More on those envy taxes

"Those who claim our tax system is unfair and fosters inequality typically quote Scandinavian countries as operating superior tax systems. The interesting thing is the top 10% of taxpayers in New Zealand pay a bigger share of the tax burden than their equivalents in the Nordic countries, at over 45%. Our northern counterparts have their top 10% shouldering less than 40% - even as low as 35% - of all income taxes paid.

"The same shrill calls for a heavier tax burden on the wealthy rarely want to look at the “net” position of taxpayers. We know that the top 10% of taxpayers are contributing as much as 75% of the tax burden after transfers for Government outgoings are netted off.

"Of that 10%, the top couple of percent are [already] carrying an enormous load. ...

"The level is already in the danger zone when relocation is factored in. It is very easy for the wealthy to move out, taking their innovative, entrepreneurial, employment-creating skills, leaving the rest of us to pick up more of the tab.

"Here's something for promoters of a capital gains tax to consider. The CGT tax collected in Australia in the last couple of years has fluctuated wildly, with as much as 70% swings. Meanwhile the cost of raising a dollar of CGT in the poor years has exceeded 75% or $0.75 cents for every $1.00 raised. Avoidance levels are running over 30% against a pure model, with significant distortions emerging having a negative effect on investment decisions.

"Taxing capital may make the envious feel better, but it doesn't do much for the country."

~ Owen Jenning from his post 'Tax is a means to an end, not an end in itself'

Who actually carries NZ’s tax burden?

 

"[W]ho actually carries their share of New Zealand’s tax burden. [Let's see] how unfair and disproportionate New Zealand’s tax system is on higher earners.

"The top 20 percent [of income earners] pay nearly two-thirds of all personal income tax.
The top 10 percent pay more than the bottom 80 percent combined.
And the top 1 percent contribute more [tax] than the entire bottom half of [income earners].

"Taxpayers’ Union spokesperson Tory Relf said: 'Politicians like Chlöe Swarbrick push a myth that successful New Zealanders are not paying their fair share [sic]. The evidence tells the opposite story. The truth is that wealth taxes, capital gains taxes, inheritance taxes, and higher income tax rates are harder to justify if politicians were truthful about how the tax system works right now.' ”

~ Taxpayers' 'Union' [sic] from their post 'Tax Inequality: Who Really Pays Their Fair Share?'

"With this information in hand, you might ask the next person who says the rich do not pay their fair share of taxes: Exactly what percentage of total federal income taxes should the 1-percenters pay? I seriously doubt whether you will get any kind of coherent answer. 

    "By the way, since 1-percenter income [in NZ starts at around $225,000], it might be pointed out that [$225,000 or even $450,000] a year is not even yacht or Learjet money. Plus, if one has two [children at university], a big mortgage and car payments, I doubt he would declare himself rich."

~ Walter Williams from his column 'What Is The Fair Share Of Taxes?'

“Since this is an era when many people are concerned about 'fairness' and 'social justice,' what is your 'fair share' of what someone else has worked for?”

~ Thomas Sowell

"Giving money and power to government is like giving whiskey and car keys to teenage boys."

~ PJ O'Rourke

"The wealth of nations is the work of the people, not of their governments."

"The wealth of nations is the work of the people, not of their governments. If they had no other maker of their wealth than their governments, all nations would be in misery. 

"Government represents an expense, a consumption of national wealth" 

~ Juan Bautista Alberdi in his seminal 1854 book, Sistema económico y rentístico de la Confederación Argentina según su Constitución de 1853 ('Economic and Revenue System of the Argentine Confederation According to its Constitution of 1853'), drafted while living in exile in Valparaíso, Chile [hat tip Libertario]

Taxing land taxes people

"[The Land Tax] suffers from a much more fundamental flaw. Namely: A tax on the unimproved value of land distorts the incentive to search for new land and better uses of existing land. …
    “Take a real estate developer. One of his main functions is to find valuable new ways to use existing land. ‘This would be a great place for a new housing development.’ ‘This would be a perfect location for a Chinese restaurant. And so on… ‘Information about the land can be considered an improvement in its own right. Some of the land's qualities have very low search costs to discover: is it arable, will it support any type of building, is it in the middle of a city or rural area, etc. Discovery of other potential uses may require significant search and/or investment in other technologies. An entrepreneur brings these qualities to market - they do not bring themselves. Until he does so, the value of the land is undefined.’”

~ Bryan Caplan from his post 'A Search-Theoretic Critique of [Land Tax' 

“[Land] taxers claim that the tax could not possibly have any ill effects; that it could not hamper production because the site is already God-given, and man does not have to produce it; that, therefore, taxing the earnings from a site could not restrict production, as do all other taxes. This claim rests on a fundamental assumption — the hard core of [land]-tax doctrine: Since the site-owner performs no productive service he is, therefore, a parasite and an exploiter, and so taxing 100 percent of his income could not hamper production.
    “But this assumption is totally false. The owner of land does perform a very valuable productive service, a service completely separate from that of the man who builds on, and improves, the land. The site owner brings sites into use and allocates them to the most productive user. He can only earn the highest ground rents from his land by allocating the site to those users and uses that will satisfy the consumers in the best possible way. We have seen already that the site owner must decide whether or not to work a plot of land or keep it idle. He must also decide which use the land will best satisfy. In doing so, he also ensures that each use is situated on its most productive location. A single tax would utterly destroy the market's important job of supplying efficient locations for all man's productive activities, and the efficient use of available land.”

