Tax reform

Almost as good as his cat killing policy

Here I was thinking the other day that I don’t agree with Gareth Morgan on anything much at all, except for his cat killing policy.

But I have found another thing to agree with him on.

Flat Tax.

Now that is almost as good as his cat killing policy…it could be improved by providing additional tax rebates for cat killing professionals.

Tagged:

Using tax cuts to revive the economy – How the poms see NZ

The opposition likes to talk down the economy and the government, yet New Zealand has recovered faster than the rest of the world from the global financial crisis, without the need to slash and burn.

Our economy is the envy of the world.

Even the Poms see that:

In New Zealand, John Key?s National Party romped home to victory on a platform of cutting taxes and balancing the budget, trouncing a Labour opposition that promised to put up taxes. Slashing the top rate of tax has revived the economy, and been rewarded with electoral success as well. True, there are lots of differences between New Zealand and this country. And yet the truth is, there are a fair few similarities as well ? and if tax cuts can work there, they can work here.

For a small place a long way from anywhere, New Zealand has a fine history of leading the way with radical experiments in economics. While we were battling over Thatcherism, and the Americans were debating Reagan-omics, the Kiwis had ?Rogernomics?, created by the Labour finance minister Roger Douglas. What had been a very 1970s, state-dominated mixed economy was swiftly transformed under Douglas into a laboratory for free market ideas. Financial markets were deregulated, the money supply was brought under tight control, the currency was floated, and industries were privatised. It was a mix that was to become orthodoxy by the 1990s, but Douglas was implementing it while our Labour Party was still planning to nationalise the top 100 companies.

Now it is doing it again ? except this time without any encouragement from the US or the UK. Ever since the financial crash of 2008, even centre-Right governments have followed a very narrow path, buying into high taxes, and near-zero interest rates, and allowing budget deficits to balloon, even when financed by printed money, to keep the economy afloat. No one has strayed far from the orthodoxy. Except, that is, New Zealand.

Read more »

Act says being in government was a mistake

In the latest ‘Letter’, Act says that being in government was a mistake.

Readers may not have noticed, and if so we are sorry to be the bearers of bad news, but ACT is struggling in the polls. This would seem surprising as the party now has the whole of the right/center to itself.? The Letter thinks there is an organisational issue here.? ACT joining National in government has compromised the party.? In the last five years, what have we heard from ACT on the advantages of low flat tax to increase investment, growth and jobs??? How many speeches have you heard on the advantages of free markets?? ?It has taken having a leader outside Parliament to get ACT back to advocating the party?s core policies. Those policies remain ACT?s bedrock. Yet, it is a big ask to expect a new leader in five months to overcome five years of being too close to government.

I disagree with them on this.

The alternative being espouses seems to be that the delivery of Charter Schools was a poor choice and instead they’d rather have made 200 speeches to no one about flat tax.? Read more »

Guest Post – Reclaiming the left

This guest post was emailed last night. I don’t agree with everything in here, but far be it from me to filter the voices of those on the left frustrated and zero traction.
How To Win It From Here – by Reclaiming the Left
So, it’s a bad time to be a leftie. Labour looks like losing the “election that couldn’t be lost.” And losing it badly. I had high hopes for Cunliffe, and I liked Goff too. Sigh.
I’ve been pissed off with a lot of the left for ages. There’s a lot of squabbling, but more importantly, very little focus.
Let’s get some things straight. Socialism is about the collective, not individuals or interest groups. Socialism is not about hippy bullshit. Many on the left have forgotten that. However, if we get back to our roots, and smash a few big-hitting policies straight off the bat, we might just do it.
The Big One: Work for the Dole
WfD is the best socialist policy there is. Everyone has a right to a job, but the government has the right to your labour as well. I’d do WfD right; good pay ($15/hr, 40hrs) with maybe 3 months on an infrastructure project then 1 month training on reduced pay. That sort of cycle would give people a chance to get back into the labour market easily enough. Yeah, it’d cost a bit (more on that later) but it’d break welfare dependency because it would turn the dole into a “community wage.”
And if you refuse it, and don’t have a disability? You get nothing.
The Next Big One: Revitalising the Provinces
Small town NZ is dying. Auckland is turning into a cancer, a tumour too big for the rest of the country to handle. Let’s revitalise the provinces – (1) special economic zones (e.g. zero corporate tax!) for places like Tokoroa and Kawerau, (2) moving some bureaucratic jobs into the provinces e.g. WINZ, (3) using WfD infrastructure projects, and (4) making sure all overseas immigrants settle in smalltowns. Try outmanouevring that, National.? Read more »

