Metiria Turei
Safe mothers, safe children

Rodney Hide’s latest piece in the NZ Herald exposes a callous and dangerous attitude. He needs to ask himself whether he really wants solutions to reduce child death or whether he just wants to pontificate while more women and more children suffer. Every death of a child at the hands of parent is a deep and terrible tragedy. And we know that the best way to keep a child safe is to keep the protective parent safe.

By choosing to harangue mothers for the tragic deaths of their children, Hide has helped to reinforce the very ignorance that continues to put children at risk. A number of these women had no or very little assistance when pregnant and that shame and fear was a factor in the death of their new born babies. The fact that less than half of the 33 child deaths were at the hands of their mothers further shows that Hide is wrong in placing the sole focus on the mums.

First, Hide places much of the blame for these deaths on the Domestic Purposes Benefit. He claims that the financial support provided by the State enables abuse of children, when in fact without the DPB, it is clear that many thousands more children would suffer from poverty and the associated impacts of that poverty.

Second, the Police report that Hide’s article was based on shows that 12 out of the 15 children killed by their mothers were four years old or less. This strongly suggests post-natal depression played a part in these tragedies (indeed, three of these mothers killed themselves immediately after killing their children).

These tragic deaths seem to me to be the result of despair, not anger – quite a different picture from the child deaths caused by men.

We need solutions to prevent child death, not further vitriol levelled against women.

What is needed to prevent further deaths is more support for new mothers, not less. We have seen a systematic destruction of community services over recent decades, the hands on, trusted, non-judgemental support that all mothers could readily access as they needed. It is this kind of help that community workers say has to be reinstated to protect mothers and their children from violence, hardship and despair.

Post-natal depression, poverty and the lack of community support all need addressing in order to ensure that all children are able to have good lives and the best chance at a fair future. By ignoring these real issues and simply blaming mothers and the DPB, Rodney Hide is frightening even more women away from the help they need to keep themselves and their kids safe.

124 thoughts on “Safe mothers, safe children

  1. Hide’s column deals first with child deaths categorised as ‘family violence’. He is transparent about the causes. Nowhere does he “harangue” or level “vitriol” at those mothers who kill their children.

    “Hide places much of the blame for these deaths on the Domestic Purposes Benefit.” Where?

    The second part deals with child mistreatment. That is when he discusses the higher likelihood that abused children will be from benefit-dependent households and why.

    You have read what you want to read. Not what was written.

    Like or Dislike: Thumb up 33 Thumb down 3 (+30)

  2. I am sorry Metiria it was no part of my intention to harangue mothers. I was interested that a high number of mothers kill their babies relative to dads and stepdads which was the opposite of what I had inferred from the media.

    I explained the leading types of mother-on-child deaths which highlights the trouble nature of the mums. I wasn’t able to draw other conclusions from the report itself.

    When it comes to abuse I did note that it is much higher in benefit-dependent households.

    In fact, benefit-dependency before age two has a very high predictive value in determining infants at risk.

    I also inferred the obvious that providing income to parents who are drunk and drugged up puts babies at risk. What we do about the problem is difficult but at least we should be able to talk about the problem without declaring an opposing view callous and dangerous. I certainly never leveled any vitriol at women as you imply.

    I might say that if we had a bit more debate we would be able perhaps to do a better job. It’s not like the Green-inspired anti-smacking policy has deterred child abuse as was intended.

    best

    Rodney Hide

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  3. “…that providing income to parents who are drunk and drugged up puts babies at risk.”

    Does it? Or were the babies put at risk because the parents needed the benefit and didn’t have the life skills to cope? Alcohol and drugs are often coping mechanisms for people who often see no future and want to just escape their problems for a while. This isn’t rational behaviour, and it is probably wrong to try to judge these people as if they are rational. Instead they need help. Help to make better judgements. Help to see a future. Help to simple cope. And they need that help before the children suffer, starting during pregnancy. In fact many or them are in the position they are because they didn’t receive help when they needed it – as children. Arguably many of them really are still children – even if they are old enough to vote or buy alcohol – because they haven’t learned what they need to learn to be an adult.

    Trevor.

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  4. Metiria says “These tragic deaths seem to me to be the result of despair, not anger – quite a different picture from the child deaths caused by men.”

    Without attitudes like yours – “female murderers are not to blame – only males” – articles like Rodney Hyde’s would not need to be written in the first place.

    Worse than that, you do a great disservice to abused and murdered children by trying to hijack the issue into a male vs female debate.

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  5. “Consider the statistics. Say one child is from a household that relies on a benefit before that child is 2. The other is not. The first child is nine times more likely to be maltreated by age 5 than the second.”

    .
    .
    .

    “They were dependent on the Government for a house, for money for food, and for drugs.

    They could not look after themselves. They could not look after their babies.

    We know in times past that such irresponsible souls wouldn’t have had children. Or if they had the children would be offered for adoption.”

    OK…. I am sorry to have to disagree. The above does constitute, with the remaining part of the piece, placing blame for these deaths on the domestic purposes benefit. You fail to read what you do not wish to see Lindsay.

    —–

    That said, Rodney Hide has a point about a subset of the population, and about how such children were cared for in years gone by… That is a separate thing…. and the position he is taking is not ENTIRELY wrong. I’ve often enough responded to the need for improved support of children as needing to be answered by greater support in kind rather than in cash.

    This pulls the teeth of much of his argument… and the expansion of external services to the child supports the parents in ways that do not offer so much opportunity to sink into a drugged stupor.

    However, there is another level of failure at work here, and that is our failure to provide any honorable path for the least advantaged in our society to pursue. There isn’t work, the pay for the low status jobs available is risible, and the emphasis on the market, productivity above all and some other value judgements simply make their position worse.

    A society has to value all its citizens. It has to find its path as a society, not as a corporation, and we are failing a portion of our population.

    BJ

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  6. (( Frog – I expect you to be checking when someone claims to be some PUBLIC figure, that they are who they say they are !! ))

    Rodney – Glad to have you visit… this could be interesting :-)

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  7. “Every death of a child at the hands of parent is a deep and terrible tragedy. And we know that the best way to keep a child safe is to keep the protective parent safe”

    Except of course the protective parent may not exist or the protective parent may stay in a relationship with the abuser and hand him the vacuum cleaner pipe used to beat her son to death.

    If a mother cannot engage the basic instincts seen universally in humanity to protect her child above all else, she is not fit to be a mother – she’s a feeble, broken, damaged individual who needs her own help, but for the child’s sake the child shouldn’t be expected to tolerate the danger inherent in remaining with someone who has no sense of responsibility to him/her.

    Killing a child should be the offence that provokes the greatest outrage and concern, but to even attempt to reduce responsibility for those actions by saying they are due to “despair” is just post-modernist relativism. No doubt some men who sexually molest children may say it is due to “despair” (maybe they were abused as children, maybe it’s how they relate sexually), but you wouldn’t want a lenient approach towards them.

    Read up on your neo-Marxist power relations – children are at the bottom of the pile, abused women have more power than infants and more responsibility. If they can’t exercise the prime responsibility of a parent, they should not be allowed to have custody of children – any other approach is being complicit in that parent letting a child be harmed.

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  8. My father was from a poor family with 7 kids. He led a impoverished but happy young life without state support until his mother died when he was 5. Their father struggled to earn a living and raise 7 kids all under the age of 10. At which point a formidable maiden aunt swept in from Auckland and gathered all the kids into Monte Cecelia which was a Catholic orphanage in those days. All of those kids ended up leading productive lives. There were a lot of similar very poor families in their remote part of NZ and none of them smashed their kids to death- the idea would have been absurd, especially the idea that the mother would be responsible.
    In the interests of adult conversation: I propose that one very important explanation for today’s shame is the absence of “formidable maiden aunts” who feel a sense of duty and will take charge if young relatives are at risk. Seems to me that whenever a kid is murdered you hear of grandparents and others who wanted to intervene, but a lumpen state bureaucracy got in the way. Bring back the formidable maiden aunt who will fear no bureaucrat and will stop at nothing to protect her charges! The second loss is the religious orphanage that provided a safe backdrop to which kids could be sent without valid argument. Those kids then emerged primed for a productive life and wanting the best for their own kids. I know it’s popular to bash the religious for molesting kids, but for every victim of whatever awful rapist was responsible for molesting a child there are thousands of other children who were given a great start in life.
    These sorts of thoughts may be unfashionable these days, but they’re more use than slogans about keeping parents “safe” or claiming that it’s callous or dangerous to tell the truth.

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  9. @ BJ

    While the real Rodney Hide may or may not have posted here, it appears an email was sent, corroborated by a post on the wall of Cam Slater’s toilet.

    FWIW I believe Hide an absolutely legitimate point: “What we do about the problem is difficult but at least we should be able to talk about the problem without declaring an opposing view callous and dangerous.”

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  10. Actually the point about checking is something that I think the staff who are “Frog” actually have to take a squiz at. I am happy to believe that it is indeed Rodney Hide… but we actually have to make an effort to be sure that nobody ELSE is pretending, and misrepresenting, him here.

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  11. Metiria.

