Crunching The Numbers: On the subject of the Capital Gains Tax, it is simply not sufficient to assert that all income is the same and, therefore, must be taxed the same. Those who say this ignore the fact that, as RNZ’s Guyon Espiner so rightly observed, not all income is made the same. The working life of the small business owner is very different from that of wage and salary earners. In addition to plying their trade and/or providing their service, they are saddled with a great many other responsibilities.
IT’S A CLASS WAR – of a most unusual kind. The looming battle over Labour’s Capital Gains Tax (CGT) pits a pampered and overpaid Professional and Managerial Class (PMC) against the constantly expanding class of tradespeople, service providers and independent contractors: the tens-of-thousands of small businesspeople whose daily labours continue to make, move and mend this country.
The PMC is determined to protect its cosy position in New Zealand society by making sure that any expansion of the state’s revenues is secured by taxing something other than their salaries.
They have been made aware of the rapidly rising incomes of the “tradies”. How could they not, with their brand new SUVs clogging the streets outside the local school every morning and afternoon? What’s more, they strongly suspect that all this new-found wealth is not being taxed in the same way that their incomes are taxed. They may not know much about running a business that isn’t funded by someone else’s money, but they’re pretty sure these nouveaux riche boofheads are dab hands at short-changing the IRD.
Clearly, these upstarts need to be taxed at the same rate as themselves – 33 cents in the dollar. And because, as the owners of small businesses, they can get away with paying themselves ludicrously low wages, they must be made to hand over to the IRD one-third of the currently tax-free capital gains they make when they sell their businesses.
They’ll squeal and moan, of course, but a CGT is by far the fairest fiscal solution. Capital gain is a form of income – and all income must be taxed. Besides, it’s just not right that people with nothing more than a trade certificate (or whatever they call it) and often with no qualifications whatsoever, should be making more money than someone who spent four or five years at a university getting properly qualified. A university, mind you, not a dreary polytechnic tucked away in some provincial hell-hole like Wanganui or Invercargill!
But simply saying that all income is the same, and must be taxed the same, ignores the fact that, as RNZ’s Guyon Espiner so rightly observed, not all income is made the same.
The impressively credentialled members of the PMC, large numbers of whom are employed by the state, turn up for work every day and are paid every fortnight. All the necessary deductions for tax and ACC have been taken care of by their employer. If they’re teachers, nurses, social-workers, or just plain, common-or-garden civil servants, there’s a very high probability they’ll be members of a union. Regular pay-rises and improved working conditions are expected – and delivered.
Life for the small business owner is very different. In addition to plying their trade and/or providing their service, they are saddled with a great many other responsibilities. They have to take care of their own tax payments – as well as the tax payments of any staff they may employ. Then there’s Kiwisaver and ACC payments to sort out. They must conform to the provisions of OSH legislation and deal with the infernal complexities of the RMA. For many, being able to pay their bills depends upon other people paying theirs – and getting some debtors to cough-up can be a nightmare.
So, Guyon is right. Not all income is made the same. Which is why not all income is taxed the same.
Which leaves the PMC with a problem. They are only too aware of the need for increased government spending on health, housing, education and the environment. After all, so many of their jobs are about providing these public goods. On the other hand, they have a lifestyle to maintain; overseas trips to pay for; kids to finance into university and home ownership. Yes, their salaries may be large – but they’re fully extended. They are not keen on paying higher income tax. Not keen at all.
It might not be so bad if all these tradies; these restaurateurs; these independent contractors were caring and responsible citizens. But dammit! What’s with all these monster SUVs? Haven’t they heard of global warming? And the things they say! Honestly, it borders on hate speech. Sexists, racists, homophobes: the whole kit and kaboodle. To call them “deplorables” would be to seriously understate the problem. And then they get to retire with a cool million bucks – tax-free.
No bloody way!
This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 12 April 2019.
The Tradies in our town are doing quite well at the moment, certainly in contrast to six or ten years ago when the building industry and much of the real economy tanked as a result of the GFC. The young wives/partners all seem to be pushing prams, not having to work and proudly raising healthy happy families. More power to them.
I feel sorry for the misguided fools that are coming out of uni with, mountains of debt and a twisted view of their fellow man and society due to the Marxist, feminist, snowflake, intersectional, gender studies bullshit getting shoved into their vulnerable young minds.
"If they’re teachers, nurses, social-workers.... There’s a very high probability they’ll be members of a union. Regular pay-rises and improved working conditions are expected – and delivered."