Let’s have a living tax on companies

David Farrar discusses a “living tax” proposal for offshore companies who pay little or no tax in New Zealand…like APN and Fairfax.

This old fashioned concept of paying tax on profit must be disposed of. We should demand a fair tax system. Let?s calling it a living tax ? the level of tax a company should pay so that it no longer feels wretched and is helping fund a civilised society.

I think a 15% tax on revenue would be a fair living tax. ?Both the Herald and the Dom Post have repeatedly run stories and editorials comparing tax to turnover, not profit. So we should start the living tax campaign with them. Here?s how it would work:? Read more »

Fairfax columnist recommends Fairfax be shut down

Dave Armstong has written a column that is online at Stuff.co.nz.

He thinks that, though loony, Labour’s Facebook Ban is actually on the right track. apparently the new standard for corporate tax isn’t the law, it is some sort of arbitrary moral code dreamed up by leftists.

Labour’s revenue spokesman, David Clark, a bright young star under David Shearer but a supernova under Mr Cunliffe, decided that if Facebook didn’t pay its fair share of tax (it paid $28,000 tax in 2012 – less than is paid by a demoted backbench Labour MP), a “back pocket” threat would be to shut them down.

Mr Clark’s Facebook facepalm quickly had the libertarians up in arms – avoid all the tax you like but banning internet sites only happens in despotic Third World regimes. New Zealand does far more civilised things like helicopter raids on residents we think may have breached US piracy laws.

Mr Clark was quickly defriended by his colleagues, who doubted Labour would take such draconian action. His relationship status within Labour quickly dropped from “liked” Dunedin MP to “single”.

Mr Key found Mr Clark’s comments “interesting” and Bill English called them “nuts”. However, the finance minister conceded that multinational companies like Facebook should “pay their fair share”.

At present many multinationals don’t. They avoid tax by various legal ways, including creating subsidiaries in low-tax places like the Cayman Islands. It is these subsidiaries that receive most of the company’s revenue, on which they pay negligible tax. The company’s expenses are channelled to relatively high-tax countries like New Zealand, where a loss is made.

Like Fairfax? When did they last pay tax in New Zealand? ? Read more »

Cunliffe lies on Tax

David Cunliffe is becoming something of a liar in his quest to lurch left.

In the Q+A debate he stated:

DAVID?I?d raise the top tax rate, and I would also bring in a capital gains tax. And I would also close tax evasion and avoidance loopholes. Of the hundred wealthiest New Zealanders, the IRD says less than half of them are even paying the top tax rate.
What we did last time round was 39 cents with a pretty high threshold of $150,000, so we weren?t hitting middle New Zealand. We had a top rate for the wealthiest. We?ve got to be very careful to make sure that the trust rate is at or close to the top marginal personal rate, because we don?t want to create an avoidance-

This is a lie.? Read more »

An idea for Finland Fanboi Shearer to Ponder

David Shearer is a big fan of Finland…perhaps he will soon start suggesting this solution, taxing unpaid work:

FINLAND’S tax authority is trying to find new ways to increase revenue and is considering going so far as to tax unpaid labour, an official has told public broadcaster YLE.