    Doesn’t being desperate, depressed, undervalued and stressed also apply to males. Could it be that is a cause of anger and despair, and the consequent taking it out on those closest to you, for both sexes?

    Even in a close family with a lot of support and a good income, children can be challenging. How much more so for someone who is already at the end of their tether.

    In other words, a lot of people, of both sexes, desperately need help, not condemnation.

    Could it be that many of these kids could have been helped by giving them and their parents better help and prospects?

    I commend Rodney for actually acknowledging there is a problem, and engaging in the discussion. And he is right, we do need to talk about solutions without all the recriminations.

    Brainstorming is an excellent method of improving decisions.

    However I do not believe Rodney’s tough love and individualistic society is the answer. Making desperate people even more destitute and desperate is not a solution.

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  12. I have to say that although I disagree strongly with Rodney Hide on most things he, at least, does not censor Herald comments that disagree with his column, unlike many others.

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  13. “Bed is the poor man’s opera” – ? Don’t know, but not me…

    As I see it there are three parts to this problem.

    1. We have a society in which a few people are productive for export purposes, and a few more support the society through their work (actually fixing and producing and building), and the remainder are selling each other houses and hamburgers in a “pretend economic system”. This is the preferred model on the Right because it is the most “efficient”. They then complain about the rather excessive proportion of the population that then cannot manage gainful employment.

    2. We have lost the perception of personal responsibility that caused young women in previous generations, who knowing they could not handle the raising of the child, to give up children for adoption. This may not actually BE a bad thing in all cases. Many women make excellent parents despite the handicap of poverty, others are in trouble from the very beginning. Clearly ONE of the things that needs to be examined based on the statistics cited, is some much more targeted attention on the mother of a newborn who is also on a benefit. The stresses on her are certainly larger than on someone with a reliable partner and a reliable income.

    3. We need to eliminate the constant complaint from the right that the money spent in support of children is being used on drugs and booze. I see only one fair way to do that and that is to not(in general) give money, but aid in kind. Working through schools, libraries and other support organizations to support EVERY child in the country with the same access to computers and the internet and books and clothing and food.

    We’d probably spend a bit more on this than we do now a fair society would have to spend more on it than we do now, but we’d be far more likely to get agreement to do so. Children’s welfare in general would be more equal and parental influences in terms of wealth and poverty would be reduced.

    I don’t think this one is “easy”. I am also aware that I am not toeing the party line here.

    I never was any good at that :-)

    respectfully
    BJ

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  14. Theres a strong smell of greens being burnt here.

    Finally we are seeing some THINKING rather than emoting. At least from the green supporters, if not the elite.

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  15. Just two quickie points:

    I’m so glad I grew up in a household free of abuse, and was able to provide the same for my children. But I shouldn’t be an outlier, there shouldn’t be kids in that position at all. The fact that threr is is a failure on so many levels.

    BJ notes:

    However, there is another level of failure at work here, and that is our failure to provide any honorable path for the least advantaged in our society to pursue. There isn’t work,…

    And there isn’t going to be. The situation will continue to deteriorate, and I cant see any reasonable way of that ending. Sooner or later, we will have to address the issue of what we do with those that, frankly, society doesn’t have a use for. Its not going to be a pretty discussion.

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  16. DBuckley… Are you conflating the value of people to a society with their value to an economy? The question of the value of a person in general is not one there is actually an answer to. A philosophically vexed question.

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  17. A philosophically vexed question.

    BJ, you have a talent for understatement.

    Are you conflating the value of people to a society with their value to an economy?

    The human in me really wants to say absolutely not, as that is a disgraceful position to advance. But the realist says that societies don’t behaves the same way as individual humans do, and currently, we (collectively) ascribe a lower “value” to those without gainful employment. We (collectively) do so on the basis that the unemployed are slackers and should get off their lazy arses and find a job. Heck there are whole factions of politics that advance that very position.

    But the growing truth is that it isn’t (or isn’t exclusively at least) that these people are slackers who should get a job; its that the jobs available no longer match the skills and abilities of those seeking work, and that no matter how hard they look, or how much they are shouted at, there isn’t gainful employment for them. Society is moving through progress, and at a faster rate than at any time in our history, and people’s progress is stuck at the rate of evolution.

    We (surely?) can’t be so stupid that the only answer is The American Way, and what these people need is the American idea of a safety net, a/k/a jail.

    This is my number two issue after Peak Oil, I think its a bigger issue than either GFC or climate change. And no-one seems to give a flying fuck, or if they are, they are keeping very schtum about it.

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  18. We have seen a systematic destruction of community services over recent decades the hands on, trusted, non-judgemental support that all mothers could readily access as they needed. It is this kind of help that community workers say has to be reinstated to protect mothers and their children from violence, hardship and despair.

    The reason the basic community support, of the community by the community, has vanished is because people who think ‘there orta be a law’ have had their way and society’s communities have given up for fear of prosecution.

    Back in the 40s, when I was a child, there was a case of wife abuse in our neighbourhood. It stopped just about as quickly as it started, and never re-surfaced. How? Easy, the other men in the community heard of the problem from their wives and ‘had a word’ with the husband involved; he never abused her again as far as the wives of our neighbourhood were aware, and they WOULD HAVE been aware!

    Today, you can be prosecuted if you break the leg of a burglar in your home (and he/she can claim ACC benefits to boot), never mind the prosecution that would follow if you were to suggest to a neighbour that he stop beating his wife or child.

    The bottom line is that we shouldn’t need community workers saying that we need to employ more of them to solve our local communities’ problems, we should be allowed to work them out for ourselves, in the same way that we should be able to maintain discipline in our children. When you see, as I did recently, a youth telling his father that ‘if you so much as lay a finger on me I’ll report you to the police for smacking’ you know that the world has shifted too far. We have a generation that is guaranteed no significant consequences for their anti-social activities because of a law and set of attitudes that have been imposed on the many because of the failure of the few. Yes, the very young (under 7 perhaps as a benchmark) need protection from idiots who abuse them, but that is a VERY small proportion of our society, the older children, as they pass through the trials of puberty, looking for independence and rebelling against societal and parental expectations, need to have an understanding that their actions can hurt them as well as others. Many a kid of my acquiantance received a clip around the ear from the local policeman for antisocial behaviour, it solved the problem and saved the courts and family a lot of unnecessary activity – how have we come to a position where the police are unable to maintain respect in their communities?

    If we want to see a more just society, where child abuse is significantly reduced from current levels, and where there is respect for elders and encouragement of youth, there needs to be a significant change in the out-of-focus perspective of our communities by people who, in general, do not live the same life as the average citizen.

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  19. Kia ora Rodney, thanks for your contribution to this blog. I think your language was intemperate (“killer mums”) and increases the risk to women; that you are wrong about the public exposure of women who kill thier children, they are exposed by the media, including those who kill thier children immediately after birth. You note that these women dont tend to have a history of violence or abuse and then ignore the drivers that have lead to such an out of character terrible act. You then use one example of of a family to imply that all these women and all beneficiaries pose particular danger to thier children. The study you cite also says that research needs to be extended beyond beneficiary families to gain a better more comprehensive picture of the risks of child maltreatment. But what is obvious from these two reports and many years of research is that children are safer when thier parents are. Therefore teh solutions are not about withdrawing support from families but making sure they have, from pregancy, the support and resources they need. Your approach has failed families.

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  20. 1/ If you think “killer mums” is “intemperate” language, how does it rate next to your description of Paula Bennett who apparently “plunges the knife in”? Killer is at least a factual description.

    2/ Child death caused by newborn infanticide or preceding their mother’s suicide are either fleetingly reported or not at all. Hide did not ignore the “drivers” of those acts. They weren’t the main subject of his column, which was the association between child maltreatment and welfare dependence.

    3/ Point to how Hide uses the Lawrence/Loffley case, “…to imply that all these women and all beneficiaries pose particular danger to thier children.”

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  21. Yes DBuckley, and I have sometimes mentioned the disturbing changes that the society and the economy are undergoing in terms of ever increasing productivity and what each of us is therefore paid. For the moment the owner is supreme, as the productive worker is not as easy to deal with as the productive machine. I do not see it ending well, and there are vastly too many of us of whatever talents.

    Yet we have no social mechanism to justify saying “stupid people shouldn’t breed”, or “short people” or “ugly people” or “purple people”… and I am not sure I’d want one despite my occasional frustration with some people who visit us here :-)

    So to do something not so selective… we need to limit everyone.

    Each parent should have no more than 2 offspring as that is a bit LESS than the replacement rate (it taking two parents to have any offspring and there being a mortality among the young irrespective of our best efforts).

    I think no other rule is justifiable unless it be 1 child, much as China has set an example for us… and supporting children properly through the entirety of the community.

    We’re in deep trouble… and I don’t fancy our chances unless we turn away from the socio-economic darwinism path down which our PM and others would lead us.

    We need a diminishing GINI and increasing employment, and those things cannot happen by “making New Zealand more competitive” with low wage countries that have immense markets, a willingness to sacrifice their environment and a population of geniuses larger than our entire population including I think, the sheep.

    One can work out at least that that competition is NOT a good answer, even before one grapples with the question of what the better answers look like.

