Ask a question about policy #1

Ask a question about policy #1

We are going to do our best to get back to as many questions about our tax policy as possible. If there is something you don't understand, ask question below and we will get back to you. Before posting a question please make sure you have read the FAQ's

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    Are there any quantifiable metrics that prove your tax policy will actually work?

    Or did you just pull everything out of thin air? I have read your FAQ and your policies, but found it hard to find literature of precedent and proof. How do you know they will work? Has this been done before in any other countries? Have you done any economic modelling? Have you consulted with economic experts or do you have a 'screw the experts' mentality?

    Official response from completed

    Many governments try other tactics to close this loophole like estate duties, inheritance tax, wealth tax, land taxes, capital gains taxes etc. They are all aimed at the same thing - the untaxed return owners of capital make over time. Most of the taxes above impact as a one-off hit, often at the end of life. This is a political choice but the consequence of it is that capital is mis-allocated (ie; allocated according to tax impact rather than economic return) right through the life of the owner. You can think of the approach we propose as aimed at the same thing by impact in an as-you-go basis. That’s the logic.There are a number of very successful economies who have not had the runaway house price inflation for example that we have facilitated. What they have in common is that unlike New Zealand they all try to address the issue rather than ignore it. Is pay-as-you-go tax on income than an end-of-life, or event-triggered one-off tax? If you don’t want to distort markets along the way it’s just logic.

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    Shouldn't the focus be on central banks suppressing interest rates?

    Wouldn't the housing bubble and malinvestment (away from productive assets as you say) be cooled off more effectively - getting to the root - if you stopped central banks artificially suppressing interest rates. (Keynsian economics). If the interest rate were allowed to rise closer to the market value it would be harder to justify taking a large loan for speculative purposes and only entrepreneurs with plans to invest that money in the most productive (income producing) uses would be able to justify this. This would lower housing prices in a superior way to hour proposed tax policy which, in my opinion would be a cost that just get passed on to the "consumer" which in this case would be people who pay rent... By reducing this harmful, fixing of interest rated, it would free up capital for productive use while encouraging people to save more and consume less on frivilous things --> this is how you create long term prosperity for all, especially the everyday, hard working New Zealanders - If interest rates go down, it should be due to an oversupply of willing lenders (savers), NOT because a central bank mandated that this is the new interest rate! HOWEVER, I do also agree that taxation should be as equal as possible across the board for all asset classes in order to prevent unequal allocation - but imo this would be addressed just fine with a standardised rate of tax across the board for all income e.g capital gains. Thoughts? In general you should try to find the hidden DE-regulation that fixes the problem. Thanks.

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    Can you please clarify these few questions for me:

    In your policy, TOP says: "Our proposal is to deem a minimum rate of return on all productive assets, including housing and land", and that "All productive assets […] produce income each and every year, not cash necessarily but income nevertheless." 1) How is the 'annual productive asset tax' any different to taxing an unrealised capital gain? 2) Wouldn't taxing all capital gains be a more efficient, determinable and transparent tax policy? 3)You say capital gains taxes don't work toward the goals TOP wants to achieve, why so? 4) How does your policy propose to determine the value of return on a productive asset with no cashflow or assessable income related to it? 5) What if the asset actually made a loss that year? 6) How will this policy avoid the chances of double taxation for people who intend to accept a capital gains tax on sale of their property? 7) Have you purposely avoided the 'elephant' of capital gains tax because of its hot political nature, or because you really don't believe it would be effective?

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    How will the value of assets be calculated for the tax?

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