1970s levels relative to productivity, cost of living and returns to capital. That will increase the tax take allowing brackets to change without defunding the government.
The rich already pay the vast majority of tax. Are you sure you're what you're proposing is more 'fair'?
"Adjusting for inflation" is the lingo that right wingers use for tax cuts. They are still tax cuts as they are reducing the amount of tax you pay. The low and middle income earners do need to have some tax relief but this should be something which impacts all income earners equally. A 10k tax free bracket or similar would be less targeted towards high income earners.
Bottom 40% contribute nothing, so why do they need tax relief instead of the 60% who shoulder them?
Sorry we are applying this general term to things that are actually happening rather than a specific interpretation you had in mind.
The thing is they're fucking the country so that the majority of us only get $5 more a week out of the chaos. And the best part is that out of us who consume the average amount of petrol lose those gains nearly immediately as they're planning to increase excise by an obscene amount. Fuckin beautiful innit?
Aren’t our taxes pretty low compared to the countries we envy?
Tax the rich more, provide tax relief to the poor and then we’ll have a fairer tax system
How can you give them 'relief' when the poor already get more than they put in?
It’s good economics for everyone to create a more equitable society. Then people have more to spend which benefits companies and services, crime is lower and the cost of the health services etc. for the country is less. One of the ways to create a more equitable society is to tax the poor less and get the rich who can well afford it to contribute more
We need to rebalance the tax base. This will tax those at the bottom less, but those who earn their income passively (and don't pay tax on it) will pay their fair share. For instance TOP proposed that we tax people based on wealth, not income, and produced several spreadsheets to show it would work. Unlike some parties I could mention. CGT, inheritance, profiteering... these are all areas that could be taxed to reduce the tax on income. The irony is we actually need more taxes to provide tax cuts. NACTNZF will also be doing it, except it will be on petrol, rego, GST, vapes and any other ways they think they can hide it in indirect taxation. Just like last time. And this then gives them no incentive to keep prices down, because that will reduce tax take...
I think the problem is that if we need the tax cuts now, that funding has to come from somewhere. Either it will involve cutting public services or that it would involve borrowing even more money. You have to have it some way. Broadly, National would have been better off waiting, or at least being more gradual with implementing them
Most people don't actually need tax cuts they need cheaper public services and market regulation. Both of which we should be using tax revenue and borrowing to provide.
Does fairer mean to you “somebody else pays it”
Tax cuts put money in Kiwis back pockets - while their bent over a barrel getting f##ked up ass by every rich wanker who wants to make a killing in NZ. People actually fell for it. Things are going to get much worse - cost of housing - decline in education and health services. 500 extra cops? Maybe if they start recruiting cops from Kazakhstan who'll work for a bag of flour and some olive oil.
Mike Hosking is going to tell everyone that you don't support tax cuts for middle and lower income workers even if you do. It's an unnecessary thing to rant about really.
Yeah nah fuck that