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  22. Oh Rodney, so you do care about the children raised in poverty.

    And your solution, more pregnant women have abortions (not having support to raise the child up) so they are never born. Nice cheap solution – that will certainly reduce violence against children. I suppose you subscribe to the theory that crime fell in the USA because of the availability of legal abortion.

    PS – We all know that while abortion is legal pregnant women unable to raise up their children are not that likely to carry them to term and have them adopted out.

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  23. Lindsay, we will have to agree to disagree because as I read it Rodney Hide said that

    1. the ability to be financially independent of state support was proof of being a fit parent.
    2. those not financailly independent fail to prove they are fit parents.
    3. they should have to prove they are a fit parent to keep their child
    4. the state in providing the UB, SB and DPB to parents of children is enabling child abuse including child murder.

    What he did not directly cover was those who lost jobs or working partners since they had their child and whether they then failed to remain fit parents – and thus should lose their children. But if was being consistent …

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  24. SPC says “Lindsay, we will have to agree to disagree because as I read it Rodney Hide said that…..”

    That’s because you have an ability to draw absurdly extremist conclusions from any statement you disagree with.

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  25. So you have no actual grounds to disagree with what I wrote, or to support Lindsay’s view – but failing that, given you would like to make a cheap shot anyway, you offered that up.

    Cannot find a reason for the downtick on the comment on the Hide post above either? But you just don’t like the anti-beneficiary arguement to be exposed like that … so you had to react … .

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  26. SPC “So you have no actual grounds to disagree with what I wrote.”

    Yet another absurd and incorrect assumption.

    If you stopped making rediculous assumptions, you’d stop being wrong all the time.

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  27. BJ notes

    We need a diminishing GINI and increasing employment…

    As I’ve noted, we aren’t going to get the latter.

    The former is at best only an analogue for the problem.

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  28. Amazing – 11 downticks (so far) and not one comment about anything I wrote, not even to answer my (non-rhetorical) question.

    Trevor.

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  29. Trevor,

    Gave you a down tick as the “kids having kids” meme is so blatantly obvious that to write a paragraph about it, WITHOUT spelling out any or possibly answer to the problem, can only lead one to rubbish your comment.

    Reading between the lines it would seem you favour more state intervention?

    No, that wont work, it makes people even more dependent on the state, and the state co-dependent (the “kids having kids” have a vote).

    What we need is for society to be less tolerant of “kids having kids”.

    The last statement will, like you comment, raise a ton of down ticks but while we make it socially acceptable for “kids having kids” the problem off poverty of spirit and finances for these kids wont go away.

    I applaud Rodney Hide for bringing the question out in the open and while not advocating draconian state intervention measures such as funding cuts, we do need to make “kids having kids” socially unacceptable.

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  30. What we need is a society that gives kids something else to do, be and live for Gerrit.

    Has tolerance for “kids having kids” grown? How do we show our disapprobation? Is there a cultural componenet? A genetic advantage?

    THINK about it… starting earlier means more kids are possible and physical recovery is easier AND more likely. The “young bride” is not an accidental meme in history, and women as chattel has a long history.

    How do we, as a society, show we disapprove?

    We cannot punish the mother without harming the child.

    We cannot punish the child as the child has done NOTHING wrong.

    Do we make this a matter of mandatory removal of the children of “unfit” parents? Not very damned likely.

    What you want to change is the culture… I think.

    Note that I am not so rude here, in terms of putting words in your mouth as you just were on another thread.

    The question is how one goes about that. The effort has to be subtle and we HAVE to find a positive hook to put in the messages. Make “having children before you’re ready” a mistake no woman wants to make… but without punishing those who “get caught”. Mother Nature is very insistent on that procreation thing… it is built into our genes in powerful ways.

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  31. Gerrit – thanks for responding. However I did offer a solution – help the children even before they get pregnant. Break the cycle. I didn’t advocate for paying them to have children, but I did question Rodney Hide’s conclusion that the benefit payments were leading to the child abuse. I also said that these people needed help, and that includes advice services, not just money.

    The NACTs are of course heading in the other direction, cutting such services – very short sighted. Their approach costs much more in the long run than providing good support early.

    I like BJ’s approach, where we include payment in kind, and in general lower the costs of caring for children.

    One way of reducing the number of kids having kids is to give these kids a better idea of what they will be letting themselves in for if they do have kids, so they can make a more informed choice.

    Trevor.

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  32. It is a consequence of two factors – a globalisation/economic system that results in surplus labour in the first world and internal policy that allows children to be raised up in unhealthy homes and failing to achieve educationally (and a failure of adequate medical intervention or healthy food provision in poor area schools) – that leads to the inter-generational child poverty/abuse cycle.

    It is some irony that someone like Rodney Hide should offer the idea that less support for such unemployed people raising up children is the answer – when Paula Bennett said recently in Northland, that the only tool she had to ensure more responsible parenting was the ability to either provide or take away the benefit.

    http://www.northernadvocate.co.nz/news/hunger-striker-kuha-has-my-respect-bennett/1639115/

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  33. Why is it that those who oppose investing in the well being of children (required rental property insulation/medical staff placed in poor area schools) are also the most opposed to supporting parents raising children in poverty?

    They say that unemployed parents cannot be trusted to use (any more) money provided to support their children (when opposing the extension of the In Work child credits) and then they say that all parents should have to be responsible for their children (when opposing food in schools). Is this not cognitive dissonance, only explained that some will look for any excuse to deny help to children being raised in poverty – because they are the children of other people, people not like them?

    After all first world/affluent monocultural society’s simply do not allow this to happen.

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  34. SPC

    Why is it that those who oppose investing in the well being of children (required rental property insulation/medical staff placed in poor area schools) are also the most opposed to supporting parents raising children in poverty?

    Problem is the ever longer arm of the state to fund the “parents raising children in poverty” is digging deeper and deeper into the ever shorter pockets of the tax payer.

    Quite rightly the tax payer is getting a bit grumpy, funding what is a never ending procession of non tax payer arms reaching out to the state for nourishment.

    It simply is not sustainable.

    Is this not cognitive dissonance, only explained that some will look for any excuse to deny help to children being raised in poverty – because they are the children of other people, people not like them?

    The “cognitive dissonance” is people getting sick and tired of trying to helping those in need only to see a never ending line stretch out behind them looking for state handouts.

    Surely it is time those in poverty stopped looking for handouts and started looking for hand ups.

    Would it not be better for the state to distribute seeds to grow a cabbage in a poor families home gardens then to give a dollar to buy a cabbage (figuratively speaking)?

    Once we see hand ups like that, we will see the excuse to deny children in poverty a hand up, disappear.

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  35. Gerrit, hand ups include being raised in a healthy (insulated) homes and having access to medical service and food in (poor area) schools. But because these investments are in the well-being of other peoples children there is opposition. And the irony is these investments actually save the “haves” money – as the ill health, educational failure and subsequent welfare dependency costs more.

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  36. Gerrit does not seem to realise that most people who are on welfare are on it for less than two years. in other words the ones on welfare are also tax payers. Collecting on the NZ collective public social insurance policy that they have or will pay into.

    Just because he has not needed it yet, apart from maybe health care and education for himself and his staff, which I am sure he did not refuse on principle, doesn’t mean he will not.

    Most of us are only an extended period of ill health or bad luck away.

    As for middle NZ being taxed too much. If top NZ, including the finance sector and overpaid jumped up bean counters, paid their share it could easily be reduced.

    At the end of the day, not helping these children will be a lot more expensive than helping them. How much per year does prison cost, per inmate, again!

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  37. (really) Heavily taxing the “über-rich”, although a darling of the left wing, is morally indefensible; its no more equitable than not having a benefit system.

    France is about to find out the hard way that people are heavily taxed (75%) leave, as some data from the UK (which I wish I could find again) showed they lost lots of rich people when the tax rates go up. Americans (who have a similar world-wide tax arrangement that we have) are renoucing citizenship to excape taxation in record numbers.

    The real problem with our tax system is that the thresholds are penally low; far too many people are top rate tax payers.

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  38. Currently it is 13% (2011) who were on over $70,000 – they pay half of the income tax paid.

    The top 5% earn over $100,000 – Labour will probably plan to deal with too many paying the top rate by having this top 5% pay a higher level.

    Unfortunately the real problem is the median pay level and the lack of investment income because of high housing cost – thus the lack of contribution to income tax collected.

    PS The lack of CGT means those with savings and access to leverage (loans) in ownership of assets have very lenient tax treatment.

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  39. “PS The lack of CGT means those with savings and access to leverage (loans) in ownership of assets have very lenient tax treatment”.

    Totally agree.

    The lack of FTT on the financial sector also gives them too great a share and a largely free ride while we take all the downside risk when they fail.

    All sources of income should have equal tax treatment.

    And our real problem is the way NZ incomes have been forced down by the overseas corporates Unions and their paid lackeys in our parliament.

    I don’t see a problem with similar tax rates to Australia. The top rate is on over 300k. Though many on around 70 to 100k would actually benefit by paying a little more taxes and continuing with the services provided by those taxes. Every time I have had a tax cut it has disappeared in “user pays” or privatisation of formerly State provided services.
    No taxes under a certain low income, like OZ, though I would prefer a UI of some sort. Like Gareth Morgans GMI.