~  Murray Rothbard from his post 'The [Land] Tax: Economic and Moral Implications' 

"[Land] values are created, not intrinsic. Why else would land in Tokyo be worth so much more than land in Mississippi? A tax on the value of a site is really a tax on productive potential, which is a result of improvements to land in the area. [A] proposed tax on one piece of land is, in effect, based on the improvements made to the neighbouring land.
    "And what if you are your 'neighbour'? What if you buy a large expanse of land and raise the value of one portion of it by improving the surrounding land. Then you are taxed based on your improvements. This is not far-fetched. It is precisely what the Disney Corporation did in Florida. Disney bought up large amounts of land around the area where it planned to build Disney World, and then made this surrounding land more valuable by building Disney World. Had [the] single tax on land been in existence, Disney might never have made the investment. So, contrary to [the land-taxer]'s reasoning, even a tax on unimproved land reduces incentives. 

~ Charles Hooper, from his bio of Henry George in The Concise Encyclopedia of Economics 

"[Economic historian Marc] Blaug reviews five major contemporary objections to [a land tax set to acquire major revenue]:

1. The Anti-Landlord Thesis: Since [profits] are ubiquitous in a capitalist economy, why single out land and landowners?
2. The Inseparability Thesis: It is impossible to [accurately] separate the value of land from the value of improvements to it.
3. The Adverse Incidence Thesis: Land taxes would simply be shifted forward in terms of higher prices and higher rents.
4. The Inelasticity Thesis: An exclusive tax on land would be unresponsive to the changing requirements of public revenue.
5. The Moral Hazard Thesis: A land tax would nullify the individual ownership of land and have negative incentive effects."

~ Mary Cleveland summarising Blaug's case in 'Henry George: Rebel With a Cause'

"'What gives value to land?' asks [the land-taxer]. And she answers: 'The presence of population—the community. Then rent, or the value of land, morally belongs to the community.' What gives value to [the land-taxer]’s preaching? The presence of population—the community. Then [the land-taxer]’s salary, or the value of her preaching, morally belongs to the community."

~ Benjamin Tucker in 'Liberty' magazine, August 18, 1888.

"Spare a thought for Queensland property owners, who were hit with a retrospective land tax ... along with a redefinition of 'unimproved' to include 'the hard work of property owners, including (among other things) the buildings they have erected, the leases they have in place, business goodwill and infrastructure charges.' Would you rule out any of that happening here?"

~ from the post `Retrospective land tax to hit Queensland property investors at PROPERTY TALK

"[C]onfiscation [by by government by means of a land tax] on the whole rent [on unimproved land]  means the same as the nationalisation of land. [Because] once the government has this whole field of taxation open to it, will it not stealthily nationalise all land by charging land taxes higher than the rent and high enough to make the private possession of land uneconomical?"

~ Pierre Lemieux from his post 'Land Taxes: The Return of Henry George'

"I am most emphatically opposed [to the theory of a tax on land]. A theory which advocates state ownership of land is pure collectivism, and it doesn't matter whether its advocates consider themselves individualists or not. Without private property in land there can be no private property right at all, and without property rights no other kind of rights are possible."

~ Ayn Rand in her letter to David Goodman, May 24 1946, collected in The Letters of Ayn Rand 

#WealthTax: "Turning capital into consumption must destroy the capital that produces consumption."

"[There's a] difference between wealth and consumption. The poor wish consumption. Turning capital into consumption must destroy the capital that produces consumption. Taxing wealth in the name of inequality will make the world, including the poor, much poorer. ...

"[T]he vision of high lifestyle amid destitution imagines great inequality of consumption. The current outrage, and demand for confiscatory taxation, is over inequality of wealth. (And that, largely mark-to-market wealth driven by high prices.) There is a big difference.

"The hard fact: Our billionaires, and now trillionaire, own wealth that is almost exclusively stock in companies they created. That wealth is almost entirely left reinvested in those companies. And the companies produce great products, innovate, and employ thousands. ...

"Musk’s trillion is not the ready inventory of a huge grocery store that can be handed out to feed people. And if it were, once the store was empty, the poor would be hungrier again, and there would be no store to buy from. ...

"The world’s rich consume very little of their wealth. The worlds’ poor consume a lot of whatever they have. Being poor is not fun. If we split up Musk’s $1 trillion and gave about $100 in Tesla stock to each of the world’s nearly 10 billion people, it’s a good bet they would not be content to consume only 1/10 of a cent extra per year.

"There are plenty of other reasons wealth taxation will not help. Even the billionaire’s wealth, even if it could be transferred and consumed without destroying the seed corn of our economy, is trivial. ...

"The biggest reason it will not work is the simple one: incentives. If you tax wealth, you tax the activities that create wealth. ...

"I too would love to raise the prosperity of the world’s poor. The goal is not the issue. The issue is whether the wealth tax will help or hurt.

"What helps? This graph from Max Roser at Ourworldindata makes the point beautifully..."

The x axis is GDP per capita, not time. 

The y axis is the share living in extreme poverty. 

What helps the poor? Growth. Capitalism and growth. 

Degrowth and wealth taxation will push us right back up that slope.

~ John Cochrane from his post 'Wealth tax equilibrium accounting'

“But let me offer you my definition of social justice: I keep what I earn and you keep what you earn. Do you disagree? Well then tell me how much of what I earn belongs to you - and why?”

~ Walter Williams, from his book All It Takes Is Guts: A Minority View

Here's one price control I can agree with.

Price controls never control prices in the way the controllers wish.  Instead, they 'control' quantities demanded, either increasing demand (with a price cap) or diminishing it (with a floor), but in neither case can markets clear. Short-term net result is market chaos; longer-term result is withered markets.

This is generally a bad thing.

But there might be one exception. And the European Union may have just found it:

Any price cap increases demand while reducing producers' ability to meet the supply demanded. Short-term result is undersupplied markets, black markets, and reduced quality. 

