Income tax

Map of the day

Tax Time

 

This map indicates the time, in hours per year, it takes to prepare, file, and pay (or withhold) three major types of taxes: the corporate income tax, the value added or sales tax, and labor taxes, including payroll taxes and social security contributions.

A million here, a million there, before you know it, you’re talking real money

UPDATE:  This article has been subject to a complaint.  Please refer to the end for a correction.

Ben Heather is all over the place with this article. ¬†Not sure if he had an off day or he doesn’t understand what he’s on about.

Headline: Millionaire number grows since loophole closed

More New Zealanders are earning millions, but the culprit may be a crackdown on tax dodgers rather than newfound wealth.

Latest figures show 830 Kiwis declared more than $1 million in income in the 2012 financial year, paying $510m in tax.

The number of self-confessed millionaires has been trending upwards since at least 2003, with the exception of a sharp drop in 2011, attributed to a tweak in tax rates.

In Wellington alone, there were 140 millionaires, nearly triple the number recorded in 2003.

Auckland had the most, with 430, and had experienced a steep rise over the past decade.

The figures, released under the Official Information Act, came amid increased concerns over inequality. Recent reports have highlighted growing child poverty, income equality and rising demand at food banks.

It’s all on here. ¬†Where are we going with this?

  • People who declared an income in excess of $1M are millionaires
  • People who have assets exceeding $1M are millionaires (inferred)
  • Government tax reform is forcing more $1M income earners to fess up
  • Major cities are the cause (or result) of millionaires (unsure if income or assets)
  • This is the final nail in the coffin over income inequality

Talking about flailing about wildly. ¬† Read more »

APN are corporate tax hypocrites, will Labour stop feeding them stories now?

APN/The Herald have an article covering that Apple NZ paid 0.4% tax on TURNOVER of $541 million – a story pushed by Labour and David Cunliffe.

Apple’s New Zealand division made sales of $571 million last year but paid only 0.4 per cent of that in tax.

Labour’s Revenue spokesman David Cunliffe said that’s akin to paying nothing at all, and letting a corporation get off “scott free” is something New Zealand taxpayers shouldn’t have to stomach.

Apple’s New Zealand sales topped the half billion dollar mark in 2012 after rising to $414 million in 2011, according to its financial results for the 12 months ended September 29. Apple is the world’s biggest tech company and makes iPads and iPhones.

Its local unit recorded a tax paid profit of $5.5 million in the year, down 40 per cent from its 2011 earnings. Income tax fell to $2.5 million, amounting to 31 per cent of pretax earnings, from $5.1 million a year earlier.

Nowhere in the story does it state want percentage of profit was paid in tax. The story seems to be pushing emotion while being light on facts and data.

But since APN think tax should be paid on turnover I thought I’d check what they paid. After all if you are going to point the finger at other corporates you had better be a corporate citizen than they are.¬† Read more »

Removing income tax entirely, can it be done?

English: Governor Bobby Jindal at the Republic...

Governor Bobby Jindal at the Republican Leadership Conference in New Orleans, Louisiana. (Photo credit: Wikipedia)

Could it be possible…no income taxes at all? Bobby Jindal thinks so:

Governor Jindal has unveiled a specific proposal.

The plan will eliminate two major tax types: personal income tax and corporate income and franchise tax. Eliminating income taxes in a revenue-neutral manner and improving sales tax administration will dramatically simplify Louisiana’s tax system and reduce administrative problems for families and small businesses. The effective start date of the program is January 1, 2014. …The plan will ensure revenue neutrality by…[b]roadening the state sales tax base and raising the state rate to 5.88%.

This is a superb plan.

Of all the possible ways for a state to generate revenue, the income tax is the most destructive.

That’s why researchers consistently have found that states without this punitive levy grow faster and create more jobs.

It’s also worth noting that jurisdictions such as Monaco, Bermuda, and the Cayman Islands manage to be very prosperous in the absence of an income tax, though the incredible wealth of these places is partly a function of bad policy elsewhere, so the comparison isn’t perfect.

