Idiot/Savant over at NRT has recently supported re-instituting wealth taxes, specifically in response to news about Oxfam’s wealth research, that there is vast wealth inequality in New Zealand. (which ironically, is not actually news- this trend to greater wealth inequality is a long-standing problem, even if it’s not yet as bad here as it is in say, the US, which is a virtual oligarchy for the wealthy)
Steven Joyce is frankly completely in error if he thinks nobody resents this level of inequality. It’s not appropriate, and there needs to be better measures in place to lift up the rest of society if we’re going to continue maintaining our pseudo-capitalist neoliberal/social democratic hybrid society,1 and some of that can be reasonably paid for with wealth taxes.
Some of this issue is down to corporate tax dodging, sure. But it’s worth looking at taxes on individual wealth too, as taxes on individual wealth are supposed to be high enough that the wealthy (which I generally define as people who rely on wealth for a significant portion of their income) are actually incentivised to invest money they don’t intend to actively spend soon in companies, so that it’s being productive for ordinary people.
I/S is quite correct that land taxes2 would be one desirable type of wealth tax we should consider, especially if some of that money is redirected into funding social housing, subsidising services for renters or even directly subsidising affordable rental properties, so as to offset likely increases in market rents from such a tax. This would have the effect of gradually pushing the least profitable (and hopefully therefore some of the worst) landlords out of the market, discouraging land banking, discouraging “housing investments” that aren’t lived in, and adding further incentive to have rentals occupied beyond offsetting maintenance, rates, and the opportunity cost of housing investments. Arguably people pay a “land tax” in the form of rates, but that’s more a building-value-based costing of local service provision than it is an actual wealth tax, although of course there will certainly be landlords that argue that paying rates on an empty property already incentives them to keep it full.That said, this isn’t exactly a radical idea. In fact, John Key was reportedly even mulling over the idea early last year.
Another thing worth considering is that there’s no inheritance tax in New Zealand. Why not? If you’ve got a large enough collection of property to actually merit the name of an “estate,” (ie. well over a million dollars worth) maybe your heir(s) should pay some tax on it if they want to collect, or forfeit part of it to the state if they don’t pay. That’s not unreasonable. And the law can be designed to allow reasonable exemptions for family farms that might trigger such a tax due to large land areas so that farms don’t have to be sold or part-sold to large or overseas commercial interests when their owners pass, so long as those farms remain closely-held family enterprises for a reasonable period of time.
Capital gains taxes and financial transaction taxes also fall into this area, although if we were to institute other wealth taxes, we might not need a CGT.
Wealth is almost3 completely untaxed in New Zealand, and that’s not actually right. If we have to put up with GST that unfairly overtaxes the poor, and PAYE that targets labour for tax, the wealthy can at least pay a Capital Gains Tax, if not several more different types of taxes because they can afford it. If they want to pull an Atlas Shrugged and all go off and live in tax havens, fine by me, we can just nationalise any assets they own here in retaliation if it ever becomes a legitimate problem4.