But what about when it's only a notional market anyway?

Notes David Turver:

"Capping carbon prices is a small step in the right direction, but scrapping the ETS altogether would be better because paying carbon taxes to the Government won't change the weather."

The true tax

 

"Keep your eye on one thing and one thing only: how much government is spending, because that’s the true tax.

    “If you’re not paying for it in the form of explicit taxes, you’re paying for it indirectly in the form of inflation or borrowing. The thing you should keep you eye on is government spending ...”

~ Milton Friedman on Money and Inflation, Q + A [13:44]

"Responsible"? They lie to you and assume you're too stupid to notice. [UPDATED]

UPDATE: Professor Robert MacCulloch: "It's a rigged budget ... so she can get a soundbite. ... Media got suckered." The promised return to surplus is a “phony” and “reverse-engineered” political exercise designed for election headlines rather than economic reality.

It's one of those rare occasions, this budget, when commentators have mostly taken the finance minister's own spin as a given and burrowed instead into the details. The result however is to ignore context, and to focus on the irrelevant to the exclusion of the important. That's why the finance minister is looking so goshdarned pleased: because her lies are going mostly unchallenged.

The finance minister tells you that this election-year budget contains "no sugar hits." That New Zealanders won't be bribed on election year with their own money.

That's a lie.

The small matter of a $450 million "emergency contingency fund" has been set aside "in a time-limited contingency" if the cork remains in the Straits of Hormuz -- betting, of course, as she does in her heroic forecasts, that the cork will at least be loosened, allowing a wee flutter when polls show it's needed. 

Yes folks, the true "emergency" being provisioned for is an election debacle. That's what the slush fund is for.

The finance minister also tells us repeatedly that she's being responsible.

That's why she's set aside "just over $1 billion" for unspecified "improvements" to KiwiRail. Which is of course a big win for Shane Jones and his friend Winston. This is their billion-dollar slush fund for the election, which is just over double the fund she's allowed for her own party.

Responsible?

It's also handing councils $400 million in “growth incentives” now while only walking slowly to bring council's rates under control. And this is only because the finance minister can't bring her own govt's costs sufficiently under control to allow the GST component of new housing to go to councils (the real growth incentive she was encouraged to enact).

Responsible?

As Michael Reddell observes (one of the few commentators to put his head under the bonnet with the proper focus, New Zealand remains among the advanced countries with the largest structural fiscal deficit -- which have got "materially worse" under this Government.

 

As the Taxpayers Union notes, "Despite branding this a 'responsible Budget,' Nicola Willis has today confirmed the Government will have borrowed more by 2029/30 than Treasury forecast just five months ago." Over a billion dollars more.

So have things got any better under this National finance minister rather than the last Labour liar? Has it hell.  Reddell again:

In the last full year Labour was responsible for core Crown operating expenses were 31.7% of GDP 

In 24/25 32.6% 

In 25/26 32.6% 

In 26/27 32.6%

Responsible, hell!

And of course, this Government went to the country promising "no new taxes." That's another long-term lie. 

The budget has announced three new taxes on banks and shareholders -- sorry, two "levies" and one "charge" -- that will of course immediately be passed on to customers -- "the Beehive can try to frame it as a levy on the big banks, but this new tax will be paid by savers and mortgage holders. It’s a sleight of hand."

So that's just yet more charges and "levies" to add to the other new taxes already whacking New Zealanders since the last election's promise of "no new taxes (Levy (n.) an officially imposed fee, tax, or penalty demanded by a government or organisation). The full list:

Road User Charges on Electric Vehicles (April 2024)
GST on Digital Platforms -- the "App" Tax (April 2024)
Trustee Tax Rate Increase to 39% (April 2024)

Offshore Online Casino Gambling Duty (July 2024) 

Increased ACC Levies on Electric Vehicles (2025)

Customs and Excise Goods Management Levies (April 2026)

Prudential Regulation Levy on Banks and Insurers (announced Budget 2026)

Company Shareholder Loan Integrity Rules (Budget 2026)

Thin-Capitalisation Changes for Foreign-Owned Banks (Budget 2026)

And finally, the promise of "returning to surplus" by 2029?

To use Michael Reddell's term, that's just vapourware:

Not only has the projected date for getting back to budget surplus (on the standard OBEGAL measure) kept being pushed back but the projected surpluses for 26/27 (the yearr today's Budget directly relates to) have worsened by more than 4% of GDP in 3 years (under both governments).

Responsible? They lie to you and assume you're too stupid to notice.

Yes, it's Budget Day ...

 ... so to help journalists desperate for something to write about before the Budget comes down, here are some quotable quotes. Send a copy to your favourite columnist:

"The average ... family head will be forced to do twenty years’ labour to pay taxes in his or her lifetime."
    ~ James Bovard

"The average family pays more in taxes than it spends on food, clothing, and shelter combined."

    ~ Congressman Dick Armey

"If politicians were serious about day care for children, instead of just sloganising about it, nothing they could do would improve the quality of child care more than by lifting the heavy burden of taxation that forces so many families to have both parents working."

    ~ Thomas Sowell

"I think coercive taxation is theft, and government has a moral duty to keep it to a minimum."
    ~ William Weld

"A government debt is a government claim against personal income and private property – an unpaid tax bill."
    ~ Hans F. Sennholz

"Christmas is a time when kids tell Santa what they want and adults pay for it. Deficits are when adults tell the government what they want and their kids pay for it."
    ~ Richard Lamm

"Everyone wants to live at the expense of the State. They forget that the State lives at the expense of everyone."