Anyhow, Gov. Jindal expands on this research with some very powerful data.¬† Read more »

Random Impertinent Question

Random question from a reader

Whale

I was listening to Larry Williams on the ride home tonight from my day of wage slavery and heard the Shearer interview around 6pm.  In it he explained away this whole offshore UN slush account with another backstory about sitting down to do his income taxes with his Missus only to suddenly realise after three years of remembering and forgetting that he has not returned the account on his Pecuniary Register.

Question:

The obvious one is what is a bloke doing his taxes with his Missus for, but I haven’t even thought about my bloody taxes yet. ¬†How can you do your taxes BEFORE the 31 March year end? ¬†

Yes. I am wondering too.  It all seems too convenient, yet as with everything David Shearer, clumsy and a D for detail.

Shearer advised IRD of his hidden off-shore bank account, but wants us to believe he “forgot” to tell parliament

The IRD announced a crackdown on people with offshore accounts in 2011:

Group Tax Counsel, Assurance, Graham Tubb said Inland Revenue was aware of New Zealand tax residents who may have taxable offshore income held in an offshore bank account, which is accessible in New Zealand, and this income may not be returned in New Zealand for income tax purposes.

He said that people who conceal income offshore are cheating other New Zealanders by not contributing their share of tax. “They do this by paying less income tax and child support, can decrease their student loan repayment obligation, and may claim a larger entitlement to Working for Families Tax Credit than they should.‚ÄĚ

“Some people hold credit or debit cards issued by a foreign bank and these cards are being serviced by funds held in an offshore bank account. The types of funds deposited into these bank accounts can include income paid by a non-resident employer, overseas life insurance policies, superannuation schemes, or equity investments held in portfolio accounts,” he said.

Mr Tubb warned that if people deliberately divert income into an offshore bank account to evade or avoid the payment of tax, or to claim a greater amount of Working for Families Tax Credits, they may be committing criminal offences under the Tax Administration Act 1994.¬† Read more »

Giving the left what they want

ŠĒ• The Telegraph

David Shearer is a big fan of Finland, other Labour politicians love cherry picking scandanavian countries to prove obscure political points about how crap new Zealand is and how we would be all so much better off if we would just follow those countries examples.

New Zealand is not unique in having socialists gaze lovingly at other countries. In the UK Polly Toynbee has similar aspirations:

We’re all aware of Polly Toynbee, doyenne of the Guardian’s comment pages and conscience of the nation. It’s true that she comes in for a bit of stick at times, but I think it’s time we started to take her more seriously. Indeed, time that we create the sort of society she desires. Which is, as she tells us this morning,¬†the following:

I want Britain to aim for the social and economic balance that thrives in Nordic nations.

Excellent! Let’s change policy to achieve that laudable aim. We should copy the¬†Finnish¬†education system, for example ‚Äď it is, after all, the number one such system in the world. There they divide into academic and vocational at 16 and there’s none of this nonsense that all must go to university ‚Äď that’s reserved for the small fraction that are indeed academic. Or the Swedish system of education vouchers. Parents decide on the school they want children to go to and the local council stumps up the fees ‚Äď whether it’s a public or private school.

From Denmark we’ll take a couple of policies. Privatise the¬†ambulance and fire services¬†certainly. They’ve been working well there for nigh on 90 years. We’d want their taxation system as well: the national income tax¬†is 3.76%¬†and the top national rate is 15%. True, total income taxes are high but the rest is levied by the commune, a political unit as small as 10,000 people. At that scale, taxation is subject to the Bjorn’s Beer Effect. If you know that it’s Bjorn who levies your taxes, Bjorn who spends your taxes and also know where Bjorn has his Friday night beer, then he’s going to spend your money wisely. Otherwise he can’t go out for a beer on Friday, can he?

From all of them we’ll take the abolition of the national minimum wage, for¬†none of the EU Nordics¬†has one.

Sweden has also abolished inheritance tax, gift tax and the wealth tax. Those sound like three excellent ideas to copy.

Simplifying Taxes

ŠĒ• NY Times

Bruce Bartlett explores simplifying taxes and making them easy:

¬†One idea is to do what Gen. Douglas MacArthur did during World War II ‚ÄĒ bypass enemy strongholds, leaving them isolated and relatively harmless.

