Bernard Hickey on CGT. nb I maintain a neither confirm nor deny position.
If we don’t move urgently to cut debt, push down our currency and encourage productive investment, we are sending a big signal to our young to visit an airline website to buy a one-way ticket.
The current form of ‘NZ Inc’ is so good that we’re exporting our kids.
What’s wrong with us?
You cannot tax an economy into growth.
If you wish to neither confirm or deny the existence of a CGT in Labour’s tax policy, why are you only citing an article supportive of such a move
Simple slogans are simple.
You may not have noticed but cutting taxes certainly didn’t work. In fact, cutting taxes has always coincided with a decrease in the economy and vice versa.
Question: How is not confirming your position “clear and transparent” tax policy?
It always feels like Bernard Chickey is playing both ends against the middle and hopes that questions about his own financial position will be safely forgotten.
My first observation is that Bernard Hickey never discusses the mess that banking/finance in NZ has created. But the world outside of NZ is full of this kind of economic discussion – it’s as if the GFC never happened, and what we’ve learnt from it doesn’t apply to NZ.
He’s comfortable with #austerity politics and happy to blame the people who can’t fight back for the mess our real economy has become.
He’s happy to link the old, babyboomers, consumerism, ‘spending beyond our means’, inflicting debt on our children, high house prices with the cause of the GFC. But I’ve not noticed great wealth amongst ordinary people in NZ. Wages are low, though we still care for our dependents and retain public services to even out disparities in wealth and care for the needy.
Then there are by turn Bernard’s Scare Stories. About hyperinflation, threats from ratings agencies, the Greek debt collapse, the size of the elderly population, foreign debt… when his policy prescriptions – at the moment, getting foolishly socialised government debt down in size – lead to comfort for financiers like himself, and poverty for the rest of us.
Proposing a CGT is a good start to reign in finance and work on our real economy. Well done Labour!
But Bernard Hickey is not a socialist, let alone an economic analyst of any stature. He recently gave up an apparent belief in the market – but since the failure of Friedman in the 1980/early ’90s, nobody of any understanding, appart from Econ101 teachers, has believed in the magic hand of the revivalist Friedman economic movement.
I think Bernard Hickey’s got a long way to go before he makes the other adjustments necessary to understand the human economic system rather than the rentier’s version of ‘looking after number one’.
Until then, though he may be giving good financial advice to investors, I think his writing is divisive, misleading and damaging.
@Draco
Have you got some research to back up this claim?
Here is a recent paper on this issue which comes to the opposite conclusion: Government Size and Growth: A Survey and Interpretation of the Evidence
Jimmy says:
July 10, 2011 at 11:58 am
You cannot tax an economy into growth.
Oh yes Draconian Bastard, that slogan has been relevant for many a year.
“I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”
–Winston Churchill
Just curious why the speculative comments regarding CGT places the rate @15%. At this rate there still is tax advaanges for this form of investment over others. e.g. For interest earned on savings the tax rate is based on the persons marginal tax rate. For most this means that invesments lose value in real terms.
@raven
I read the abstract from the paper you referenced. It doesn’t support the claim you make. I might read the rest of the paper, but I’m not sure that it will say very much of importance.
Government spending has the same weight as any other spending when it is productive spending. The kinds of things that government spends upon are often the things that the private sector is very poor at understanding and creating. This includes health, education and welfare services, and large complex projects including infrastructure.
As as been said before – private production in capitalism is good at producing widgets. The public sector does things of other importance.
@lovinthatchangefeeling
Churchill knew sweet Fanny Adams with respect to economic management. His efforts as Chancellor of the Exchequer to bring the UK back to the gold standard in 1925 were highly deflationary and ruined a lot of industry.
@EconomicsNZ
In what way? You don’t explain. The conclusion the authors come to in that paper is the opposite of Draco’s assertion. The authors come to the conclusion, based on the data, that an increase in total government spending in tax revenue or expenditure as a share of GDP is on average associated with lower growth. As is evidenced by the quote I provided from their conclusion.
A CGT is an excellent idea. So long as, like GST, it is universal. All income should be taxed equally.
Income from capital gains should be taxed at the same personal rate as any other income.
There is an argument for exempting a family home, but firstly how do you define it, and second it still allows exceptions for million dollar mansions which are obviously investment assets. A 450k house is a necessity, a million dollar one is an investment.
If there is an exemption it should be up to, say, twice the average cost of a house.
“There is an argument for exempting a family home, but firstly how do you define it” –
Don’t ask Bill English he clearly couldn’t figure it out whilst ripping off the tax payer.
Although I’m sure the average honest Kiwi can figure it out.