    ~ Frédéric Bastiat

"Apparently, politicians can change the planetary climate, but they can’t fix the potholes, repair the drains, or balance their books."

    ~ Alice Smith

"The secret to balancing the budget is to remember that all tax revenue is the result of holding a gun to somebody's head. Not paying taxes is against the law. If you don't pay your taxes you'll be fined. If you don't pay the fine you'll be jailed. If you try to escape from jail, you'll be shot. Thus, I - in my role as citizen and voter - am going to shoot you - in your role as taxpayer and ripe suck - if you don't pay your share of the national tab. Therefore, every time the government spends money on anything, you have to ask myself, ‘Would I kill my kindly, gray-haired mother for this?’"

    ~ PJ O'Rourke

"The state is never accused of greed. There is no limit to what it may take from us. And those who live on what is taken in taxes are never accused of greed either. Greed is virtually identified with the "profit motive." We have no invidious term for the parasitic motive. The state and its clients are all but immune from moral criticism."
    ~ Joseph Sobran

"[There are dangers in] the disposition to hunt down rich men as if they were noxious beasts."     
    ~ Winston Churchill

"To tax the larger incomes at a higher percentage than the smaller, is to lay a tax on industry and economy; to impose a penalty on people for having worked harder and saved more than their neighbours."

    ~ John Stuart Mill

"When Barbary Pirates demand a fee for allowing you to do business, it's called 'tribute money.' When the Mafia demands a fee for allowing you to do business, it's called 'the protection racket.' When the state demands a fee for allowing you to do business, it's called "tax." 
    ~ Jeff Daiell

"There are people who think that plunder loses all its immorality as soon as it becomes legal. Personally, I cannot imagine a more alarming situation."
    ~ Frédéric Bastiat

"Taxation is far greater an evil than theft. It is a form of slavery. If you cannot choose the disposition of your property, you are a slave. If you must ask permission to work, and/or pay involuntary tribute to anyone from your wages, you are a slave. If you are not allowed to dispose of your life (another way of defining money, since it represents portions of your time and effort, which is what your life is composed of) in the time, manner and amount of your choosing, you are a slave."

    ~ Rick Tompkins

"Taxation of earnings from labor is on a par with forced labor. Seizing the results of someone’s labor is equivalent to seizing hours from him and directing him to carry on various activities."

    ~ Robert Nozick

"The man who produces while others dispose of his product is a slave."
~ Ayn Rand

“Taxation is the price we pay for failing to build a civilised society, since taxation represents force.”
    ~ Mark Skousen

"The bureaucrat’s first objective, of course, is preservation of his job – provided by the big-government system, at the taxpayers expense. … Whether real world problems get solved or not is of secondary importance. It doesn’t take much cynicism, in fact, to see that the bureaucrats have a vested interest in not having problems solved. If the problems did not exist (or had been invented), there would be no reason for the bureaucrat to have a job.”

~ William Simon, former U.S Treasury Secretary

"… thou shall not steal, even by majority vote …"

    ~ Gary North

"In levying taxes and in shearing sheep, it is well to stop when you get down to the skin."

    ~ Austin O’Malley

"Public works are not accomplished by the miraculous power of a magic wand. They are paid for by funds taken away from the citizens."

    ~ Ludwig von Mises

"A [tax loophole is] something that benefits the other guy. If it benefits you, it is tax reform."

    ~ Russell B. Long

[S]tatism is but socialised dishonesty; it is feathering the nests of some with feathers coercively plucked from others – on the grand scale. There is no moral difference between the act of a pickpocket and the progressive income tax or any other social program."

    ~ Leonard Read

“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”
    ~ Winston Churchill

"Taxation without representation is tyranny."
    ~ James Otis

"Taxation WITH representation ain't so hot either."
    ~ Gerald Barzan

"If taxation without consent is not robbery, then any band of robbers have only to declare themselves a government, and all their robberies are legalised."

~ Lysander Spooner

"When a new source of taxation is found it never means, in practice, that the old source is abandoned. It merely means that the politicians have two ways of milking the taxpayer where they had one before."
    ~ HL Mencken

"The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin."
    ~Mark Twain

"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it."
    ~ Ronald Reagan

"According to the Tax Foundation, taxes now consume more than 38% of the average family’s budget. That is more than is spent on food, clothing, housing, and transportation combined. Compare this to the plight of medieval serfs. They only had to give the lord of the manor one-third of their output — and they were considered slaves. So what does that make us?"

    ~ Daniel Mitchell

"Death and taxes are inevitable; at least death doesn't get worse every year."
    ~ Will Rogers

"When more of the people's sustenance is exacted through the form of taxation than is necessary to meet the just obligations of government and expenses of its economical administration, such exaction becomes ruthless extortion and a violation of the fundamental principles of free government."
    ~ former US President Grover Cleveland

"Rulers do not reduce taxes to be kind. Expediency and greed create high taxation, and normally it takes an impending catastrophe to bring it down." -
    ~ Charles Adams

"We have a system that increasingly taxes work and subsidises non-work."

    ~ Milton Friedman

"When you subsidise poverty and failure, you get more of both."

    ~ James Dale Davidson, US National Taxpayers Union

"The mounting burden of taxation not only undermines individual incentives to increased work and earnings, but in a score of ways discourages capital accumulation and distorts, unbalances, and shrinks production. Total real wealth and income is made smaller than it would otherwise be. On net balance there is more poverty rather than less."
    ~ Henry Hazlitt

"The poor of the world cannot be made rich by redistribution of wealth. Poverty can't be eliminated by punishing people who've escaped poverty, taking their money and giving it as a reward to people who have failed to escape."
    ~ PJ O'Rourke

"A government with the policy to rob Peter to pay Paul can be assured of the support of Paul."
    ~ George Bernard Shaw

"There cannot be a good tax nor a just one; every tax rests its case on compulsion."