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  40. Heavily taxing the uber rich is not at all morally indefensible. Keeping the poor artificially poor so others can have huge, largely unearned, fortunes is morally indefensible.

    As is leaving the country that allowed you to gain huge wealth, to avoid paying your fair share.

    In fact we may be better off without the uber rich. Less than 3% invest in any useful way.

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  41. Kerry, as for a UI of some form.

    Various independent steps, in no particular order.

    1. a universal student allowance for all full-time students (one could start with a cap at 5 years beginning at 21 – many have to complete masters, and still do further study or retrain for a new career)
    2. income for all non working parents with working partners (applying the work test on the same terms as for the DPB)
    3. for those who do unpaid community service work (singles and those with working partners) and a few others who provide unpaid care for others etc
    4. wider (individual) eligibility to the UB for those who have working partners, (including those without children and those not doing community work).

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  42. @rapidFlyer – not to put too fine a point on this but your insult falls FAR from the truth. We’ve been discussing this in these same terms for years.

    You happen upon actual Green thinking as opposed to what you were told about us, and think we’ve changed.

    We haven’t.

    We were never what you thought we were.

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  43. Kerry

    My Hero ! ! ! ! ! !

    All sources of income should have equal tax treatment

    You said it right mate. Every dollar of income, rrespective of its source, should be taxed at the same rate as every other dollar of income. If we all paid 25% of all of our income (gross revenue in the case of businesses) in tax we would have no problem. Right?

    :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-)

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  44. The usual meaning of equal tax treatment is the same progressive taxation applies to all sources of income – given income is taxed progressively.

    In this regard one should note one criticism of our company tax regime is that we have one flat rate of tax on company profits, others – such as the USA, have a lower rate of company tax for a smaller company or those making low profit returns.

    PS You meant profit of companies, not revenue, another assumption I know …

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  45. Kerry is, on this issue, very wrong. And then he things two wrongs make a right. Go figure.

    That’s not to say our current tax system is right.

    You said it right mate. Every dollar of income, rrespective of its source, should be taxed at the same rate as every other dollar of income.

    The model I’m currently favouring is a single transaction tax. Every financial transaction, be it one being paid ones salary, be it buying an orange, a beer, or a house, paying a bill, be it investing in a share, or that share paying a dividend, or that share being sold, every transaction should attract tax. It wouldn’t need to be a very big tax, probably under one percent, but it is absolutely universal. No exceptions, no thresholds.

    As such a tax is trivially simple, we can sack almost everyone involved in taxation, so reducing the costs of implementation and compliance dramatically.

    Get rid of every other tax scheme, including GST.

    Brazil tried something like this for a while, but as an additional tax layer on top of the existing taxes. There’s a very interesting paper on their experience with it that a bit of googling will find.

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  46. SPC
    Nope, I meand exactly what I said “gross revenue”.

    My gross revenue (income) is taxed, why not that of companies? (just an extension of GST without the claimback really).

    As for your comment regarding the “usual meaning of equal tax treatment”, it reminds me of the way Goldman Sachs used the term “short” to express faith in its products rather than a blatent bet agains them.

    Equality means “all the same”. If I give 25% why shouldn’t you and everyone else? THAT is everyone paying their equal share of income in taxes, what socialism suggests, however, is that some income is less equal than others, and so YOUR Usual Meaning.

    Laugh – I could cry!

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  47. dbuckley

    If the model you currently favour is a single transaction tax, with NO exceptions and NO other form of taxation, I will happily favour it with you. However, if this is ON TOP of GST and Income Tax, – sorry, you will find me am obstacle in your path.

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  48. dave stringer

    Taxing gross revenue is done now.

    Gross revenue is the left over part after deducting expenses from income.

    Commonly called EBT (earnings before tax)

    Now if you wanted to tax on income without allowing the balancing of the ledger by expenses, not many businsses would survive..

    I noticed that the Labour party wants to make redundancy provisions mandatory for all companies.

    Means even more money has to remain “on the books” and physically unable to be used to grow the business (or return to the shareholders) and provide more jobs.

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  49. dave

    Why does no country tax companies on revenue? It’s because many would not make any profit and without a profit they would go bankrupt.

    If a companies profit margin on costs was less than “25%” there is no money to provide a return to capital investors. It would also end the ability of a company to borrow to invest as the cost of borrowing would be something a company taxed on revenue could not easily afford.

    Kerry meant tax all income the same/equally – CG income on the basis we do work and interest income etc on a progressive basis. You prefer a tax at the same rate but this equal treatment of each dollar of income is not the same meaning as equal treatment of income from various sources.

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  50. If the model you currently favour is a single transaction tax, with NO exceptions and NO other form of taxation, I will happily favour it with you.

    I believe I was quite clear: “Get rid of every other tax scheme, including GST.” and “but it is absolutely universal. No exceptions”

    So get rid of every other scheme, yes, including income tax, and cheque tax, and the list just goes on and on and on.

    Taxation is – today – the way it is because its always been that way. Always since the Greeks days. Just read the list of taxes in WikiPedia, each new tax just another way that a government can transfer wealth between citizens.

    But we’re now in the 21st century; we don’t need a million ways to raise tax, just one that works will do, based on the fact that almost all (legal) money flows are electronic.

    The Single Tax is a variation of the Tobin Tax, but many (especially those of the left persuasion) see Tobin as an additional, punitive tax, rather than a really good way to start again.

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  51. Gerrit
    PBT, or as you say EBT, is NOT the same as Gross Revenue – there’s a book called “accounting for dummies” you might want to put it on your Christmas wish list!

    SPC
    Not at all, they would just have to increase prices so they received enough revenue to cover all expenses including tax! The fact that we would haver to make do with less would probably be a good thing – in green terms!

    AND

    You are saying that equality means including capital gains as income for tax purposes and taxing people at different rates depending on their total net income. I am saying tax everybody at the same rate on their gross income/revenue. WHich of these is a statement of equality for all people and all income?

    dbuckley
    That’s exactly what I thought you meant (just checking,) and so you have a fervent supporter in me for this initiative. Now; what shall be our next step? I know, let’s get the Green Party to put this on its platform for government at the next election – do you know, I think it might be a winner!

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  52. I could live with the same tax rate on everything. Say 25% so long as it was associated with a GMI at a liveable rate replacing all welfare. I.E. A negative tax paid to those below a certain income.

    Even though progressive tax rates are fairer. A millionaire gains infinitely more and uses much more of our tax supplied resources than he would pay in flat tax. But as half of our wealthiest people pay no tax now, 25% would be an improvement. A flat tax a-la Gareth Morgans idea on imputed income would get the half of them who do not pay tax now.

    I suspect both left and right can see the advantages in simplifying tax and welfare.

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  53. dave stringer,

    What you are proposing taxing is GROSS INCOME.

    NET INCOME is what remains after the ledger has expenses taken away from turnover.

    So yes technically you are right.

    But if pedantics is your feel good factor, call it what you like.

    Wiki entry says this

    In business, revenue or turnover is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover. Some companies receive revenue from interest, royalties, or other fees.[1] Revenue may refer to business income in general, or it may refer to the amount, in a monetary unit, received during a period of time, as in “Last year, Company X had revenue of $42 million.” Profits or net income generally imply total revenue minus total expenses in a given period. In accounting, revenue is often referred to as the “top line” due to its position on the income statement at the very top. This is to be contrasted with the “bottom line” which denotes net income.[2]

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  54. Wonder if we had a flat tax for everyone if the PAYE tax payer would mind paying provisional taxes prior to earnings as well as the final at the end of the year.

    Business pays taxes “up front” and whoa betide if the IRD thinks you have understated future earnings and not payed enough provisional tax.

    mmmmmmmmmmmmmm

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  55. I also suspect over time if we capture all transactions, and spread it out equally, the rate could be dramatically reduced.

    At present most tax is paid by those we would regard as having middle incomes. Enough to be worth taxing, but not enough to take advantage of the many, legal, tax dodges.

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  56. Gerrit, Correct there. One of the many ways Government unnecessarily burdens small business.

    I would rather pay weekly as a proportion of net cash flow. Even if we have to have a small settlement either way at the end of the year.

    For contract building, estimating income in advance is almost impossible.
    My other hats, boat designing and contracting for ship/yacht deliveries were even worse.

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  57. Gerrit

    Why do you have a language problem?

    In all the posts on this topic that I have made I have referred to GROSS REVENUE, simply because the concept of income is, in many accounting standards, subject to reduction by some cost or other. (To see just how screwed up IGAAPs are look at http://www.slideshare.net/amarhindu/comparison-of-accounting-standards-presentation#btnNext)

    BOTTOM LINE:

    I PROPOSE TAXING GROSS INCOME

    OK?
    Got it?

    Right.

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  58. Kerry. Re:-

    I could live with the same tax rate on everything. Say 25% so long as it was associated with a GMI at a liveable rate replacing all welfare. I.E. A negative tax paid to those below a certain income.