I'm a little surprised and sad to see Chris Trotter taking a swing at teachers nurses and social workers. Maybe not teachers, because they used to having people take cheap shots at them. Usually people who wouldn't last for seconds in a classroom in a low decile school. And as someone who spent 25 years in low decile schools, coping with the changes that David Lange claimed he wasn't responsible for, I know a little bit about what I speak.
Must be a long time since you've had anything to do with the union Chris, because you should know that these "expected" and "delivered" regular pay rises are fought for, often bitterly. And often it's not the regular wages that they want but some form of betterment of conditions. Conditions which in the private sector are dire, because their unions have been gutted.
I had occasion to ring the post office and find out why a parcel hadn't been delivered the other day – they said "His GPS said he was at your place at........ " workers are now being controlled to an extraordinary degree, such that they might as well be in Foucault's panopticon.
My son's taxes are all taken care of, but he has no choice as to when he works, and as I have explained before there are times when he can't be trusted to drive, and there is not much in the way of public transport for the people who keep the city going at night time. So I have to run around a fair bit.
When I was teaching, I would have loved to set my hours and chosen my classes, but of course I had to do my share – probably more than my share considering some people couldn't handle them – of teaching fuckwits and criminals.
Which brings me to my major point. While small business people do have extra responsibilities – and I have actually been self-employed and didn't find them to much of a burden – they have the freedom to choose their hours, choose their jobs, and usually get it quite a bit of money. And judging by the difficulty I'm having getting an electrician to do a small job around my house, they're not backward in dismissing smaller opportunities to make money. So pardon me if I'm not particularly sympathetic to their having to pay capital gains tax if they sell their business.
Bit of a cognitive disconnect here.
The overwhelming majority of tradies own a business with one to three staff, which depends on the labour and skills of the owner to remain viable. From NZ labour force survey.
Only a very few, are ever worth enough on sale to attract capital gains taxes.
Though many of us hope we get something.
The payers of capital gains taxes will be that very managerial class that you are talking about, with their three or many more rentals, the children of the wealthy, and corporate farmers with millions of dollars in land speculation.
High land prices, and the necessary borrowing for trade premises, make life difficult for genuine businesses.
The wife of an electrician up the road insists that her husband is a businessman.
And talks of how long he has been in 'business.'
Had an amusing story from my sister about a couple they know in Wellington. The guy had put in a good, solid 20 years plus in his government job there, long enough to score a pension. But he could see the writing on the wall with a sinking lid policy that would force out most of his age group.
No matter. Plenty of money to be made in the private sector, contracting and advising the same government departments.
Except, oh dear, all of sudden, all the little things that had been taken care of for years by unknown functionaries on his behalf now landed on his plate. GST, Fringe benefits tax, ACC, home office calculations. various other rules and regulations, many with monetary impact, not to mention the far greater attention that had to be paid to cashflow, which trended up and down. His wife continued in the sector, earning good money, so there was that padding.
Unfortunately he made the mistake of bitching to my sister about all this during a visit to them and she, being a life-long farmer, basically let him have it right between the eyes, starting with a bit of a lecture about what they'd been telling him for years about their business/"lifestyle", along with dredging up some of his past jabs about their asset wealth and being on the pigs back.
Possibly not the most fun dinner he's ever had, but I'd like to think it gave him pause for thought on the flight back to our Capital city.
Quite a rave Chris, you must be looking forward to the cannabis referendum.
You may be a curmudgeonly old lefty but by God you’re right on the mark sometimes!
As always with stereotypes theres and element of truth...but for every tax dodging contractor theres probably two that are being royally shafted....its never so simple
Taking care of your own tax is no fun. Neither is sending bills, and collecting overdues and bad debts. Then there's keeping fine detail records of multiple transactions, managing cashflow and spending time on no income finding work. And when a downturn comes being the first to feel the pinch.
I've moved from Wellington to a small town, it's really brought home to me how cossetted the public servants are. Their life appears to provincial NZ as parasitic and paid for by yours truly. Fertile ground for National, and not without reason. Add to that the PC liberalism of those classes not at the hands-on grindstone then Labour really has an issue. Still the polls say Labour is safe, so long as there is no downturn. That's playing with chance in my book.
Take that! ... all you risk-free/averse, entitled, underwritten and unionized civil service factotums.
But Chris how dare you be on their side.They are all capitalists.
A top notch column Chris !
Should be compulsory reading for the COL...can you please bring it to their attention on our collective behalf?
You've been earwigging at the free house pub get togethers have you Chris?