~ Frank Chodorov

"Freedom is the quality of being free from the control of regulators and tax collectors. If I want to be free their control, I must not impose controls on others."
    ~ Hans F. Sennholz

"There's only one way to kill capitalism--by taxes, taxes, and more taxes." -
    ~ Karl Marx

"The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation."
    ~ Vladimir Lenin

"Giving money and power to government is like giving whiskey and car keys to teenage boys."
    ~ PJ O'Rourke

"A society of sheep must in time beget a government of wolves."
    ~ Bertrand de Jouvenel

"The power to tax involves the power to destroy."
    ~ former US Supreme Court Justice John Marshall

"Taxes are not levied for the benefit of the taxed."
    ~ Robert Heinlein

"Taxes are the sinews of the state."
    ~ Cicero

"Government is the great fiction, through which everybody endeavors to live at the expense of everybody else."

    ~ Frederic Bastiat

"Be wary of strong drink. It can make you shoot at tax collectors, and miss."
    ~ Robert Heinlein

"Every dollar collected through a capital gains tax is a dollar stolen twice"

"Capital gains tax represents one of the most egregious examples of double taxation in the federal code, yet politicians treat it as if they're taxing 'unearned' income for the first time. 

"You earn $100,000, pay income tax on it, and save $70,000 after the government takes their cut. You invest that already-taxed money in shares, real estate, or bonds. Ten years later, you sell for $140,000. The government swoops in again, demanding capital gains tax on your $70,000 profit. They're taxing the same economic activity twice: your initial productive work that generated the savings, then the delayed consumption that made investment possible. 

"Capital gains represent nothing more than the time value of money plus compensation for risk. When you save instead of consume immediately, you defer gratification to provide capital for productive investment. That $70,000 you invested didn't sit idle; it funded business expansion, job creation, and economic growth. The return you earned reflects both the productive use of that capital and inflation's erosion of purchasing power over time. 

"The double taxation becomes even more perverse when you consider inflation. If your $70,000 investment becomes $140,000 over ten years, but inflation averaged 3% annually, your real purchasing power increased by roughly $18,000, not $70,000. Yet the IRD taxes the entire nominal gain, including the portion that merely kept pace with their own monetary debasement. 

"Every dollar collected through a capital gains tax is a dollar stolen twice; once from your labour, again from your thrift."

~ Handre [translated from American]

"Taxes ... "

"Taxes are the price you pay to fund the things that you protest against."

~ Spike Cohen

How regulation works

Above a certain size, building new homes in France requires a registered architect.

Take a wild guess: what size do you reckon that is ...

In the same vein, at what number of employees do you reckon French firms are obliged to unionise ...

...and at what level of income do you reckon UK firms are legally obliged to register for VAT...

...and what happened in Georgian Britain when they taxed windows ...

Here are The Beatles ...

"The Greens are proposing one of the most aggressive tax regimes of its kind anywhere in the developed world..."

 

"The Greens are proposing one of the most aggressive tax regimes of its kind anywhere in the developed world, resulting in a broad-based raid on Kiwis who’ve worked hard, saved, and built something over a lifetime. 

"The idea this only hits the wealthy simply doesn't stack up. One in five Kiwi homes is held in a trust, and the Greens would tax those assets from the first dollar. In Auckland, that means an annual bill of over $18,000 on a mortgage-free family home, or $3,600 for first home buyers with a twenty-percent deposit.

"And it doesn't stop there. A 33 percent death tax would force many families to sell farms, homes, or businesses just to pay the bill. Inheriting the average dairy farm would trigger a $1.2 million tax bill. There is nothing fair about taxing grief, or taxing the same income again when it's earned, saved, and finally passed on.

"Most countries that have tried wealth taxes have scrapped them because they drive investment and talent offshore. Death taxes are even worse, New Zealand tried one and abandoned it in 1993 because it crushed farming families and raised almost nothing.

“This package is light on evidence, heavy on populism, and green with envy.”

~ Austin Ellingham-Banks on the Taxpayer Union's 'NEW REPORT: Green With Envy: Wealth, Death, And Trust Taxes Examined'

"One 'solution' to inequality ... is the wealth tax. ... This taxing away of capital means less means of production and thus less production and higher prices. At the same time, it means less demand for labour and thus lower wages. [The] programme is a call for mass impoverishment....

"Taxing wealth is not merely a levy on individuals but a direct seizure of the capital required for production, which ultimately harms everyone's standard of living. ...

"As [Ludwig Von] Mises observed* ...., almost all of the technological advances of the last centuries are available to and can be fully understood by engineers in even the most impoverished corners of the world. What stops the implementation of those advances is not any lack of technological knowledge but a lack of capital. Thus, a farmer in India who has seen a tractor on television can easily understand the value of using one. What stops him from using one is certainly not any lack of technological knowledge. It is certainly not that he does not know how to operate a tractor or could not easily be taught how to do so. What stops him is that he cannot afford a tractor. He does not possess the capital necessary to buy a tractor and cannot find a lender to provide it. This is a lack of capital that probably could not be made good by any rise in the local capital/income ratio. It reflects generations of insufficient local capital accumulation."

~ George Reisman from his comment on 'The Problem with the Wealth Tax' and his 'Piketty’s Capital: Wrong Theory/Destructive Program' [emphases mine]

"New Zealand’s productivity challenges are strongly linked to low capital intensity. ... New Zealand’s slowing labour productivity growth is likely to reflect both slowing growth in innovation and declines in the capital to labour ratio. ... New Zealand’s capital intensity [already] lags other countries...."

