funny thing about this for me personally has been that in the not too distant past, due to my resistant to the rates structure mentioned earlier, i figured ‘what on earth is wrong something like a poll tax margaret thatcher style’? You know – user pays and all that. I could never figure out why there was such vehement opposition to it. But my opposition to this idea for an asset tax like this is similar I think, philosophically, to the opposition to a poll tax.

“But this asset tax would be forced upon them by the state! You seem to think there is some choice to it. There is not. that is my point.”

Presently, if you have an income, income tax is forced on you by the state. It’s easy to get out of paying income tax – quit your job, sell income generating assets. It’s even easier to get out of paying an assets tax, sell the assets you have and put the money in the bank. (cash in the bank wouldn’t be included in my definition)

“as far as I am concerned the state shold not have that sort of power or effect on peoples chosen way of living.”

I see the simplicity of an assets tax making it easier for people to choose
alternative life styles, Fred buys a bach on the lake say for $200,000 (nice bach) annual tax bill $4000, he then finds casual work, at $15/hr, so he can pay that tax with just 267 hrs work a year, because there is no income tax (and preferably no ACC) it’s easier and cheaper for an employer to employ him on an informal basis, no IRD paper work, Fred doesn’t need to deal with red tape and men in suits, the tax he pays dovetails with his insurance plan, easy peasy.

My comment: “Good for you! Refuse to pay your income tax if that’s what you believe.”

Was in response to your claim “I am not a subject of the state.”

If that were so you wouldn’t be subject to the rules of the state, you are.

“You seem to be 100% capitalism.”

Given Redbaiters numerous and ofter nasty attacks on me, including changes that I’m a communist, that’s very very funny.

Kind regards

This statement of yours seems to sum it up – “Sometimes things don’t work out as we would like if it’s an obligation to the bank instead, why on earth should they be forced to sell to meet some bank obligation?”

That is entirely my point. People can choose to take on such an obligation as that with a bank, or walking in front of a truck, etc and they should face up to any consequences that arise from that in the future. But this asset tax would be forced upon them by the state! You seem to think there is some choice to it. There is not. that is my point.

And dont compare it to income tax or GST or others – it is entirely different. People can choose not to earn an income and grow their own food and not own a car and not use cash or partake in society. There are people who do that now. They can do all of that now without incurring income tax or GST obligations to the state (council rates excepted, as previously covered). Or at least keep them to a very low level. What you propose would blow them out of the water. And as far as I am concerned the state shold not have that sort of power or effect on peoples chosen way of living.

Me – “You clearly think people should be forced out of their family home to satisfy some state tax due solely to a valuation that the rest of the world puts on that familys home.”
You – “Crap! In such a situation they – didn’t – plan – for – their – retirement. Got it yet?”

What do you mean crap? That is exactly what would happen – people would be forced from their homes. Explain what part of my statement is wrong.

“Good for you! Refuse to pay your income tax if that’s what you believe.”

Man, think about what you are writing about. We have been talking about a tax on an asset, not income tax! Bloody hell.

and you have something about me a little bit right – capitalism with a smattering of socialism. You seem to be 100% capitalism.

heated discussion. peace.

Ditto, I’ve suggested alternatives on older threads.

“The reason their homes are supposedly million dollar homes has nothing to do with them. Why on earth should they be forced to sell to meet some state obligation? ”

Why? if interest rates go up and people are forced out because they can’t pay the mortgage it’s not their fault!
If I’m hit by a truck and can no longer work it’s not my fault!

Sometimes things don’t work out as we would like if it’s an obligation to the bank instead, why on earth should they be forced to sell to meet some bank obligation?

“To have the state come along say 50 years after they built it and raised families and retired in it etc (in one style example) and force them out of their home is state power gone mad.”

That’s why smart people plan for their retirement, I can find you lots of good hard working people who struggle to feed their families, pay the power bill, buy school uniforms, never go on holidays etc, if they accept that having a family was their choice and their bills are their responsibility they have my respect, If they want to bitch and complain that it’s everyone elses fault, or the states fault they don’t.

“You clearly think people should be forced out of their family home to satisfy some state tax due solely to a valuation that the rest of the world puts on that familys home.”

Crap! In such a situation they – didn’t – plan – for – their – retirement. Got it yet?

“are you quite a young chap?”

Are you in your 1st or 2nd childhood?

“you sound like some evil medieval tax collector turfing the poor out of their sod hovels and into the street ”

The tax rate on hovels would be the same, what’s a hovel worth?
You sound like a fair weather capitalist, bad weather socialist; Capitalism when it suits you, socialism when it suits you.