There could be a happier lower class if some reasonably radical changes w4ere made, ie GST down to 10% again. But the PMC class are favoured; when they are good for the people they get grudging thumbs-up but they can behave like old-time government employees, not very helpful, but on much higher salaries.
Tradies are different. When they are good, they are salt of the earth and though they mightn't be getting quite the PMC rate, their receipts are tied to their work output, doing satisfying physical work with observable results. That's when they're good; when they are bad they leave a toxic cloud behind that's over the burdened owner of the debt for fixing their shoddy work.
And on TS some anecdotes about fruit picking from the lower/no income wage class. Drive 20 minutes to work at your own expense, sit in it for half a day waiting for the brix? level to be right in the kiwifruit I think, get paid for working a half-day and drive home. Or wait on site for the fruit to dry before picking starts, or get there and be told no picking today.
This sort of work is what the precariat is putting up with at present.
And then there is the beneficiary. If you earn more than a set limit, though that would help pay for your rent or children's, or your own shoes, then your grants go down - you may be worse off. Your income is monitored closely in case you get a little bit more than the PTB have decided, you may have to refund. The idea is to keep you slaving, unhappy, unsettled, with little joy in life. The clawback on your grants plus the PAYE to be paid on earnings from work can bring your income to less than the benefit and grants you had been allowed.
Encouraging people to go out and work to advance themselves and not keeping a tight rein on every $ with a monthly summary and adjustment but with wide bands enabling you to keep most would be a forward move. Also with decent case managers who are there to help. All this is needed as much as CGT but I don't think that governments can walk and chew gum at the same time.
" Marxist, feminist, snowflake, intersectional, gender studies" = I don't really know what these words mean but I like to throw them around in a pejorative way because they sound good. -50 – someone getting close to negative territory here.
Gosh a lot of bitterness about public servants here. I must say I have some sympathy, because the average public servant sitting in an office gets a damn sight more than the average teacher at the chalk face. But even so, let's remember that a good number of the civil servants' jobs are there to actually keep the public safe. From everything from bosses rorting your wages to making sure your food is unadulterated. Even Bob Jones – hardly a Marxist recognise that the public service is absolutely necessary. My main beefs are – that they get paid so bloody much to do it comparatively speaking, and the ones at the top who get paid so, so, so much bloody more to act like CEOs of private companies.
@ Kiwidave 12 April 2019 at 14:54
Those uni students that you mention that are mis-guided probably get to that point because their degrees are essentially worthless.
It comes down to marks in their academic transcript.
I give you the eg of my sister. She took a law degree from Otago. And for the last 30 years hasn't practiced one day in the law. Why? Because her marks weren't good enough. A collection of 'C's' and the occasional 'B' means law firms won't employ her. Fact.
About a decade ago a professor at Otago told me: 'If there are 25,000 students at this university; about 20,000 shouldn't be here. Their degrees will essentially be the equivalent of toilet paper.'
Of course, it suits governments to have all these people at university as they can't be counted in the unemployment stats.
How many ex-tradies do we have in government at present? Zero? They are virtually all from the PMC's despised career politician subset and they are relying on envy to do its dirty work among us. Great column Chris.
So property speculators shouldn't have to pay tax because... tradespeople?
You seem to have bought into the National Party attack lines, and mixed it up with some bureaucrat bashing. This idea that it will be an attakc on small business which will be taxed on sale. Where's the data? Where are all these people "building up" small businesses and then onselling them?
There are more than other stereotypes at play here. Fancy stereotyping Invercargill as a hell hole. For you, Chris, from Dunedin, as am I, to those north of the Bombays, Dunedin is a hell hole....
Monster SUV's and global warming - when Stuart Nash, Minister of Police, drives one proudly emblazoned with "Labour Party MP," or the like on it, you know someone somewhere has lost the plot.....
Guerrilla surgeon; it doesn't take much to trigger you does it. I didn't realise it was a competition with points and all. What fun!
My experience with young ones making their way in the world is grounded in real life. We have interactions with a very large number, a large extended family, their friends and workmates. Our place is a popular gathering place and I like to engage with them, listen to their concerns and offer some (hopefully useful) advise and wisdom. I have noticed a very concerning trend with some studying at our universities; a cynicism, lack of genuine humility and a pathological aversion to the society, its founders, traditions and institutions that gave rise to them and all the freedoms and prosperity we now enjoy. There seems to be a denial of the reality they should be able to see with their own eyes; a wilful blindness. This attitude is saddening in ones so young with their futures ahead of them. The joy of starting the adventure of life is replaced with an unreasonable and self destructive morbidity. I can't imagine why anyone would want to do that to them; I don't like these people.