~ Treasury from their 2024 report 'Causes of New Zealand’s low capital intensity'

* Ludwig Von Mises, in his chapter 'Capital Supply & American Prosperity'--in which he observes that "the average standard of living is in [America] is higher than in any other country of the world, not because the American statesmen and politicians are superior to the foreign statesmen and politicians, but because the per-head quota of capital invested is in America higher than in other countries."

1 in 4 people born in New Zealand live elsewhere by age 30

Some fascinating research by Tim Hughes and his team at Treasury reveals that "25-30% of people born in New Zealand are living elsewhere by age 30."

We find that only about a third of emigration each year is of the NZ-born, and about 40% of NZ-born emigrants return to live in NZ again. Those with the highest qualifications are most likely to leave but also the most likely to return. Those who return earn more and pay more tax than those never to leave.
    Yet much emigration is permanent and the diaspora is still substantial, with 25-30% of each birth cohort living elsewhere by age 30. Approximately $4b of public investment in human capital [sic] each year is ultimately lost to emigration, needing to be replaced with migration from other countries.

Complementary research further reveals that this "human capital [sic] is replaced via migration of people born elsewhere. 

Foreign-born residents contribute a disproportionate share of personal tax revenue, reflecting their age structure and other factors.
    In 2024, foreign-born NZ residents made up 32% of the population, and paid 38% of the personal tax.
    This analysis helps demonstrate the growing importance of migration policy settings for fiscal sustainability.

[hat tip Eric Crampton]

"I want to help the poor"

Cartoonist unknown

"It’s training to be an entrepreneur, and an employer—not an employee."

Q: Governments and central banks have inflated asset prices for decades—making housing, education, and healthcare unaffordable for many.

Is the 'system' designed to turn Millennials and Gen Z into lifelong renters and debt-serfs? Is there a way out?

Doug Casey: It’s a natural consequence of Statism.

First of all, taxes are high and have been increasing for decades. After taxes, you have less money left over to save. And if you do try to save, inflation eats away at the dollars that you put in banks or investments. Worse than that, welfare and government benefits make saving feel unnecessary for many people. They feel they don’t need as much because the cradle-to-grave welfare state will cover them. There’s a reason why Klaus Schwab famously said, 'You’ll own nothing and be happy.'

A lot of people believe it. This feeling is abetted by schooling, where everyone is inculcated with this collectivist meme. On top of that, the rich are viewed as parasites. And who wants to be a parasite?

This is all caused by State intervention in the economy. Schools almost always teach students that the State is their friend. It’s not; it’s their enemy. ....

Q: We’re seeing a collision between AI/automation and a credential-heavy job market. Which parts of today’s white-collar economy do you think are most fragile?

Doug Casey: .... The bright side is that while AI and robotics will destroy huge numbers of jobs—starting now—they’ll also level the playing field. A person of less than average intelligence can have AI do things for him that he might otherwise be unable to do. A further benefit is that the world doesn’t need paper pushers and cubicle dwellers who are sitting around doing marginally productive labor. Very much like the world no longer needed people working like drones in textile mills 200 years ago, at the start of the Industrial Revolution.

While AI is going to create some major problems in the short run, it’s going to be a very good thing after those bumps in the road. Just like the Industrial Revolution itself created problems while vastly improving the world. ....

Q: What should a 25-year-old do to build real, durable earning power in the next 5–10 years?

Doug Casey: Ayn Rand answered that question in a speech I heard 40 years ago. When asked, she said: 'The best way to help the poor is not to be one of them.'

I confronted this problem with my friend Matt Smith when we wrote 'The Preparation.' The book explains why young people should avoid college. In fact, it urges them to treat college like the poison that it now is, showing how college has become a serious detriment in almost every way. More importantly, we describe what young men should do instead during the four years between 18 and 22, a time which is critically important, but generally wasted.

We demonstrate—exactly—how a young man can qualify himself with the equivalent of a BA, a BS, and elements of an MBA. That’s in addition to learning practical things in a hands-on way. We divide the four years into 16 quarters. The student will learn everything from flying a plane to sailing a boat around Cape Horn to operating heavy equipment. He’ll qualify in welding and metalwork in Canada. Cooking at a professional level in Italy. He’ll be farming in one quarter and building a house in the next. He’ll learn martial arts skills in Thailand, as well as shooting and scuba. You get the idea. It’s a productive and busy four years.

The critical thing, since we don’t know how the world is going to evolve because of AI, is to become a Renaissance man, enabling students to do anything and go anywhere. To avoid trying to climb a greasy corporate ladder, but build a web where you can reach out in any direction. That’s necessary in the world of AI. It’s training to be an entrepreneur, and an employer—not an employee."

~ from an interview with investor 'Doug Casey on Why Millennials and Gen Z are Trapped by Debt, Inflation, and Broken Promises

The Return of Chloe's Wealth Tax

Watch any rant by Chloe Swarbrick and, after the obligatory nods to te reo, to Palestine, and to passing laws to change the weather, she'll tell you that it's time for "the wealthy" to fund everything every government could dream of. 

It's really the only substantive policy she can articulate. Yet she remains blithely unaware that the fortunes she want to sack are not gold bars under the mattress but ownership stakes in operating companies, real estate, and other productive assets, so her Wealth Tax would function as a direct penalty on those investments. That penalty doesn’t remain confined to the wealthy. Capital formation is what drives productivity growth and wage gains, and policies that discourage it ultimately leave everyone worse off.

As Adam Michel explains in this Guest Post, the chronic government spending growth she advocates cannot be paid for by ever more aggressive taxes on a narrow subset of high-income taxpayers.  Not even in a US more stocked with billionaires than she'll ever see here ...

