Taxation Saturation
Today, John Key made an expected statement announcing proposed changes to the tax system. Media outlets around the country have been waiting with baited breath for this speech, presumably because taxation effects us all (well, most of us), and because changing the system (actually, cuts to the middle- and high-income tax rates, but we all know what happened to those) was probably the only the piece of policy that most National voters voted for (given that “it’s time for a change” is not a policy).
I’ve just read the statement, and I think that the media has been (and is likely to continue) making a bit much out of this. This is really a statement of intent, and rather a feeble one at that, like National is waiting for our response to actually make any decisions. Given that they are essentially a bunch of nu-populists, this makes sense. Key did make a couple of firm statements though. For example, he ruled out any real attempt to address the property market issue, specifically there will be no capital gains tax, no land tax and no risk-free return method.
Gareth Morgan asserted in his article in the Jan 20-Feb 5 2010 issue of the New Zealand Listener that investment in the country is so skewed towards toward the property market that it has not only distorted the way we shape fiscal policy and the way we think about money, but has also handicapped our entrepreneurial community by diverting potential investor money into land. If this is so, then surely a capital gains tax is the most direct and most fair way of addressing this. Key’s argument against a capital gains tax is that “it would make the tax system more complex to administer and comply with, and may encourage taxpayers to hold on to assets longer simply to avoid tax.” The first part of this argument is a lazy cop-out in my eyes. I agree with Morgan, we need to be discouraged from looking at property as being some sort of bottomless goldmine. The second part, well, I cna only say “meh.”
Really though, I don’t see much point in talking about today’s statement. I didn’t expect anything better from the Nats, that’s why I wasn’t stupid enough to vote for them. If what Morgan thinks is true, it would follow that wealthy investors in New Zealand have a bunch of property in their portfolios. And if quite a few MPs, particularly those on the blue side of the house, are wealthy investors (I have no evidence here but, well, prove me wrong), why would they want anything to change there?
No, I wanted to share a laugh with you over the inevitably confused media response. I’ll have to wait a few days to really let that happen, but I thought I could take a lead from the excellent Editing The Herald and have look at the comments thread on stuff.co.nz’s initial story on the statement. Why Stuff? Because not only is it the flagship site representing a steaming morass of Fairfax media outlets, not only do I know people who do write or have written for the site and should know better, but because the comments threads are often home to very angry, very confused and very funny people.
Take “Chris”, who says
OMG.. i think we should all stop working put GST up to 1000% and smoke pot all day…. then most people who have made comments will be happy.. or hows this for a novel idea…. get up off the couch and do a decent days work pay for for what you want out of life and stop asking for handouts!!!! god damn lazy kiwis.
This is a favourite at Stuff. The thread doesn’t even have to have anyone in it “asking for handouts” (indeed, this one doesn’t. The closest it comes is someone suggesting that someone living in a state house and earning $12.50 an hour might have trouble eating if their food costs more) for this one to appear. I don’t think they read the article or the comments. How about this one from “Mark”:
“If only we lived in Cuba or Zimbabwe! Then we could all be equally poor!
Inequality is an absolute necessity for growth! Having a large gap between the ‘haves’ and ‘have nots’ is a great thing and let no one tell you different. The fact is that even the poorest families in this country have much higher standards of living than so many people around the world!”
Um. Just… yeah. There’s not a lot one can say about that really. “Pan Narrans” chimes in with:
“yegads, where did all the commies suddenly come from?”
Because obviously, pointing out that dropping the top personal income tax rate makes high-earners happier belies one’s membership in the Communist Party.
On a plate, this one:
Stupid people #111 3:38pm
People are so uninformed and say comments that lack any rational and make no sense. For all you haters out there, go take some courses in economics and grow a real business mind before you make a fool of yourself.
Yes, that’s a comment by “Stupid People”. To be fair, the commentator is probably calling the minority of thread respondents who are unhappy with the proposals stupid. However, when you think that the field labelled “Your Name” actually means “describe who wrote the other comments”, and you construct that wonder of an opening sentence, you’re not getting off to a great start.
However, the other side doesn’t really bust out the magic either:
SS #68 03:15 pm Feb 09 2010
This is sooooo crap… oh well, I didn’t vote for him
The real worry to me is the “moderate” view in this thread. Take “Jane”, who says:
Please dont make generalisations like the rich get richer and the poor get poorer.
Fair enough. Generalisations are, generally, pretty dodgy.
There is only a small percentage of the truly rich in NZ. I personally get annoyed at being held up as one of the rich when Im struggling with a mortgage, bills etc like everyone else.
I can understand that. Up until recently, I earned the NZ “average wage”. My standard of living certainly went up, but according to banks, even though I had more earning power than the vast majority of New Zealanders (taken as single entities), I could still only afford to buy a house at the very bottom of the in the lowest-priced market of all the main centres (I’d like to also point out that I have no dependents, no real debt, and I didn’t end up buying a house).
A side issue but related - I also worked, and still work extremely hard to earn what I do (which isnt that much)
Ok, great, me too (although, as I’ve pointed out above, if you’re in the middle income bracket you already earn more than most other New Zealanders). But wait for it…
and get annoyed at people who expect handouts without actually doing the hard yards. Im sick of paying for the supposed poor when some (yes not all) take the benefit route when they could be working like the rest of us.
There it is. The assumption that people are “asking for handouts”. I’m not sure where this comes from. Certainly, most of the people in this thread who are taking the anti-PM line seem to be prefixing their comments with something along the lines of “I’m a middle-income earner and I work hard, but…”
Anyway, it is heartening that there are a number of people in the thread pointing out that we will have to wait for the Budget before we know what is going to happen. This is mostly true, but as I suggested before if we all yell loud enough about certain points, Key and English will probably listen.
Finally (and beautifully) there are a few comments early on in the thread along these lines:
nzbee #60 03:11 pm Feb 09 2010
yet another example of incompetent reporting - the govt is CONSIDERING raising GST. this is not definite and so the heading of “GST SET TO RISE” is extremely misleading sensationalism!
Most people then dont read the article to see how wrong the headline is!!!
By the time I got there, the headline was “Key confirms GST increase being considered,” but I can only assume that Stuff had indeed initially muffed up the headline (there will be those that argue that “set to rise” is actually fairly ambiguous, but I think it’s pointed enough to cause confusion). It’s nice to know that Stuff are reactive.
[Edit:] Actually, it’s back to “set to rise” on the front page of the site. Maybe they rotate them?