“what you advocate is us serving the state. I am not a subject of the state.”

Good for you! Refuse to pay your income tax if that’s what you believe.

what you advocate is us serving the state. I am not a subject of the state.

Dont you understand? The reason their homes are supposedly million dollar homes has nothing to do with them. Why on earth should they be forced to sell to meet some state obligation? It is their home and always has been. To have the state come along say 50 years after they built it and raised families and retired in it etc (in one style example) and force them out of their home is state power gone mad. It is the sort of thing that brings down govts.

tax is not the same as other living expenses liek phone and power bills.

You clearly think people should be forced out of their family home to satisfy some state tax due solely to a valuation that the rest of the world puts on that familys home.

the state can fuck off.

are you quite a young chap?

clearly that is the case, I view the state as a over weight monster that needs to be controlled, never to be expected to return more than it takes, you seem to view it as a Super Santa, “there to serve us not the other way round bro.”

“the people i have in mind re this absolutely do not choose to live expensively. and they do not live expesnively”

Even though they apparently live in million dollar houses, but can’t afford 20K tax bills? If you check through recent threads you will find comments by people who have far larger tax bills under the present system, and references about people on very high incomes who use trusts and possibly other loop holes to escape income tax.

“tax is not a living expense.”

There is nothing special about the state other than it is the ultimate monoploy, unlike any other organisation, the only way to escape its grasp is to emmigrate, don’t put it up on some sort of pedistal, expecting anything special from it, it, and its demands are just more of those little hurdles in life.

“if you think people should sell their homes to pay tax then we are on different planets.”

It would be up to people how to deal and adjust to such a revenue gathering scheme, whatever suits them best, I’ve only offered some possible solutions, getting a job and robbing a bank are others, ditto if they have a big phone or power bill to pay, again tax is nothing special.

the people i have in mind re this absolutely do not choose to live expensively. and they do not live expesnively

tax is not a living expense. the state is there to serve usnot the other way round bro.

if you think people should sell their homes to pay tax then we are on different planets.

“So if someone with say an income of $20k p.a. is faced with a $20k p.a. tax bill due to some non-cash producing asset how do you propose they pay it?”

A $20k tax bill at a 2% tax rate makes the asset worth $1000k, if it gives them a $20 return they should sell it so that someone who knows how to run it properly can do so, if you’re talking about a house I suggest they settle for a $400k house and invest the balance, a 5% return that would yeild $30k/yr.

As you can see another attribute of such a tax is that it would discourage people sitting on assets that weren’t being efficiently utilised, both capital assets and consumer assets.

and it would not be “their choice how they manage their financial affairs”. That is my whole point. There would be no choice – they would be forced into debt.

So if someone with say an income of $20k p.a. is faced with a $20k p.a. tax bill due to some non-cash producing asset how do you propose they pay it?

It certainly is no more based on a very historical system than income tax eg. the king gets 1 in 5 bussels of the farmers yeild, the rating system is the most easily administered tax system we have, if there is a problem it has nothing to do with how the money is collected but rather how it is mis-spent.
Even Bob Jones, the man who has said “taxation is theft” has described it as “not a bad system”.

“And re forcing people to borrow to pay a tax in this way doesnt actually happen now with cash/income, despite your assertion. Not unless there is poor management of the cash/income as it ‘comes in’.”

And it wouldn’t “need” to happen under an assets tax except for the same reason, and for the same reasons people “need” to borrow money to buy cars, pay bills etc, if people want to escape paying assets tax, don’t own assets, people can’t escape income tax so easily.

“People should not be forced by the state to go into debt.”

It would be their choice how they managed their financial affairs, they would actually have more financial freedom than exists with todays raft of taxes, designed with complexity to stop people escaping, but still often failing to do so.

re your post above to my resistance to a tax on assets and forcing people into income penury – I do actually think the whole rates system is flawed and rates as a cash obligation against a non-cash item does the same thing. Funding of local govt by way of rates is seriously overdue for reform. It is based on a very historical system, the reasons for which have long since expired, and is another story in itself.

So yes, I dont like the rates system either for the same reason (among a couple of others). And it is based on reason not so much philosophy.

And re forcing people to borrow to pay a tax in this way doesnt actually happen now with cash/income, despite your assertion. Not unless there is poor management of the cash/income as it ‘comes in’.

You have not convinced me at all – I dont see any strength to your argument.

People should not be forced by the state to go into debt.