    The eventual reality of that scenario would be a net zero revenue to the government. Because, I, for one, would happily sit back and receive “GMI at a liveable rate” at the expense of the idiots who agreed to pay it to me. Of course, what constitutes a livable rate would have to be calculted as the average gross income of all entities in the country!

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  59. Some minor comments.

    Dave Stringer @ 12.49pm
    The effect of taxing firms on their GROSS income would to immediately favour large vertically integrated firms. Businesses that bought in goods or services from other firms could not possibly compete as the string of businesses involved would lead to multiplicative taxes as the work was performed by a series of small firms.

    Kerry Thomas @ 12.56pm
    You do realise, I suppose, that what you are advocating is Milton Friedman’s program? He was I think the first economist to advocate a negative income tax. How he became the bete-noir of the left is something I have never understood.

    Gerrit @ 1.08pm
    PAYE taxpayers already pay provisional tax. If at the end of any year your final tax owing is more than (I think) $2,500 you have to pay provisional tax in the following year. It is only if your final payment, due in February, is less than that figure that you don’t get caught with provisional tax in the following year.
    People whose total income comes from wages and salaries don’t get caught as they don’t actually have to prepare an IR3 return.

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  60. Wrong assumption.

    A liveable rate is around our present super.

    Hardly making for zero net tax if we had a flat tax, especially if all transactions were taxed.

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  61. Yep. Also Roger Douglas, which just goes to show that not even RWNJ’s can be wrong all the time.

    But. If we are looking at the possible, something we can get enough people to agree on to actually do. This is workable.

    We can argue about the level of GMI, and tax percentage, later.

    Freidman became the bete-nior of the left because of many other nutty ideas, which have proven not to work. I am surprised that he is still a hero to anyone, actually.

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  62. Kerry :-

    A liveable rate is around our present super

    HA!

    Tried living on $268 per week recently?

    It’s easy for a week or two, but when the rates bill comes in, you find you’ve got nothing left for a week or ten!

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  63. Alwyn
    what’s wrong with vertical integration on a small scale.
    Grow the grass
    to feed the sheep
    to harvest the wool
    to spin the yarn
    to knit the clothes
    that your neighbours buy.

    Perfect integration as long as there’s some nitrogen in the rain to keep the grass fed :-)

    QED

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  64. “Tried living on $268 per week recently?”

    Yes. And I couldn’t.

    But we were used to living on a lot more.

    I did have to live on the comically low invalids benefit for a considerable length of time. With three children. My wife couldn’t work as she had to care for my son, who also needed extra care at the time.
    I say live advisedly. Fortunately I had a considerable amount of savings and equity in our house, but still had to try working again before I was ready. Which resulted in more time on the benefit.

    I was lucky, I had many years of savings from high earnings to fall back on.

    But. That is what many on the right expect all the people they have put out of work, the sick, the mentally ill, young people looking for work and the elderly to live on for extended periods.
    That is if WINZ do not find an excuse not to give it to them, as they frequently do.

    It is not surprising that people get angry, depressed and desperate when hope is removed.

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  65. Dave Stringer
    Can I suggest a few steps you have left out of this scenario.
    We’ll assume you are going to make hay so add the following
    Build a plant to make the tractor and the harvester
    And I suppose a generator to run the equipment in a shearing shed
    And a power plant to run the generator.
    And a plant to scour the grease from the wool.
    And one to build a knitting machine.
    And of course the farmer would have to do all the shearing himself as he wouldn’t get in a shearing gang.
    I’ve left out a plant to make the superphosphate as you’ve said it will come down with the rain.
    Seriously very small scale vertical integration doesn’t work as the economies of scale differ for every part of the enterprise, and you don’t get the benefits of specialisation.
    It would also require selling to only very close neighbours as you wouldn’t have any vehicle (other than the tractor you are going to build) to move any goods.
    On the other hand with your tax system it would pay to set up an enormous firm that would own all the farms and the various factories and a power station etc.
    Somehow I don’t think that you could, for example, make a single tractor and harvester as well as a large factory. I don’t think you would want to make a scythe, which might be possible to do by smelting iron on a small scale, and use that to cut your hay.
    Adam Smitth explained it rather well in about 1775.

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  66. Sorry Alwyn
    I thought you intended us to create this world without mining, burning fossile fuels, etc., etc.. If there are no ecological restrictions I could do a much better job of integration. First I would print enough money to own all the productive land in the country, then . . . . . . . . . . .

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  67. How does anyone know what the appropriate rate for a “single tax” would be. Because no one can seriously propose the idea without an implementation plan. And to have one they need to know this.

    The only way to trial it is to introduce it as a supplement to existing taxes – identify the revenue then set a rate to replace existing taxation. It like GST introduction would require income boosting some individuals and couples and families disadvantaged by the move from progressive taxation.

    Not even Morgan has done the work (his UI requires old people and women on the DPB with property to receive less and pay more tax – mortgage their homes to afford to continue to live in them).

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  68. Morgan’s UI is way too low. We pay more, now, in our already inadequate welfare.

    Though he has done some work on taxation. “The Big Kahuna”.

    Unfortunately most of the real work, and figures, is behind Journal pay walls. Last lot I read, set it at around 25% flat tax.

    National gets away every election with slogans and no policy research details or accurate sums.

    Could work backwards from total taxation now and what it would require.

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  69. I would imagine that when people start being cautious during say a recession the amount of activity is a lot lower than at other time. The changes in budget outcomes may be more severe than now and quite hard to forecast.

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  70. How did this thread get on to taxation policy?

    My 2c:

    1. Yay! for simplifying revenue taxes to be a flat taxes on wealth rather than income (possibly including some form of annual tax on unproductive capital – maybe the hurdle set set at the averaged 90day call rate over the year -1%?)

    2. Yay! for eliminating GST.

    3. Yay! for a comprehensive CGT across all asset classes – this should include the family home – though for the family home and owner/operator businesses, could well be offset by some form rebate for improvement/investment, length of holding and costs of finance.

    4. Yay! for a 0.1-0.5% Tobin tax on cash transactions, though it should be noted that Sweden (I think?) dumped theirs or alternatively, demurrage.

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  71. Gregor W

    Could you define “unproductive capital”? What is it, how is it measured, how much taxation are you expecting?

    For example, my home is morgage free, business investments without debt and a small stash on term deposit.

    Is this sum total considered “unproductive capitol”?

    After all I could re-morgage, take on overdrafts, and invest in more plant, equipment, products, marketing/sales support, R+D, extra staff, etc.

    If I dont will I be taxed on the value of debt free assets?

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  72. Sure Gerrit.

    Unproductive capital = capital that is not ‘earning’ a minimum rate of return.

    A measure might be an annualised amount, based on a calculation of the aggregate 90day rate minus a little bit to cater for fluctuation or it could be arbitrarily set at 5-6% as the minimum expectation of capital return. It would be ringfenced by asset class.

    If your home in debt free then you are not paying a cost of capital to offset this tax. Some calculation might be made for the opportunity cost based on the potential rental return of the property.

    If your business is debt free then you should be making money, over and above a minimum RoR that you would expect from a term deposit. Otherwise your business is a hobby – or as is usual in NZ, a farm!

    The rate of taxation would be the difference range of between 0-6% (if for example 6% was set as the upper limit), entirely depending on the RoR performance the asset class.

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  73. Good lord. Schemes to keep civil servants in employment.

    “simplifying”

    yeah right.

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  74. Gregor W,

    So its a punative tax for those people who safe hard to pay off the morgage, to tuck away a lump sum for something to live on in retirement!!

    Business wise it is not so much a problem as depreciation means the asset value (except land and buildings) will have no taxable value. You could tax gross earnings as some other dreamer suggested.

    Unless you are going to say that as my machines are not running at 100% capacity (unproductive use of capital) I will pay punative taxes!!

    Too bad if you loose a customer and it create excess capicity!!

    As dbuckley says. More tax sucking civil servants to quantify the “unproductive capital” of 4 million New Zealanders and 1 million businesses.

    Lordy lordy, need a $300M computer system to run that little lot. Plus offices, cars, travel for the civil servants, etc.

    How much tax would be collected versus the cost?

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  75. @ Gerritt

    So its a punative tax for those people who safe hard to pay off the morgage, to tuck away a lump sum for something to live on in retirement!!

    Ummm no. I said it’s a punitive tax on unproductive asset classes and specifically stated that a sliding scale can be applied both to homes and investments.

    Unless you are going to say that as my machines are not running at 100% capacity (unproductive use of capital) I will pay punative [sic] taxes!!

    If your plant is running under capacity for an extended period then you’re likely to out of business anyway so this is somewhat of a red herring.

    Lordy lordy, need a $300M computer system to run that little lot. Plus offices, cars, travel for the civil servants, etc.

    We need a $300m+ in IT systems with 5500 staff now to collect income tax as opposed to wealth tax so I’m not sure what you’re getting at.

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  76. Forgot to add:

    How much tax would be collected versus the cost?

    It entirely depends on the settings, but as long as the tax take exceeds the offset of eliminating GST and incomes taxes and shifts the burden to wealth as opposed to income, then it’s a win for most NZers and a move towards a much more progressive tax system.