Quite a contrast with the young ones courageously and wholeheartedly embracing the challenges and rewards of becoming useful to others, learning skills, falling in love and starting families and businesses.
Stuart Nash? Surely not. Before he got to be a Minister, or perhaps before he even got into Parliament, he used to have a Fire Engine.
He could actually have done something useful with that.
Formal Complaint to RNZ
...has the official reaction to the Christchurch mosque shootings caused something to break in the political fidelity of those New Zealanders not invited to signal their virtue on Wallace Chapman’s ‘The Panel’, or Jessie Mulligan’s ‘The Project’?
Is a quote from
Chris Trotter is writing on Whale Oil's -Incite (Members Only)
How can the public be sure Radio New Zealand's Overton window aligns with that of the general public?
Kiwi Dave. Not a competition, as I may have mentioned before I'm deducting 10 points from the perceived IQ of anyone who uses all those pejorative words they haven't got a clue what they mean. And I haven't noticed anything of the sort you mention about my son's friends, although only about half of them have been to university. They're all good kids who want to work, contribute to society, get married and buy a house. And that latter is getting harder all the time. So my subjective experience is just as good as yours.
Now to the point at hand. Well, the middle class have made their noises and the working class have been shafted yet again. Just as they did when people tried to regulate their quack medicines. So what if anything now are Labour and the coalition going to do to try to close the wealth and income gap? Or do they even care anymore? One of the best things to do of course would be to get rid of the regressive GST – but of course they won't do that because it's cheap and easy to collect, even though it hits the poorest the most. I guess they could extend working for families to more people, but the middle class are going to resent that going to the "unworthy".
Or they could give ordinary workers a chance to avoid tax like the middle class and the tradies do. One of our local coffee people delivers his stuff (no idea what he does to it to be honest) with a huge Jeep four-wheel-drive. With a tiny little notice on the side saying something like "Bob the coffee man" to make it legal to claim on his taxes. You'd think he was delivering coffee to isolated sheep stations without roads, but no you never see him outside the supermarket car park. He sells coffee – we sell labour. We also need a car to be able to sell my labour – be nice to be able to claim that on tax eh? Be great to have a Jag with a tiny notice on the side even so. Can't do our job without food – should be able to claim that on tax it's at least 50 bucks a week. Can't do our job without sleeping either – maybe I should be able to claim for my bedroom.
And don't bullshit me that it's not a rort, because I've been self-employed and the number of things I was advised to claim for....... but of course we can't do that because our tax is taken off at source and we have, thanks to Roger Douglas/Jim Bolger no tax write-offs anymore.
So bugger it, that's it Labour is not even getting my electorate vote anymore.
I did an arts type degree and got very mediocre marks (mostly). But, at the end of the degree my writing skills had improved out of sight relative to what they were before.
They really hammer you on that in humanities. They fuckin obsess over paragraphing, referencing, researching, wording...
Now I work for a tradie small business where I do mostly office work and what I have learnt at uni has really helped.
Do we want to be a country where people say - 'oh those Kiwis are good with their hands but they won't go near a book and they sure as hell can't write to save themselves'?
I thought you righties were supposed to be patriotic?
You are so full of complacency about our present life and its direction.
You don't like the universities because some students are being taught to analyse our society and then compare it to the standard we say we have.
The rest of your cohort you say, are conforming and accepting of how things are. It appears that your group have lost the ability to care for others outside your satisfied circle. They are part of the skewed, diminished democracy we have which has settled into thinking of government as an allocator of goods to those who sell themselves as worthy, and those who aren't are separated, and disadvantaged. and branded as being degenerate and persons merely to be tolerated and left to moulder in poverty and mean conditions. Your hubris kiwidave lacks reason as well as morality.
Wow! Chris you are either prescient or have the ear of the PM, along with the small biz owners perhaps. Although her permanent dumping of a comprehensive CGT probably has as much to do with listening to the thousands of excessively well paid bureaucrats (and fellow Labour MPs) who invest in nothing other than rentals and Kiwisaver.
As a Tory I am sad she did not have the courage of her assumed convictions because now even more of the above crats will vote for her.
Changing the subject to her then, is it not absolutely clear now that she is hollow? Has no substance? I have observed from when she first hit the stage that as she only even speaks in platitudes and clichés, truisms and 6th form essay phrases, she was a façade. But thought maybe given time she may just disclose a real personality to us. Then she was, for about 5 minutes a real person on or just after March 15. Yet when given a great opportunity so show real substance and stand firmly behind a major tax change... she proved me right! To my disgust.