“The problem with a tax on assets is, however you dress it up, it’ll always be perceived as a form of envy tax and resented by those who pay it.”

As is the progressive income tax system.

“And then there’s the problem of asset definition – real or personal property? What about beneficial interests in property?”

Anything that can be bought and sold for cash, here’s a cunning system: let people put their own valuation on their assets IRD (or anyone if such an idea were acceptable) can buy those assets at that valuation. This would include intangable assets but paper “assets” that represent ownership wouldn’t be included, otherwise the assets are effectively taxed twice.

“not all government expenditure is good expenditure.”

As I mentioned above, this is a more visible tax, hopefully harder to increase either openly or covertly, if the growth rate of the public sector can be slowed that would probably improve the efficiency of government spending. However, this is only a form of revenue collection, I have mentioned other ideas to limit the tax grab and improve public spending by removing the state monopoly.

Nicely put – I completely agree.

We could have a pseudo-intelligent debate along these lines:

Labour good, National bad
Surplus under Labour good, tax cuts under Labour bad
Labour good, National bad
Michael Cullen = great Minister of Finance, Bill English = terrible Minister of Finance in the making
Labour good, National bad
Government spending under Labour = fiscally prudent, government spending under National = inflationary
Labour good, National bad

Or we could have an intelligent debate along these lines:

(1) What is the proper and legitimate role of government?
(2) What is the set of measurable objectives underpin that role?
(3) What level of taxation is genuinely and demonstratably required to meet those objectives?

And only THEN do we get into (4) a tax policy discussion.

Many here (particulary the left, I’m sorry to say) seem to prefer the pseudo-intelligent debate around (4).

I’d like to ask Phillip John/Roger Nome for his views on (1)-(3) – but I’ll wait for him to catch up first. He’s probably studying Australia’s top personal tax rate (45% – not 59% as he falsely claimed). Hopefully his answer won’t refer to some obscure NZBR submission back in 1986.

The left is particularly obsessed with slogans like “tax cuts for the rich”

Indeed, so much so that the concept of the state having a budget to operate in, a percentage of GDP to to aimed for as a surplus and taxation actively adjusted to maintain that, is not a left or a right concept. It’s a basic good governance matter.

The left seem to like the situation where the state is rich and the people are poor, therefore they conclude that the right must want the people rich and the state poor. Fools.

We should have expectations that the state will actively manage the internal economic conditions to redistribute from higher wealth individuals to lower wealth individuals and to provide first world social services. Not simply for the state to ratchet up the taxes with static thresholds against raising incomes to do stuff all more than bloat administrations and build a monster surplus.

This is turning into a good thread.

Just a quick note from me – I’ll try to engage you more fully later.

I’m just trying to reconcile your application of the KISS principle (flat rate assets tax of 2%) and no other general taxes with Jim Anderton’s transaction tax proposal of several years back (which obviously was a political non-starter). The problem with a tax on assets is, however you dress it up, it’ll always be perceived as a form of envy tax and resented by those who pay it. And then there’s the problem of asset definition – real or personal property? What about beneficial interests in property?

My personal view, for what it’s worth, is that we should start with the required level of government expenditure. The left is particularly obsessed with slogans like “tax cuts for the rich” – but we never quite get the balanced acknowledgement from them that not all government expenditure is good expenditure.

As has been pointed out, we are talking about a system that is very similar to the rating system, and rates these days can go above 1%, do you see this as “forcing people into income penury” do you think the rating system should be because of this?

The state is always forcing people to do things “they cant/wont/dont want to”

“You cannot force people to borrow, or expect them too, for such obligations.” That’s exactly what occurs today with many people on income tax, they do usually have a cash income but can’t we just accept that planning for future liabilities and costs is part of life, an assets tax is at least predictable and unless assets appreciate significantly stable, if assets do appreciate people who own those assets are financially richer.

The other big plus is an assets tax is visible, it’s not buried in the cost of the shopping and so people are more aware that they are paying that tax and it’s not subject to fiscal drag. if it’s 2% it stays at 2% unless the government takes action to increase it.

Its not so much feeling sorry for the elderly, its forcing people into income penury (or doing something they cant/wont/dont want to) for the state, etc etc.

maybe its like the state forcing everyone to drive to wellington when some people cant drive, some are blind, some dont even know what car is and dont want to do that with their lives. (Bad analogy methinks).

You cannot force people to borrow, or expect them too, for such obligations. May as well let the state bankrupt them. ridiculous

Me a huge fan of simply stupid too.