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  77. Gregor W,

    I can run my plant at 50% capacity and make more then enough. Most capital plant is purchased with growth capacity built in. Common sense but will be punished under your taxation regime. I wont be going broke even running at 25% capacity.

    Biggest problem you will face is to value capital for taxation purposes where the capital is locked into a productive purchase and not utilised 100%.

    Just take a trucking firm for example. Their capital is tied up in trucks where the potential for full productivity is on the road 24/7.

    Most trucking companies run at 33% (guestimate) productivity so they would be taxes on the unproductive 66% of the capital investment.

    Good luck getting the IRD to tackle every company and person regarding the productive utilisation of their capital.

    Should be fun.

    As an extra negative think of the compliance cost for business to have (in the case of the trucking company) log their truck utilisation percentage versus capital investment.

    Ah yes, that will be interesting plus so easy for companies to “fiddle” the books.

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  78. I can run my plant at 50% capacity and make more then enough. Most capital plant is purchased with growth capacity built in. Common sense but will be punished under your taxation regime. I wont be going broke even running at 25% capacity.

    Gerrit – let me see if I understand you correctly.

    You have plant – lets say $100,000 in asset value – that you make less per annum that what you would make on a 90day deposit? How can you possibly run a business with such low returns?

    That’s a poor investment – possibly understandable over the short run but not so over time.

    It’s also bad for the country as;
    (i) capital is being locked into assets which aren’t making enough to cover the cost of finance
    (ii) capital is being drained away from other potentially more profitable investments
    (iii) losses are stacking up as an effective liability on the govts books, and
    (iv) the taxpayer is footing the bill for depreciation of that under-performing asset.

    As such, investment of that type should be discouraged via marginal taxation.

    It doesn’t matter whether you are running at 1% or 100% capacity – it’s the RoI that is important not specific utilisation.

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  79. Gregor W @ 1.04pm

    The whole problem with your argument is that it an after-the-event measurement. You talk about penalising under used capital equipment as if we could do something else with it.
    From here I can observe the Makara windfarm. I am told by experts that it runs at about 25% efficiency. Presumably you would now tax the hell out of it. What however is the owner supposed to do with the turbines? They exist and you can’t just turn them on their sides and use them to cut hay. You would also have to have some way for the firm to raise the money to pay the taxes. Just how are they supposed to do that?
    I note that the Green Party superannuation fund used to hold shares in Windflow technologies. They were never a success. Are we going to lumber them with a tax because they didn’t get the technology right? We would certainly NOT encourage entrepeneurs in New Zealand if, if you get it right you get hit with punitive taxes and if you fail we thump you for your failure with equally punitive penalties. It’s great to second guess things but I bet you wouldn’t want to take the fall. Are you willing to pay up for the economic disaster that was the biofuels industry for example?

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  80. It is alright, Gerrit.
    I don’t think the Greens want to target useful and productive small business. Including yours.
    We are throwing around ideas about better tax systems. Not making conclusions at this stage.
    The aim is to redirect investment from unproductive speculation, which at present is driving up the value of land, financial products and costs of doing business, towards more sustainable and socially useful productivity.
    Like the large amount of money, land and other capital sitting in the hands of the very wealthy, contributing nothing!

    How about some proposals on how to do it better?

    As that noted “socialist”, Adam Smith said, “we should not be taxing entrepreneurs and labour as they are the source of our wealth. We should be taxing landowners and the owners of capital to ensure it is used effectively’.

    If you accept we have to have some form of taxation, you must also accept that our current system is neither fair, nor effective.

    Our system discourages a lot of beneficial economic activity while encouraging a lot of counterproductive and antisocial use of capital, of all types.

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  81. @ alwyn

    The whole problem with your argument is that it an after-the-event measurement.

    A fair criticism, but so is terminal tax.

    You talk about penalising under used capital equipment as if we could do something else with it.

    To clarify, I will repeat and expand some earlier comments:

    1. The tax could have some marginal RoR setting (4%, 6%) or it could be keyed to other factors (OCR, 90 day rate over time).

    2. The tax is a sliding scale between 0% and the marginal RoR. If your asset makes more than the marginal RoR (i.e 4%) then no ‘negative’ tax is paid – you merely pay standard taxation on profit from that point.

    3. It’s not a tax on under-utilisation – its a tax on sub-optimal investment, specifically designed to disincentive unproductive capital hoarding.

    Broadly, it’s about capital efficiency and the ability of that capital to contribute so society.

    Given that capital is a social asset, why should society not expect the best return for it’s extracted marginal labour?

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  82. Given that capital is a social asset, why should society not expect the best return for it’s extracted marginal labour?

    “capital is a social asset” sounds a very communist principal to me.

    Back in the real world, capital belongs to those who have it, and we believe that making use of some of that capital for the common good is good idea. Depening on ones ideology, the values of “some” and “good” vary.

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  83. Gregor W

    Gerrit – let me see if I understand you correctly.

    You have plant – lets say $100,000 in asset value – that you make less per annum that what you would make on a 90day deposit? How can you possibly run a business with such low returns?

    I never gave you a ROI figure on my investments. Even at 50% capacity I make a nice return. At 25% capacity it becomes marginal to open the doors and turn on the power.

    But now you want the state to set a ROI target for my investment or face penal taxation. Even though as a private individual, I may be perfectly comfortable with what I get from my equipment?

    Kerry,

    I like to help explore options for wealth distribution (for that is what taxation is for) however when you see a notion to tax unproductivity (is there such a word?) you need to ask, does this pass the KISS test. Plainly taxing “uproductive capital: is neither simple (it is highly unquantifyable) nor likely to gather much taxation versus implementation and running costs.

    Other point Gregor W made are highly doable, but not this one.

    How is it measured acurately, who sets the levels where private individuals have to be taxed if they dont meet the state targets?

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  84. Gerrit. Does our current tax system pass the KISS test, or even the not easy to dodge test.

    How many hours and how much do we pay an accountant every year to meet tax requirements. I don’t know about you, but my cost is 10 to 40% my tax on earnings.

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  85. This is why the single Buckley transaction tax is such a good idea! We can sack all the tax advisers, and all the civil servants. One tax applied electronically and automatically. How is that for KISS!!!

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  86. I like an FTT, in principle, especially if it also acts as a brake on currency speculation and the like. And captures the excessive amount of value the finance industry takes.

    But, there are still many wrinkles to be worked out on that also.

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  87. Kerry,

    I pay a flat fee of less then $1000 for annual tax returns (both company and individual for both directors). Do GST returns myself with a single click on the accounting software. Pay IRD over the internet.

    Having good accounting software (I use Cashbook Complete, cheap at $300) , properly set up with the correct applicable codes, to generate the reports the accountant needs makes the cost lower.

    As does having receipts and invoices correctly files and labelled.

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  88. Yes. I’ve used Cashbook Complete since 2008.

    The best business accounting program I have used. Good support and pricing, and made in NZ. Recommend it to anybody. No commercial interest and all that.

    But my rates bill, wealth tax, took no input from me apart from payment and requires a valuer, 5 yearly, for about 10 minutes.

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  89. @ dbuckley

    “capital is a social asset” sounds a very communist principal to me.
    Back in the real world, capital belongs to those who have it…

    And also back in the real world, things are pretty shitty for a lot of people. Never forget that as a society, the wealthy are able to temporarily hold capital on and by the sufferance of all those who don’t have any. History tells us that revolution is only ever a bread shortage away.

    It behooves the wealthy to recognise that with their great power comes great responsibility and that benefiting from their vast accumulation of capital is a privilege, not a right.

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  90. @ Gerrit

    I never gave you a ROI figure on my investments.

    I didn’t ask you too. I merely provided an example of a hurdle rate that a sensible investment should pass to illustrate my proposal. I hope that makes sense now.

    But now you want the state to set a ROI target for my investment or face penal taxation. Even though as a private individual, I may be perfectly comfortable with what I get from my equipment?

    Yes, given my reasons establish December 3, 2012 at 1:04 PM, specifically (iii) and (iv):

    “(iii) losses are stacking up as an effective liability on the govts books, and
    (iv) the taxpayer is footing the bill for depreciation of that under-performing asset.”

    If the taxpayer is effectively footing the bill for a poor or under-performing investment, I don’t think that is right. If you are making a minimum positive return (my example 6%) then you are hunky-dory.

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  91. @ Kerry Thomas

    We already have wealth taxes, on land, Rates.

    True, but rates also cover improvements. Also given that rates are tax deductable if the property is owned by a business, it’s not effective.

    PS – Cashbook is most definitely great.

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  92. Gregor W @ 3.21pm on 03/12.
    You say “It’s not a tax on under-utilisation – its a tax on sub-optimal investment, specifically designed to disincentive (sic) unproductive capital hoarding”
    I think you are missing my point. Most capital investment produces capital goods that have NO OTHER USE. If you make a bad investement decision decision, say building a factory to make photographic film, you can’t just use the equipment to make something else. You made a bad decision by ignoring the growth in digital photography but there is nothing you can do about it now. Taxing a money losing business isn’t going to do any good and will simply discourage anybody from investing in anything. Regardless of whether you agree or disagree with offshore oil production the Maui platform has no other use. If you banned oil production they can’t use the platform for something else. They wouldn’t be hoarding the capital by keeping the platform, they can’t do anything else with it.
    I refer you to the Economic debates, called “The Cambridge Controversies” that were discussed by academic economists in the 1970s.

