There’s a tax coming, there’s definitely a tax coming.
And out of morbid fascination, I can’t wait to see how Labour goes about trying this one on.
David Parker today released his research into how much tax Kiwis paidand he's got the headlines he wanted. They’re all screaming that 350 of the richest Kiwis pay half the rate of tax that the rest of us do. Only 8.9 percent, compared to our 20 percent.
Now this is where it gets tricky for David Parker, because he’s counting capital gains that aren’t realised.
As in, he’s counting the increased value of the rich guy’s house and business and shares and buildings that he hasn’t sold, so it’s just a paper gain. And based on that, David Parker says the rich guy isn’t paying enough tax.
Now, think about this. It's the same as counting the increased value of your house over the last yearand then asking you to pay tax on that.
You haven’t sold it, you still live in it, you haven’t got any more money coming on your wages to pay that tax on the house- but you have to pay a tax.
Sound fair? No.
Now I'm told no one in the world taxes capital gains that exist only on paper, this is because it’s very hard to do.
And by the way, forget the rate of tax these people are paying. Look at the value, on average they pay $2.5 m dollars each a year. That's a huge amount already.
I'm guessing, based on what David Parker said today, that Labour are considering proposing a tax at the election. And the tax would be on the ultra-wealthy, these 350 people.
And it would be used to fund tax cuts for the average Kiwi worker. I suspect they’re going to do that based on the reaction they get from today.
But it’s high risk for them.
Because (A) it needs to be a good sized tax cut for Kiwis to vote for it.
And (B) they’ll have to withstand a lot of political attacks for an idea that apparently hasn’t been tried anywhere else in the world.
So as I say, I can’t wait to see Labour trying this one on.
Heather du Plessis-Allan is a journalist and commentator who hosts Newstalk ZB's Drive show.
Back in 2017 , when New Zealand’s economy was being described as a “rock star”, the opposition Labour Party railed against the role being pl...
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