John MacDonald: I know you hate taxes. But have you got any better ideas?

Canterbury Mornings with John MacDonald

It might happen. It might not.

What I’m talking about, is the way some people seem to think they have to jump to the defence of the super rich whenever anyone mentions the idea of a wealth tax.

Which one of our country’s wealthiest people is actually advocating for today. This is Bruce Plested, who was a co-founder of the Mainfreight transport business and who’s done very well out of it.

And, while he’s not claiming to be speaking on behalf of all the mega-wealthy people in New Zealand, he is saying today that he would have no problem paying more tax.

Mainfreight is currently valued at about $7.3 billion on the New Zealand Stock Exchange. Bruce Plested still has a 14 percent stake in the company. So he’s done alright.

At the same time, Labour leader Chris Hipkins is saying that the party is thinking about including a capital gains tax in its tax policy - which could include taxing the increased value in people's houses, even when they're not being sold.

Which I think is nuts. I’ve got no problem with the idea of a wealth tax - I think that would be much fairer.

The reason why I’m against capital gains taxes, is that capital gain is, generally, the only way ahead for most of us - financially.

Maybe the gains we’re going to get out of property, for example, won’t quite be on the scale they have been in recent years. But why should we be taxed on that? Let alone the capital gain we get on properties we aren’t even selling.

Even talking about that possibility, Chris Hipkins is holding up a sign saying “don’t vote for us”. Because, what I’ve learned over the years, is even people on the left will avoid paying taxes if they can.

What’s more - as we see with the likes of council rates - just because your house increases in value, it doesn’t mean you can afford to pay more rates.

Just like with this idea Labour’s got. Just because your house increases in value, it doesn’t mean you could afford to pay capital gains tax. And then what would happen if, down the track, the market went backwards and you lost some or all of the capital gain you’d previously been taxed on? Tax refund anyone? I don’t think so.

So I think it’s very easy to pull holes in Labour’s potential capital gains tax idea.

A wealth tax, though, is a different story. Because, anyone wealthy enough to be on the list of targets for a wealth tax, wouldn’t be impacted as much as the rest of us if we were pinged with a capital gains tax.

But those who jump to the defence of the super rich whenever anyone mentions wealth taxes won’t agree with me. They’ll say what the Revenue Minister is saying, that a wealth tax would drive the super rich out of the country.

Someone who does agree with me, though, is Max Rashbrooke - who is an expert in inequality.

He says the facts of the matter are, that when a super wealthy person threatens to pull their money out if a wealth tax is brought in, it’s generally what he describes as “a hollow threat”.

He’s a researcher at Victoria University, in Wellington, and he says New Zealand lets wealthy people off very lightly when it comes to paying tax.

Unlike me, though, he’s in favour of a capital gains tax as well as a wealth tax. Where I’m just in favour of a wealth tax.

He says: "Capital gains tax is just so standard virtually everywhere else in the developed world. It's just part of the furniture. It's totally normal. It is bizarre that we don't have one."

On the wealth tax, Max Rashbrooke says what he would do is he’d have a wealth tax and put the money into a Kiwisaver scheme for kids which, he says, would genuinely build wealth for everyone. Not just for a select few - as he puts it.

I wouldn’t go for that. I’d put the money from a wealth tax into all the things the government pretty much can’t afford to do right now, because it’s not bringing enough money in the door from taxes.

This cost-cutting that we’re seeing now in the public sector - that’s just politics. We’re not going to suddenly be able to afford more infrastructure and more hospitals, or more of anything the taxpayer pays for. Because there just isn’t enough money. And it’s only going to get worse as the population ages.

So something has to be done. More tax is needed. And, as far as I’m concerned, the answer is to tax the super wealthy more - through a wealth tax. Instead of hitting us all with a capital gains tax.

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