Prof. Michael Graetz of Columbia Law School has proposed what I believe is a MacArthur-like solution to tax reform. He would abolish the income tax for the vast bulk of Americans and replace the revenue with a 12.5 percent value-added tax. People would pay their taxes when they buy things and wouldn’t need to worry about keeping records or filing tax returns at all.

The brilliance of the Graetz plan is that no tax expenditures need to be repealed. He would simply give every family a tax exemption of $100,000, which would eliminate the income tax for 90 percent of those now filing returns. For lower-income people who currently have no net income tax burden or who earn an income tax credit, Professor Graetz proposes a rebate (too complex in its details to spell out here).

The current income tax would be retained with a top rate of 20 percent to 25 percent only for those with incomes above $100,000.

Obviously the US has a more complex tax code than here, but it is a far simpler way of doing it than the current ridiculous Working For Families tax subsidies.

Len Brown: 13 options to increase your tax

Len Brown is releasing a paper today on ways to fund his pet project, the rail loop.

Here are the proposed options:

  • General rates – increasing rates.
  • Targeted rates – rates to pay for specific projects.
  • Development contributions – charges on new property developments.
  • Regional income tax – new income tax paid only by Aucklanders.
  • Regional payroll tax – new income tax paid by Auckland employers.
  • Regional GST – raising GST in Auckland.
  • Tax increment financing – tax on increase in property values from transport services.
  • Regional fuel tax – raising petrol and diesel taxes across Auckland.
  • Tolling new roads – charging for new roads.
  • Tolling existing roads – charging on all roads or just congested roads.
  • Carparking charges – increasing carparking fees.
  • Visitor taxes – nightly charge for hotel and motel rooms.
  • Airport departure tax – increasing departure tax on international flights.

Every single one of them is about increasing taxation and spending even more than his profligate council already does. Len Brown says that “there are those in government that would be reasonably amenable” to increasing taxes on Auckland’s population….I challenge Len Brown to name three.

There is not a single option for reducing our rates, or reducing council expenditure in other areas and there is not a single option fo0r charging existing customers of public transport increased fares for the allegedly superior service hey would enjoy from Len’s train set. Another option would be to reduce transport subsidies on fares and re-direct that into his pet projects.

It is a classic case of picking the pockets of other people to funds socialist pipe dreams. Len Brown is trying to box the government into a corner, what will happen is he will get his ears boxed.

Soak the Poor

Some very interesting thoughts about Income tax as the root of all evil by Frank Chodorov:

The class-war doctrine is most vicious not in that it sets man against man, producer against producer, but in that it diverts the attention of the contestants from their common enemy, the State. Men live by production, but the State lives by appropriation. While the haves and the have-nots struggle over the division of existing wealth, it is the business of the State to improve itself at the expense of both; it picks up the marbles while the boys are fighting. That has been the story of men in organized society since the beginning. That this lesson of history should have escaped the reformers of the 19th century, when the habit of freedom was still strong in America, can be easily understood; what is not easily explained is the acceptance of the doctrine of benevolent government in our day, when all the evidence to the contrary is before our eyes.

…This is all in line with the ability-to-pay doctrine.¬†The poor, simply because there are more of them, have more ability to pay than the rich. The national pay envelope contains more money than the combined treasuries of all the corporations of the country. The government could not for long overlook this rich mine. Political considerations however, made the tapping of the pay envelope difficult. The wage earners have votes, many votes, and in order not to alienate these votes, it was necessary to devise some means for making the taxation of their incomes palatable. They had to be lulled into acceptance of “soak the poor.”

The drug that was concocted for this purpose was “social security.” The worker was told that he was not paying an income tax when his pay envelope was opened and robbed; he was simply making a “contribution” to “insurance” against the inevitable disabilities of old age. He would get it all back, when he could no longer work, and with a profit.

We¬†have¬†exactly the same situation here where the poor and middle classes are “soaked” with no escape. And again it the elfare state that is the drug that this country has become addicted to and the excuse to continue to soak the workers.

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