Thursday, April 27, 2023

Heather du Plessis-Allan: It's clear there's a tax coming

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 paid and 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 year and 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.


Anna Mouse said...

Smoke and mirrors attempt to dupe the incredibly guilable.

Robbing the productive to pay the unproductive to vote for them is a totally predictable political move.

However this government is caught in the wormhole of their own making and using this little blunt tool is no way out because there is not enough on the productive side of the balance sheet to smooth the other side.....

When you only have a hammer you see every thing as a nail.

Anonymous said...

You have to admit this is good politicking! Taxing a theoretical capital gain earned by the uber rich is a much better vote grab than holding the majority of taxpayers, who effectively pay no tax, to account for continuing to buy things they don’t need with money they don’t have. The real question is, what’s Labour going to do when those 350 people take their business, including employment opportunities, elsewhere? This is the problem with ideological governments and their gullible supporters, they never anticipate getting harpooned by their own stupidity. The fact that Labour is still tracking north of 30% in the polls is proof that many voters are suckers for punishment. They clearly want to be poor and miserable so I say let them have it! Maybe in 3 years the penny will drop when they’re all but bankrupt and their kids are bearing the dire consequences of a dangerous ideological and predatory education curriculum.

Anonymous said...

Marxists are good at wasting other peoples money which is acquired by an adjustable made up legalized theft system called tax.

Unknown said...

Parker could confiscate the entire assets of the 311 families, and in a year's time Labour would have squandered the lot. And anyone else having more than the average will see the headlight of the approaching express train, and get across the Tasman while they still own their own shoes.

Richard C said...

Haven't read the report as it's probably half Te Reo, so does anyone know if IRD is only talking income tax? Unless the 300 or so mega rich simply count their money, presumably they spend quite a bit on goods and services, fuel for their yachts etc, etc. i.e. Is GST included in the tax total they pay?