Rationale needs to be made clearer, and more appealing

Rationale needs to be made clearer, and more appealing

Gareth I think it would help if you could be really clear about why this is proposed. Is it for fairness, or is it to fix the housing market?

I don't think "fairness" will sell it. Why? Because only an economist could become outraged at the unfairness of people freely living in their own homes ;-) Yes, I agree with your logic that imputed rents should be taxed, but neither I nor most other kiwis will want to buy into this policy on the basis of "fairness". We may buy into it as a solution to the housing market.

Official response from submitted

Well it actually addresses both and better than that it also addresses (c) the shortage of capital flowing into our business sector (d) the problem around lacklustre productivity in NZ that is constraining our ability to lift GDP per capita (e) this obscene race to the bottom advocated by our Treasury to just keep cutting tax rates on corporates until we’re the same as tax havens - this is a craven position that arises because of our morbid dependency on foreigners' savings because we’re too bloody stupid to direct our own savings into productive endeavour rather than property speculation.

OK having got that off my chest, here’s your answer. Inequality in New Zealand has increased enormously since Ruth Richardson’s Mother of all Budgets where she pulled the rug out from under the lower paid. The Trickle Down never eventuated and under John key’s regime rampant house price inflation has made it even worse. Now if you don’t care about fairness then such events don’t interest you, otherwise you should be disgusted. What the closing of the income tax loophole I propose achieves is it takes away the reason for rampant house price inflation and it gives tax cuts to lower incomes. So it does both of the things you asked about. More details here.

Showing 4 reactions

  • John Rusk
    commented 2016-12-12 21:22:07 +1300
    Thanks Gareth. I guess my motivation for asking may have been a little selfish. I wanted an easy way to explain to people, “TOP has this tax policy because….”. Now, instead of having to choose between two ways to finish that sentence, there are five;-) Is there one which you feel is the primary reason, or do they all rate more-or-less equally?

    BTW In regard to “fairness”: Prior to your answer above I though that by “fairness”, you specifically meant that it was unfair for owners of wealth to pay no tax on that wealth, if they choose to employ it for “unproductive” purposes. (That’s a hard sell, to most Kiwis). But I think what you actually mean when you’re talking about fairness is the level of support that NZ provides to the lower paid. The latter meaning is something that many New Zealanders, myself included, would support. And, if you sell it well enough, we may even vote for a comprehensive capital tax as a way to fund that support :-)
  • Gareth Morgan
    responded with submitted 2016-12-12 10:00:52 +1300
  • Oliver Krollmann
    followed this page 2016-12-10 18:15:01 +1300
  • John Rusk
    published this page in Ask a question about policy #1 2016-12-10 17:31:53 +1300