The tax office was looking at service exchanges in particular, such as time banking, where reciprocal services are exchanged using units of time as currency, or more informal arrangements such as that between two neighbours.? Read more »

The moral case for lower taxes

? The Telegraph

An interesting Telegraph article from Philip Johnston about the morality of lower taxes:

The moral, and Conservative, case for lower taxes is that they allow people to make their own decisions, to save when they wish, to give if they choose and to spend on what matters to them. Tory politicians should not be ashamed to talk about cutting taxes, because high taxation removes the need for individuals to take responsibility for their own lives and heightens cynicism about the ability of the government to deliver. The point of the beer/tax story is that a Robin Hood tax system of the sort envisaged by Cardinal O?Brien will harm those who create the wealth and jobs, without which there are no services for the less well-off.

The Cardinal is right to recognise the moral dimension to taxation; but it cuts two ways. Yes, we should be prepared to render unto Caesar what is Caesar?s, but it is incumbent upon Caesar to ensure the money is properly spent; and while that was certainly not true of the appalling Tiberius in Jesus?s time, neither is it true today. Taking people?s earnings to spend them wisely in the interests of the common weal, however defined, is one thing. Squandering them is quite another. Each year, billions of pounds are taken in tax for programmes that by no measure can be justified in the public good, while at the same time the individual?s right and duty to choose is restricted. That?s immoral.

Sweden and the Recession

? The Spectator

This article in The Spectator is about Sweden’s Finance Minister Anders Borg who confronted the recession by cutting taxes?across?all income groups to prevent the wealthy leaving Sweden, refused a big stimulus spend up ?and has been working to move Sweden away from a high tax, high regulation system and create smaller government including cutting welfare payments.

His advice,??Keep on dealing with the deficit, because deficits destroy everything else.? Similar to National in New Zealand he was?criticized?for allowing tax cuts to the wealthy and yet?the Financial Times recently declared him the most effective finance minister in Europe.

Interestingly we don’t hear much about Sweden from Labour despite it’s success at dealing with the global recession.

?Everybody was told ?stimulus, stimulus, stimulus?,? he says ? referring to the EU, IMF and the alphabet soup of agencies urging a global, debt-fuelled spending splurge. Borg, an economist, couldn?t work out how this would help. ?It was surprising that Europe, given what we experienced in the 1970s and 80s with structural unemployment, believed that short-term Keynesianism could solve the problem.? Non-economists, he says, ?might have a tendency to fall for those kinds of messages?.

He continued to cut taxes and cut welfare-spending to pay for it; he even cut property taxes for the rich to lure entrepreneurs back to Sweden. The last bit was the most unpopular, but for Borg, economic recovery starts with entrepreneurs. If cutting taxes for the rich encouraged risk-taking, then it had to be done. ?In most cases, the company would not have been created without the owner,? he says. ?There would be no Ikea without [Ingvar] Kamprad. We would not have Tetra-Pak without [Ruben] Rausing. They are probably the foremost entrepreneurs we have had in the last few decades, and both moved out of Sweden.?

But they were not rich, I say, when they were starting out. ?No, but they were becoming rich. If you have a high wealth tax and an inheritance tax, people emigrate because it becomes too costly to own a company. Ownership is a production factor. Entrepreneurs are a production factor. Yes, these people are rich and you can obviously argue that we want to encourage social cohesion. But it is also problematic if you drive out entrepreneurs from your country, because they are the source of job creation.?

The Conservative took a hit politically for giving tax cuts to the rich, but interstingly the tax cuts across the board had spectacular results:

Tax rates would be cut for workers, and welfare cut to pay for it. High welfare levels, he says, can inflict cruelty in the name of compassion. ?People emigrate from the labour market. Unemployment traps capture a lot of people in social exclusion.? Tax cuts are not spoken of as an ideological aim, but as a tool to cut unemployment and advance social justice.

What even Borg did not expect was that his tax cut for the low-paid would increase economic growth so much that it has almost entirely paid for itself. Borg had created something that Osborne?s critics say does not exist: a self-financing tax cut. ?There was some criticism at the time that we were borrowing to finance tax cuts,? he says. But Sweden could do it, because it was expecting to return to surplus soon; Britain has no such luxury, he says. His main advice to Osborne is: ?Keep on dealing with the deficit, because deficits destroy everything else.?

National is trying to return to surplus and Labour insists on spending even more. AS Anders Borg says deficits destroy everything else.