The Return of the Wealth Tax, Evidence Against Them Is Stronger Than Ever

by Adam Michel

Wealth taxes are back in the policy conversation— a good opportunity to review how wealth taxes work and why they have been called “one of the most harmful taxes ever created.”

Wealth taxes are unique in that they are not levied on an annual flow of income or consumption (like a sales tax). Instead, wealth taxes apply to a stock of assets and are usually intended to be primarily redistributive, aiming to reverse a perceived inequality in the distribution of resources.

Wealth taxes promise redistribution but more often deliver high economic costs, administrative complexity, and disappointing revenue. California’s proposal  to impose a broad-based wealth tax on the state’s billionaires illustrates how these taxes distort investment decisions, magnify fiscal volatility, and tend to evolve from one-time levies into permanent features of strained budgets.

Wealth Taxes In the Real World

Wealth taxes impose an additional layer of tax on the income generated by the underlying asset. Most wealth consists of productive assets deployed in the economy, such as active businesses and other physical investments. The annual income streams generated by the underlying assets—capital gains, dividends, and interest—are taxed through the normal income tax system.

The existing tax system already charges the wealthiest Americans high tax rates. A Biden administration Treasury study found that the wealthiest 92 Americans faced total state, local, federal, and international income tax rates of 59 percent. Recent research by four prominent liberal economists concludes that US billionaires pay higher tax rates than their counterparts in the Netherlands, Sweden, Norway, and France, and, contrary to the headline claim, the wealthiest taxpayers also pay the highest tax rates among all Americans.

Because wealth taxes are assessed on a stock instead of an annual income flow, expressing the tax rate as an equivalent income tax rate is more informative. Unless the taxpayer is expected to slowly sell off their underlying assets, the tax will be paid from annual income. Table 1 shows the equivalent income tax rate on underlying assets with different rates of return at different wealth tax rates. At the California top wealth tax rate of 5 percent, any asset earning less than a 5 percent annual pre-tax return would face income tax rates above 100 percent before paying other taxes. Bernie Sanders’ 2020 campaign proposal included a top wealth tax rate of 8 percent.

Net wealth taxes have been tested in other countries and repealed due to high economic costs and administrative burdens. Peaking at 12 in the 1990s, only four Organisation for Economic Co-operation and Development (OECD) countries still impose broad-based net wealth taxes today: Colombia, Norway, Spain, and Switzerland. The figure below shows the trend of wealth taxes over time.

Economic and Administrative Costs

Wealth taxes can impose confiscatory effective tax rates with predictable economic consequences. By directly reducing the after-tax return to saving and investment, they weaken incentives to build businesses, expand productive capacity, and take entrepreneurial risks. Because most large fortunes are not gold bars under the mattress but ownership stakes in operating companies, real estate, and other productive assets, a wealth tax functions as a direct penalty on those investments. That penalty doesn’t remain confined to the wealthy. Capital formation is what drives productivity growth and wage gains, and policies that discourage it ultimately leave everyone worse off.

Wealth taxes also distort capital allocation. Investors have a strong incentive to shift portfolios toward assets that are harder to value, easier to shelter, or more mobile across borders, rather than toward their most productive use. This encourages tax avoidance rather than genuine economic activity. It can mean less investment in long-term projects, more leverage, and greater reliance on complex financial arrangements to reduce reported net worth.

Wealth taxes are also administratively complex. Valuing a broad range of assets every year is extraordinarily difficult. Unlike easy-to-value publicly traded stocks, most wealth is tied up in closely held businesses, partnerships, real estate, artwork, and other illiquid or unique assets. Annual valuation invites avoidance and disputes, which raises compliance costs for both governments and taxpayers. It took 12 years for the IRS and the Michael Jackson estate to reach a court-mediated agreement on the value of its taxable assets. Going through such a process every year for all taxpayers with assets above or near the tax threshold is administratively impracticable.

Because of persistent administrative difficulties and taxpayers’ behavioural responses, wealth taxes raise comparatively little revenue. Countries that experiment with wealth taxes repeatedly find that taxpayers adjust their behaviour or move in large numbers, undermining optimistic revenue forecasts. Before France repealed its net wealth tax in 2018, the government estimated that “some 10,000 people with 35 billion euros worth of assets left in the past 15 years.” 

Spain experienced a similar behavioural response following the 2023 “solidarity tax,” which raised just 40 percent of the projected revenue. Cato’s Chris Edwards summarises that “European wealth taxes typically raised only about 0.2 percent of GDP in revenues. Given the little revenue raised, it is not surprising that they had ‘little effect on wealth distribution,’ as one study noted.”

California’s Proposal Is a Warning for the Country

California’s proposed 5 percent wealth tax is especially notable because it would layer on top of the most progressive tax system in the OECD. The state already relies on taxpayers making over half a million dollars a year (the highest income 2.5 percent) to pay 49 percent of income tax revenue. They do this by combining high marginal income tax rates and heavy reliance on capital gains taxation, which makes revenues volatile and highly sensitive to the fortunes and domiciling decisions of a small number of taxpayers.

The initiative’s own findings make clear that this will not be a one-time tax. The ballot text explains that the wealth tax “would only modestly slow” the growth of billionaires’ fortunes in California. That admission undermines the premise that the tax solves any underlying fiscal or wealth distribution problem. If a tax leaves wealth largely intact, political pressure to repeat, expand, or permanently extend it is inevitable. This is what happened in Spain, when its “exceptional and temporary” wealth tax became permanent. California’s proposal should be understood in this light, not as a one-off correction, but as a test case for permanent wealth confiscation.