    Incidentally, how did this get into a posting on children’s well-being?

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  93. Gregor W

    Where do my privately funded under performing investments sit on the state books as a liability?

    Now I can understand any SOE not having a 6% return or higher return being hauled across hot coals but punitive taxes dont work for SOE’s (The state extrating money from a SOE is taking money from itself).

    I can understand the depreciation angle but that is a write down over a quite a number of years (for all capital purchases over $500) whilst the ROI is measured every year.

    So you could have a $100K investment needing to return over $6000 or 6% in the first year but as depreciation kicks in the value of the investment gets smaller the return actually goes up.

    So when the assets is depreciated and valued at $50K to a return of $6000 or 12% is great.

    Productivity has not increased but the punitive tax have disappeared.

    Where is the upside in that equation?

    Instead of investing in new plant and equipment for greater efficiency, one would be better to hang onto old and worthless in value (on the company books) plant.

    That is counter productive both in terms of spreading the tax revenue income base and increased productivity through the purchase of new equipment.

    Does not pass the DIMS test.

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  94. Alwyn,

    Incidentally, how did this get into a posting on children’s well-being?

    Developed from the fact that to increase childrens well being, the Greens needs the state to spend more money.

    Only way to get that is to increase taxation. Now the current taxation regime has got to the end of the road in the fact that the few tax payers remaining dont earn enough to enable the state have the funds to fund the policies the Greens would like to implement.

    Hence the discussion on other tax collecting strategies.

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  95. Gregor

    Back in the real world, things are pretty shitty for a lot of people. – THEY ALWAYS HAVE BEEN, Nothing new here

    Never forget that as a society, the wealthy are able to temporarily hold capital on and by the sufferance of all those who don’t have any. WHAT TWADDLE

    History tells us that revolution is only ever a bread shortage away. YEP> JUST LOOK AT HOW SUCCESSFULL THE Russian Revolution, Chinese Revolution, Italian Revolution, etc., were.

    Please. Tell me exactly what your problem is that you believe a revolution will correct? Is it that you don’t have a big house, or a smart phone, or a working car, or . . . . . . . . WHAT!
    Because the reality is that compared to the peopple against whom the masses revolted, you’ve got it pretty damned good here in NZ, even if you are living of the rest of us!

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  96. Gerrit
    “Instead of investing in new plant and equipment for greater efficiency, one would be better to hang onto old and worthless in value (on the company books) plant.”

    THat’s exactly their point mate. If we were still using the horse drawn plough and doing hand harvesting we’d be employing more people to do less work an live the lives of our great-grand-parents. THat’s what the “revolutionists” are hoping for.

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  97. Hmmmmmm
    I see I’m now in the group of “moderated” posters. Wonder why?

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  98. @alwyn

    If you make a bad investment decision decision, say building a factory to make photographic film, you can’t just use the equipment to make something else….Taxing a money losing business isn’t going to do any good and will simply discourage anybody from investing in anything.

    Counterposition: why should we maintain the status quo of the taxpayer footing the bill in terms of depreciation on an unproductive asset / carrying tax losses for an individuals poor investment choices?

    I don’t buy the wont invest position – it should in fact help investors by setting a reasonable expectation of return, without welfare from the taxpayer.

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  99. @ Gerrit

    Where do my privately funded under performing investments sit on the state books as a liability?

    As tax credits that can be applied in future to another vehicle that is turning a profit.

    Re depreciation benefits, the idea is that this taxation is long run – the example 6% hurdle rate over the life of the asset. I would in fact challenge anyone here that suggests that they would rationally invest in anything that consistently returns less on a per annum basis that a 90 day deposit.

    The point I’m trying to make – probably not successfully! – is that we should expect every business to consistently turn a nominal profit over the long run.

    Any investment that runs a couple of years + of losses is a hobby, not a business and the taxpayer is effectively subsidising it.

    Alternatively, we continue to support a scenario (again using farming as an example) where the means of production can be run for tax efficiency purposes at break-even or loss, the taxpayer foots the bill and capital gains incur no opportunity cost.

    No one in this country puts money in the bank and doesn’t expect even a modest return. Why should housing and businesses be the exception?

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  100. Gregor W,

    The point I’m trying to make – probably not successfully! – is that we should expect every business to consistently turn a nominal profit over the long run.

    Punitive taxation on low ROI is not the way to do it.

    It penalises capital intensive businesses such as farming, manufacturing, transport, etc.

    While a plumber, with an initial capital investment of say $20K, can generate the same returns as a farmer, manufacturer, transport company, plowing millions into equipment and plant.

    Will not encourage investment in productivity generation.

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  101. @ Gerrit

    I don’t believe it would penalise any capital intensive business, merely raise the bar of investment criteria.

    An while I completely accept that a plumber investing 20k can make the same proportional RoR on investment as a farmer, manufacturer etc. the question remains: why should the public should bear the hidden cost of sustaining businesses that are consistently geared to be break-even or unprofitable?

    But, accepting your premise, what measures might be adopted to ensure capital is allocated more efficiently and effectively for the betterment of NZ?

    Or alternatively, do you regard it as a non-issue?

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  102. @ dave stringer

    Back in the real world, things are pretty shitty for a lot of people. – THEY ALWAYS HAVE BEEN, Nothing new here

    What exactly is your point? That we shouldn’t try to make our society better? That we should try nothing new because it “always has been”?

    Never forget that as a society, the wealthy are able to temporarily hold capital on and by the sufferance of all those who don’t have any. WHAT TWADDLE

    Great response. Care to elabourate?

    History tells us that revolution is only ever a bread shortage away. YEP> JUST LOOK AT HOW SUCCESSFULL THE Russian Revolution, Chinese Revolution, Italian Revolution, etc., were.

    I’m not suggesting revolutions are desirable or indeed “successful”, merely that they are inevitable when economic power is to far out of balance.

    As to the rest of your tedious little rant, maybe read the comments in toto, possibly contribute to the discussion on taxation options in a meaningful manner and save yourself a coronary to boot ;)

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  103. What exactly is your point? That we shouldn’t try to make our society better? That we should try nothing new because it “always has been”?

    No. The point is that life isn’t fair, and one person’s shitty is another person’s luxury.
    Think on a global scale! Consider the people who work at heavy labour for a pittance (e.g. brick-layer for NZ$10 per day) then tell me how shitty life here in NZ is. Making a better society is an excellent objective; however, taking from the productive to give to the unproductive is not creating a better society, it’s reducing society to the lowest possible common denominator.

    Great response. Care to elabourate(sic)?
    Sure! The wealthy, by dint of their own or an ancestor’s efforts, have acquired capital and are able to invest it to sustain a lifestyle. The “temporary” hold you alude to has never been the case as I read history.

    I’m not suggesting revolutions are desirable or indeed “successful”, merely that they are inevitable when economic power is to far out of balance.
    You seem to be suggesting though that they are inevitable, and they’re not. The problem with revolutions is that the redistribution of wealth that takes place is usually into the pockets (off-shore bank accounts) of those who end up with the usurped power, the little guys at the bottome get no benefit. Introduce a wealth rewarding society into China and watch the millions rush from the farms to the factories so they can improve their life-styles. OH. THAT’s RIGHT. it already happened.

    As to the rest of your tedious little rant, maybe read the comments in toto, possibly contribute to the discussion on taxation options in a meaningful manner and save yourself a coronary to boot.
    Tedious – then don’t read it
    Rant – only because you don’t agree with it
    Meaningful – more than your comments as far as I’m concerned. I posted many moons ago that the most fair taxation system was based on tything consumption – all of it.
    Coronary – no way, my heart is in the right place and is concerned with the entirity of society, not just those with house/car/savings envy. It’s also very healthy, my two children who are doctors will attest to the fact :-)

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  104. Gerrit

    Developed from the fact that to increase childrens well being, the Greens needs the state to spend more money.

    Only way to get that is to increase taxation. Now the current taxation regime has got to the end of the road in the fact that the few tax payers remaining dont earn enough to enable the state have the funds to fund the policies the Greens would like to implement.

    Hence the discussion on other tax collecting strategies.

    Quoted pretty much in full as this is what it requires.

    The answer to your question is that you are already admitting we are in failure mode and you want to increase the scope of that failure.

    More taxation is not the answer. The state can’t (and frankly, shouldn’t) have any more taxation, it already has far (far, far) too much. Something like 31% of GDP. In a paper that someone conveniently linked to recently, but now of course I cant find, the “tipping point” at which people take interest in what the government is spending our money on and they want the government to spend less is 19% of GDP.

    What we need to do is not increase the taxman’s share of our meagre earnings, but to increase our overall earnings, a process which, funnily enough, increase the taxman’s take also. We have a long way to go to get the taxman’s take back down to an equitable proportion of GDP.

    Stop looking at issues like children’s well-being in isolation – these issues are just of symptoms of an underlying disease. That disease is that the the country is fucked. We need to address the disease; papering over the symptoms is just playing Whack-a-mole with peoples lives.

