Calculator makes it clear how the 80% would benefit!

Calculator makes it clear how the 80% would benefit!

You need to include a calculator to demonstrate the benefit to the 80% that will benefit. Love your thinking Gareth, and the juxtaposition of launching the policy out side Keys mansion. Nice format you have developed.

Official response from submitted

Not hard to do - add up the value of all your assets, take off your debt. That’s your equity. Of course the government might say don’t include anything worth less than $10,000, or $20,000 - who knows?

Now you need to guess an effective tax rate that will be charged every year. I’d guess anywhere between 0.5% and 1.5%. But remember that will be ultimately. Who knows how many years a government would choose to phase in this change in the tax base? They don’t want to collapse house prices, the aim is to take the sting out of house price inflation. And who knows whether they grant an exemption - that could be anything from no exemptions (like GST) to a minimum value of say $200,000 - or even the value of an average house. These are all choices for the government to make.

Thirdly you need to estimate what happens to your tax rates - remember all revenue raised is returned through tax cuts. Also remember the more exemptions they  grant, the less tax is collected, the smaller any cuts must be. And of course a government might decide to spend all the proceeds cutting the top tax rate, another government might decide to cut the bottom rate only, a third government might just cut all rates equally.

Hopefully by now you can see that how it effects you in particular is impossible to know unless all these factors are known. These are political choices. If they do it properly as I would - and remember we have no aspiration to be the actual government - then they’d collect enough to cut tax rates by a third. So it is a fundamental change in the way tax is collected - wage earners at long last get the tax relief that is only fair, and asset owners are flushed out from the bushes. But hey, that’s your choice.

I always ask people whether they think this enormous rise in inequality that has occurred since Ruth Richardson did her thing is in any way fair? If they don’t care we don’t need to talk on this any further. But if they think its unfair then I’m suggesting what the best (in terms of both economics and fairness) way to address is as I’ve outlined. Do it with no exceptions, cut income tax rates by 1/3rd and 80% of people will be better off. It’s a no brainer. The only issue is how many of the 20% (or those who aspire to be) care enough to support it. Your call.

I have to say it does amuse me to see people saying they’ll only support making NZ fair again if they are directly better off themselves. Makes them sort of prostitutes doesn’t it?

Showing 10 reactions

  • Clinton Ulyatt
    commented 2016-12-12 10:35:43 +1300
    Thanks Gareth,

    To your point about “sort of prostitutes”. There are very few philanthropists like yourself out there.

    Most in office or power are akin to the" Judas sheep" … leading others up the ramp to slaughter and saving their own skin by exiting stage right. We saw this with the likes of Sir Douglas Graham, Fay Ritchwite, Alan Gibb…
    Many lining their pockets out of the public purse via the sale of taxpayer-owned assets (Telecom/Housing NZ…)

    Philanthropic behaviors are at odds with the current ethos, which dictates it ’s not done unless “I” benefit.

    Where are the like of Sir John Logan Campbell who gifted Cornwall park to the future generations of Auckland and our guests?

    If you are lead to trust your leadership and believe that they have your better interests at heart, it is inconceivable to think that they are leading you to your undoing whist profiteering in the process.

  • Gareth Morgan
    responded with submitted 2016-12-12 09:12:01 +1300
  • John Rusk
    tagged this with i have the same question 2016-12-10 18:32:00 +1300
  • Oliver Krollmann
    commented 2016-12-10 18:17:20 +1300
    Have a look if my response to a different question (with three example families) makes any sense to you guys.
  • Oliver Krollmann
    followed this page 2016-12-10 17:03:01 +1300
  • Mark Alford
    tagged this with i have the same question 2016-12-10 15:04:12 +1300
  • Mark Alford
    followed this page 2016-12-10 15:03:54 +1300
  • Tristan Kiddie
    tagged this with i have the same question 2016-12-10 14:26:02 +1300
  • Clinton Ulyatt
    @ClintonUlyatt tweeted link to this page. 2016-12-10 13:57:42 +1300
    Ask a question about policy #1: Calculator makes it clear how the 80% would benefit!
  • Clinton Ulyatt
    published this page in Ask a question about policy #1 2016-12-10 13:52:53 +1300