The lesson extends beyond California. Chronic spending growth cannot be solved by ever more aggressive taxes on a narrow subset of high-income taxpayers. Wealth taxes are not a solution to budgetary or economic gaps; they are a symptom of a broken fiscal system grasping for short-term revenue while postponing the difficult but necessary work of restraining spending growth. 

* * * * 

Adam Michel is director of tax policy studies at the Cato Institute, where he focuses on analysing the economic and budgetary effects of taxation in the United States.
    He is widely published and quoted in the Wall Street Journal, the New York Times, the Washington Post, and elsewhere. He has also appeared on Fox News, CNN, and CNBC to discuss tax policy and its economic effects. In addition to numerous book chapters, his scholarly work has been published in the Journal of Public Budgeting and Finance and Tax Notes.
    His post first appeared at the Cato at Liberty blog.

Austerity, what austerity?

 

"You may have heard a lot of stories about austerity. Consider that both the government and the opposition may want to convey the impression that it has happened, despite it very much not having happened.

"Throughout the 2010s (barring #eqnz), per capita real operating expenditure net of interest expenses ranged from $17,143 to $18,653 - with 2019's jump to $18,653 being well out of line with the prior track. Labour substantially increased spending under its wellbeing focus ...

"Per capita real operating expenditure net of finance cost has been above $21,000 since then; the provisional figure for 2025 is $21,648. ...

"The largest-spend category here by far is social protection [sic]: benefits and superannuation. ...

"Any giant shedding of government staff will show up in General Public Services. The austerity really stands out in this picture. Can't you see it too? ..."

 

~ Eric Crampton from his post 'The state of the books'

"Why are taxpayers in the business of subsidising certain industries again?"

"Around 6pm on Saturday night one of the Sky Sport channels was showing a feature on the young Black Ferns star Jorja Miller. ...

"The show was made by NHNZ, formerly Natural History New Zealand and owned by Julie Christie. After the credits ... there came a line advising this show would get a rebate under the Screen Production Rebate scheme.

"This means that either 25 or 40 percent of the cost of making the programme on Jorja Miller will be refunded from the taxpayer’s purse. In other words, you and me have paid a sizeable chunk of the cost of making this rather inconsequential TV show.

"On Monday morning, the news bulletins were broadcasting information about a new $70 million dollar fund to subsidise 'events' like concerts featuring big time international stars. The narrative seemed to be that if Taylor Swift’s promoters had access to some of this money last summer when she was playing in Australia, they may have attracted the superstar to perform in New Zealand.

"All of which got me thinking about why are taxpayers still in the business of subsidising certain industries again? ...

"[T]here are increasing signs of what the political class often refer to as 'mission creep.' The two examples given above involve what might be termed glamour industries – screen production and entertainment. The government is happy to prop them up.

"But as taxpayers are we that well off that we can subsidise movies and TV shows to the tune of over a billion dollars for the next four years? It’s a scheme designed to attract big time film productions to this country but somehow modest little feature sports programmes on women rugby players qualify too – because they have a potential overseas audience through NZR+.

"The fact that international audience will be miniscule appears to be irrelevant. ...
"That’s the line that film producers and entertainment and sports promoters always use: 'Look at the economic impact this has had' they’ll say. Good for them. But if they’re so good couldn’t they have done it without taxpayers subsidising it?

"Governments putting money directly into certain industries are trying to pick winners. Are bureaucrats the best people to be the judge of what will fly and what won’t? I don’t think so. ...

"A subsidised economy was supposed to have ended forty years ago. The country can do better than its slow-creep return."

~ Peter Williams from his post 'The slow creep of subsidies: The Government looks after glamour industries'

When I hear warmists whinge about the rocketing cost of living, I think about climate justice.

When I hear warmists whinge about the rocketing cost of living, I think about climate justice.

Why?

Because these are climate activists complaining about the effects of climate activism.

Let's start with the cost of tomatoes, cucumbers, lettuces, capsicums ... you know, all the things now generally grown in greenhouses. To heat them economically, growers use gas. And "because carbon dioxide is a plant food, concentrations of the gas are sometimes elevated in greenhouses to accelerate growth....

...All this requires a lot of energy, making greenhouses vulnerable to climate taxes on carbon dioxide emissions and bans on hydrocarbons, which drive fuel and electricity prices higher.

Government policies have tripled natural gas prices for Simon Watson of 'NZ Hothouse,' a 25-year tomato producer in South Auckland, who says the very foundation of his business is crumbling.

Twenty-five years ago, gas was abundant and we were told it was going to last forever,” said Watson. “It was a wonderful thing.”

But the good times are gone. Natural gas supplies are running out [sic], and rising costs threaten to uproot the entire operation, disrupting hundreds of workers. Watson’s two plants represent about 10% of New Zealand’s 500 acres of covered crops in the upper North Island. He predicts many will have to cut back or close because they can’t afford to pay for gas.

And salad dodgers have to pay too.

Watson points out that 80% to 90% of supermarket products – from meat and dairy to sugary drinks and liquor – rely on gas-intensive processes. The decline in natural gas reserves is pushing prices higher.

As energy commentator Vijay Jayaraj explains, this is an entirely self-inflicted energy crisis.

This manufactured crisis reveals the true cost of climate virtue-signalling – not just in New Zealand but across the globe where similar policies are damaging the agricultural sector. ... The government and the energy industry have nine months to come up with a solution before the high energy demands of next winter make the situation catastrophic.

"Catastrophic" is precisely what warmists were after. So it's funny to see them whimpering now.

You want to ban gas, ban exploration of gas, to price gas off the market? Then, you know, how about sucking up the consequences without whimpering.

But it makes things no easier for the rest of us.