So let’s talk about Sam Morgan’s dad, Gareth. Because for an apparently smart man, he can be awfully fricking dumb.
There he was yesterday announcing the very first policy of his spanking new party, the Opportunists’ Party, capitalising on the opportunity of the Prime Minister’s resignation by flying up from Wellington to be photographed outside the Prime Minister’s Parnell home so he can announce a new tax. In a country that values home ownership, he announced he wants to tax your home.
Nice policy announcement by which to launch a new party.
What’s the connection with Parnell, you wonder? Why outside the Prime Minister’s home? Because Sam Morgan’s dad is very much an opportunist, and there were already reporters stationed there. And because his very first policy being so gleefully unwrapped is a new tax that will make those Parnell home-owners’ eyes water. A new tax that reveals Morgan senior to be something of an old-fashioned redistributionist – the sort that should have long ago been put out to pasture.
Morgan Sr says in essence that NZer’s houses, boats and cars are unproductive assets, so therefore (the “therefore” is his) his party would tax them all as if they were. He will simply “deem” your asset (his word again) to be a productive asset, and then tax you as if it has generated an income stream. Even if it hasn’t.
So not a direct property confiscation then, just confiscation by a thousand cuts.
Morgan Sr says not to worry about that however. It will only hurt some people (many of them in that leafy suburb he and his charts took over yesterday).
And, Morgan Sr says, don’t complain that this is just a tax grab, because we have it balanced out with income tax cuts for those other people who it won’t hurt. That will however hardly comfort those for whom it will.
This, he has said before, is a “fresh idea” that all makes sense. In point of fact, it is as stale as redistributionist dogma and makes no economic or moral sense at all.
- It may or may not be “balanced” overall by income tax cuts, but even if true that would be cold comfort to those on low or little incomes. If you have a large house but little income, you’re going to have to find Morgan’s nut every year or sell out. If you have a small house but no income (perhaps because you’re retired and on a pension) then Morgan’s tax lords will simply “deem” you to have one and confiscate their tax anyway. And if you have any kind of house on leasehold land that doesn’t turn an income, then if Gareth’s policy were implemented you may as well just hand him over your wallet and all your credit and debit cards to with as he pleases.
In any case, if you’re income poor and asset rich, this would come at you like Len Brown’s rate rises, only at a rate many times higher. (Expect rental margins to be squeezed, and slum landlording to be encouraged.)
- And why on earth would we expect it to be balanced by a promise of commensurate tax cuts? Has any politician since Pericles ever kept a promise not to raise taxes? And Gareth himself seems fairly new to the idea since, when he first floated this new tax way back when he was talking about “Big Kahunas,” he talked about using have the new tax to pay for his Universal Basic Income – i.e., a godawful and expensive scheme making everyone in the country a beneficiary. So he’s not even wedded to that tax-cut linkage himself.
And in an MMP environment, neither would any major party either who was likely to adopt the policy, if any. When you consider that a politician is someone who has never seen a new tax they wouldn’t like, nor an income tax cut they would offer (except in election year), the chances of it being tax-neutral are essentially nil.
Yet even if not nil, it would still not be tax neutral for those he intends to harm. Who would be many
Morgan says that this new tax is necessary to hold down house prices and direct capital to more productive uses. But the fact remains that no tax on houses anywhere in the world has held down house prices when, in our hampered markets, the things hampering the markets are holding those prices up. And as economist Jim Rose pointed out to Gareth back in April when he was floating this particular trial balloon, “optimal tax theory, including that pioneered by Stiglitz and Merrlees, economists of impeccable left-wing credentials, show that taxes on the income from capital should be low because the deadweight social costs of taxes on capital are very high.” For that, Rose was threatened with banishment as a troll.
Because basically, Morgan thinks he knows best how to run things, and in the end doesn’t care that he’s wrong or who he may hurt in the process.
So if you’re a cat-loving retiree who owns a leasehold home, you may want to start a club. It could have as its first aim doing to Morgan pere what he’d like to do to your family pet.
PS: A reader sent me this link to Captain Morgan being interviewed this morning by Paul Henry, for whom I generally have little time – but when he begins by telling the Captain (accurately) that what he proposes is an Envy Tax, he immediately has my attention.