It was just the politics of it, Chris, surely. No need to put your shoulder to the door like this. And we on the side of society feel smeared about after it's gone. Says it all.
Saying that, the brilliant Left PR of the 'living wage' in comparison.
God, the force of and for the people (demos) by its lack in the last 40 years, proves itself.
"she only even speaks in platitudes and clichés, truisms and 6th form essay phrases"
Charles have you ever listened to your own politicians? Talk about hearing what you want to hear and using your original bias to interpret her words.
"A common theme was that the current ... system needs to be more accessible, consistent, robust and understandable. "
"I come from a country that has some pretty strong values, and a strong sense of our place in the world."
"Being leader of both the party and the country has been an incredible experience."
"The fact that I’ve visited so many times reflects my personal commitment to the relationship between our two countries."
"I am proud to be a New Zealander. "
Trade will always be an essential part of our engagement with other countries.
Better market access for our exporters and growing New Zealand businesses
internationally are critical parts of our economic strategy.
"I have as a goal my ambition to build on their efforts and those of others who have preceded me, so that I may play my part in creating something even greater for those who have yet to arrive."
These are from some of John Keys speeches. And some are from Jacinda Ardern. Now without reference to Google Charles, you tell me which is which.
Oh well back to normal a Charles?
It appears the likes of Charles W Etherington have finally got to the acceptance stage of the grief process.
Thank you for your comments Greywarbler. You are making a lot of assumptions about what I believe. Yes, it does concern me that these kids are being told (indoctrinated?) to denigrate their heritage with a very one-sided view of history and a failure to make a reasonable comparison with other societies (past and present) that is at odds with the observable reality that we live in. There is always a huge danger in believing things that aren't true or even half true, even more scary with moves to criminalise free discussion and with the truth as no defence.
The cohort of young adults I was referring to are involved with helping others with involvement in our volunteer fire-brigade, coaching kids sports, school fundraising and trips, beach clean ups and so on. More so, I would say, than the ones pushing for broad scale social change; it's as if they believe that's the answer for everything.
I'm not suggesting that things are perfect but that an entirely negative view is wrong, dangerous to society and destructive psychologically to those enamoured of foolish ideology.
GS, . You missed the point; you're only inviting people to wind you up, no one really cares about your points system.
What basis do you have for assuming that people don't know the meaning of the words they use.
To then make assumptions on their intelligence and award points on that assumption strikes me as unnecessarily offensive and indicates an almost superhuman like lack of basic humility.
The situation has not changed since government time of one Peter Fraser Prime Minister.
As he noted in 1948:" they walked to the polls to vote us in and they will drive to polls (in 1948) to vote us out.".
The difference to now is zero.Except now poverty and want are far greater and the intrest of Labour quite unaligned with the battlers of Cannons Creek or Linwood. Ardern and Co. just rolled over and played dead at the end of Act 1 when to get that far NZ First at the least was open minded.
And they believe shuffling Cullen across the stage will help.
Amateur hour with the lights out.
kiwidave.... Throwing words like intersectionality, and identity politics out there merely as pejoratives shows a lack of something. Not quite sure what. Probably understanding though. And I know damn fine that at least some people haven't got a clue what they actually mean or at the very least what the implications of them are. And as all you right wing people say when you talk about race and such forth – "it's just a joke", "it's a bit of fun", "it's ironic".
Hey Chris, are you on holiday?
Your erudite posts are appreciated.
Get back to work. People like me need you, if I am ever to be well informed in my chats over beers with my Federated Farmers acquaintances.
This is a good site for pointing the way to the current subjects and writers on things of importance to us.
https://eveningreport.nz/2019/04/24/newsletter-new-zealand-politics-daily-april-24-2019/ (Last I can see from Chris)
But The Daily Blog is getting reports of Chris's Italian trip.
This one 3/5 https://thedailyblog.co.nz/author/chris-trotter/
The Daily Blog lately has no item from Chris but there is plenty to chew on with joined-up thinking.
This was an interesting view on the Oz election which has been a great topic for everyone over here who wants to be different from the land that eats kiwis - slaps Ozzie chest, quite narrow if they are politicians, and says 'I did it my way'.
Interest.co.nz would love to see you, they must have a lot of nous if they feature Chris T.
At Australian Ballot Boxes, the Left’s Empathy Deficit Came Home to Roost
The Australian Left's Empathy Deficit you might have chosen to say. Their empathy level is rather like the old vaunted Texas motto 'Larger and bigger than that of everybody else'.
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