    Taxation will not fix the disease.

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  105. db – correct

    The question that we now face is “what is the responsibility of the state aand what is the responsibility of the individual?

    FROG
    PERHAPS WE COULD HAVE A NEW THREAD ON THAT TOPIC, WHICH, AT THE END, MIGHT GIVE US SOME INSIGHT INTO WHAT APPROXIMATE AMOUNT NEEDS TO BE RAISED IN TAXES?

    Pretty Please!

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  106. More taxation is not the answer.

    Sure. But better taxation is part of the answer, winding it right back to my original proposition: taxes on wealth not income.

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  107. Wealth = personal property + monetary savings + capital wealth of income producing assets.

    Income = revenues generates from the categories of wealth + earnings received from labour.

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  108. Gregor W

    I see the issue of trying to punitively tax investment that show a low rate of return a wast of time in regards the cost of collection versus the return.

    Remember the Plumber invests in year one $20K for a van and tools.

    He/She buys the raw material (pipes and stuff) as and when required, usually with the cashflow from the deposit he obtains before starting the job.

    Lets say his income for the year is $120K each and every year. His ROI in year one is 600%. In year two even higher. Not till year 5 when he comes to replace his van will the plumber need to make another investment into the business.

    Now many farmers, manufacturers, transport operators wont get within a bulls roar of that return.

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  109. Fair enough, Gerrit.
    I guess until the numbers are run, there is no way of knowing if the benefits outweigh the costs.

    But to go back to other points:

    1. Why should the public should bear the hidden cost of sustaining businesses that are consistently geared to be break-even or unprofitable?

    2. Accepting your premise, what measures might be adopted to ensure capital is allocated more efficiently and effectively for the betterment of NZ? Or alternatively, do you regard it as a non-issue?

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  110. Gregor

    re:-
    “Wealth = personal property + monetary savings + capital wealth of income producing assets.”

    Right. So if someone has a house they rent for $5,000 per month, that is full of furniture, a car, savings of $1,000 a KiwiSaver account with $5,000 in it and NO debt, an income of $180,000 per year as a musician and has a lifestyle that consumes all of that monthly cash flow, how much tax should they pay ?

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  111. Gregor W,

    Taxing non performing investment is a non issue. Simply cant be done to derive a steady and budget able tax take for the state.

    If you could implement it it requires a large infrastructure investment on the part of the state to implement basically a nil tax take.

    After all you want to tax business if they don’t fully utilise their assets.

    So if all business do (fully utilise their assets), there will be no tax to collect but the state still need to retain the huge expenditure to oversee the status of all businesses.

    No the best way to expand state expenditure in child development is by reducing state expenditure in other areas.

    Arts, music, politicians, bloated state departments, etc.

    Lets decide what is important and ditch that, which is not.

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  112. Wealth is the amount and value of of “work done” that you control.

    A Picasso is a risible amount of actual work done, protecting it is more work than the painting was, but it is uniquely the work done by Picasso (though I think him overrated). So the “who does the work/quality of work” is a part of the value, but it is always “work done” times that value multiplier.

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  113. One, we are not overtaxed.
    Government in NZ is relatively small compared with more successful states.
    In fact private investment has failed to deliver in NZ in many ways. We need the State to take up the slack, which means either taxation, borrowing or QA, “printing money” (for economic ignoramuses).

    Two. Nationals present tax cutting and cutting the public service is killing the economy and the tax take. Not growing it. Dis-proving the neo-liberal, cut taxes, cut spending and private business, otherwise known as the confidence fairy will take up the slack

    Taxation is not lost to the economy, as Gerrit seems to assume, and Photo likes to pretend, a misinterpretation of the Laffer curve, which Chicago economists love because it supports their counter-factual theories. . In most cases increasing tax, and spending, lifts the whole economy as it is used locally.
    http://www.alternet.org/its-simple-cutting-deficit-will-kill-jobs-and-hurt-growth-taxing-rich-wont
    Hence the faster rate of economic growth with more leftish Governments.

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  114. @ dave stringer

    Re your scenario, without working through the various tax rate settings of income vs wealth taxation its impossible to know.

    A lot of it comes down to what the state sets the tax free / UBI threshold, what the flat income tax rate would be over that threshold and also structuring taxes on returns from all asset classes and labour equivalently – that is, ensuring wages, interest, dividends, capital gains etc. are being taxed in an equitable fashion so as not to be borne unduly by the wage earner as it is today.

    Put simply, if structured correctly those that are asset poor / income poor get a break enabling mobility towards the middle class, those in the middle probably see a bit more in their pockets enabling then to build wealth, and those that are asset/income rich have their proportional obligations lined up with everyone else.

    The real negative impact will be on those who are asset rich/income poor – which is likely to affect a lot of retirees – but there are mechanisms available via specific transfers to mitigate this as long as it is offset by some form of inheritance or estate duty.

    If you want to take a look at a macro setting calculator, IIRC Gareth Morgan has put one up online somewhere. It’s worth taking a look.

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  115. @ Gerrit

    After all you want to tax business if they don’t fully utilise their assets.

    Once again for clarity: It is not a tax on specific under-utilisation. It is a tax on capital under-performance.
    It doesn’t matter if your plant is running @ 1% or 100% – it’s the state expecting that your investment, however you choose to run it returns a minimum to reduce the scale of ‘shadow’ transfers – depreciation and tax losses – that businesses can current be geared to run, all the while increasing their capital value aka ‘wealth’. I can’t explain it more simply that that I’m afraid.

    So if all business do (fully utilise their assets), there will be no tax to collect but the state still need to retain the huge expenditure to oversee the status of all businesses.

    Not at all. The capital under-performance tax only affects those businesses who whether by (i) poor investment choices or (ii) tax efficiency manipulation run their business at less that a mimimum return after expenses.
    Anything over the minimum is taxed as per normal coy tax rate (whatever that setting may be).

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  116. Gregor W

    Sounds so good in theory, lets see it in practical terms. Ever run a business?

    If we go back to the trucking company, he/she has a clapped out old truck doing the customer deliveries.

    They invest in a new truck. Automatically he is facing punitive tax rates because the investment in the business has gone up, but the returns remain static.

    His return on investment goes down marketly as the business does not gain any extra customers or revenue.

    What you are actually measuring and adding punitive taxes to, is Shareholders Value Added (SVA). How much are businesses adding to the shareholders investment. If this is too low you will acrue punitive taxation.

    Good luck setting that up as a state set and measured KPI across all NZL businesses.

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  117. @ Gerrit

    Yes I have run several businesses. Burned on one (fraud), broke even on another, made a little money on the last.

    They invest in a new truck. Automatically he is facing punitive tax rates because the investment in the business has gone up, but the returns remain static.

    You’re still not getting me. If the owner operator can’t reasonably see a minimum after expense return from his business, why would he invest? Why spend more to make the same amount of money? Would the bank lend you money if you can’t show a reasonable cashflow/RoR to support their investment? The purpose, yet again, if to specifically eliminate any tax advantage of people gaming losses and depreciation, leaving the taxpayer to carry the can. If you are happy footing artificial losses then that’s fine, but I’m not.

    To a degree you are correct re SVA but only on the condition that the value add does not pass a minimum return threshold – something which any business case should have to do anyway.

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  118. Gregor
    if . . . .

    The purpose, yet again, if to specifically eliminate any tax advantage of people gaming losses and depreciation, leaving the taxpayer to carry the can

    why not just remove depreciation and replace it with a 1-off expense of the capital purchase AND make losses ineffective for tax purposes. In other words, remove Accrual accounting from the tax system and have it work purely on cash-flow?

    Seems much easier to implement that the complex, ‘made for accountantcy fees’, approach you’re proporsing.

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  119. An excellent idea Dave.

    All I wanted to put forward is that there are numerous mechanisms to (i) stop gaming (ii) encourage more productive investment behavior and (ii) level the tax system to eliminate the advantages that currently support those benefiting from wealth as opposed to earning income – and that the state should be actively implementing them – rather than chucking them in the ‘too hard’ basket.

    A healthy debate is the start!

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  120. This thread should be about the callous right wing attitude towards the suffering of children and how the removal of community services and support makes things worse.

    Somehow it got sidetracked into a taxation debate …..

    Here’s a prime example of just how shitty Rodneys old mates and allies the national party are towards children and that example is …… Alcohol.

    Police dealing with often shocking cases of child abuse and murder have stated that Alcohol is often a major cause/factor. Same with ALL our serious violent crime.

    But you’ll never hear a national police minister or any national politician say that and the reason is money ……Lots of money and perks .

    National wont lower our high legal blood alcohol limit which allows our drivers to be half pissed, its estimated lowering it to the same levels as Australia and Britain have would save in excess of 30 lives per year, some saved might be children and a lot would undoubtedly be parents.

    National is on side and in bed with the booze industry and that has extremely negative consequences for countless thousands of children and of course the country as a whole.

    The Nats and Rodney would rather just bad mouth solo parents than do anything real to help the kids.

    They do however have some lovely private prisons to sell you …..No ? how about private schools with unqualified teachers then …

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