By Gareth Morgan
It was great to have a frank exchange with Paul Henry about The Opportunities Party's first announced policy on closing a tax loophole this morning.
While I appreciated his honesty, sadly Paul hadn’t done his homework. His claims were self-interested and reflected the views of someone who actually doesn’t care about other New Zealanders nor the rise in inequality that governments have presided over since the Ruthanasia of 1990. While he was quick to whinge, he didn’t offer one suggestion how he would address the well-recognised anomaly.
First up, before I was even on the set he called me a "socialist wowser". So of course that set the tone for our exchange. I was not given the courtesy of an uninterrupted rejoinder – as is the style of shock jocks trying hard to boost their ratings. To be frank, that style is too weak intellectually for me to respect.
This tax reform policy will not increase the tax take by a single dollar – a point Henry simply ignored. Instead I am proposing to stop the government charging wage and salary earners too much tax by closing an obscene loophole (called the Trump loophole in the US). Any money raised by closing these tax loopholes will be recycled in the biggest income tax cuts the country has seen. That apparently is "socialist".
All assets provide their owners with a benefit, each and every year. For those assets where the benefit is already taxed - like deposits and shares - there will be no change. For those assets where the benefit isn't taxed, my proposal is to tax it as if it were a bank deposit.
At the moment the burden of tax falls unfairly on wage and salary earners. Who cares? Henry doesn't that’s for sure. Along with the Hard Right such an assessment reflects the view of a "socialist wowser". He needs to read the reports of a succession of tax reviews that the government here has commissioned. Sorry I forgot, not part of his job spec.
Let’s be clear. I’m all for rewarding hard work and talent that generates wealth. What I am totally against is maintaining a flawed income tax system that enables people to get rich by doing nothing apart from speculating on housing. What I am totally against is Establishment parties and career politicians who have presided over this debacle because they haven’t the guts to call it out.
You wonder why it is so hard to get ahead in modern day New Zealand, particularly for young people? Why are decent paying jobs in short supply yet housing costs the earth, even to rent? This tax loophole is right at the centre of this cancer. Far more successful economies than ours have not had a rise in real house prices over the last 50 years. Our leaders have let New Zealanders down badly.
By closing this loophole and returning the tax gathered via tax cuts at the bottom end of the income scale, at least 80 percent of Kiwis will be better off – another point Henry couldn't care less about. At the same time we will get more money invested in productive businesses, producing better paying jobs, so that we can afford the houses we are paying so much for. We will bring to end this pathetic dependence on overseas capital that turns our PM to a globe-trotting beggar, and sees The Treasury advise that we should keep cutting corporate tax to zero.
Other countries have a variety of taxes that are similar to what I am proposing. Often they are imperfect, and riddled with loopholes so that the rich can avoid them. Yet some countries manage to have housing markets that aren't crazy like ours. Instead people in successful countries like Germany put their money into businesses rather than houses, and everyone is better off as a result.
Secondly Mr Henry called my proposal an "envy tax", and said that he "supports aspiration". Supporting aspiration is irrelevant to this discussion, I’m talking about tax cheats. Henry in essence doesn’t care that hard working PAYE people are paying for this loophole that the property-speculating elite are exploiting.
I have no problem with people getting rich from investing their money in businesses that provide jobs and incomes for people. I applaud it, I have done it several times myself. This helps society. I do have a problem with rich people stashing their savings in housing, land and unproductive assets like boats and cars that clearly provide them a benefit every year but don’t attract a tax impost. Tenants and those whose money is in a bank account don’t have that tax break.
If that is what Paul wants to do with his money, fine. Our tax system shouldn’t encourage him however to invest his money in that way.
There aren’t many policies that can reduce inequality, improve economic growth and make 80 percent better off. It sounds too good to be true, right? So why have people like Paul Henry got their knickers in a twist?
The answer is simple. Paul has done well out of the current system, so if he doesn’t care about the rise in inequality and its cause, then logically he will tell wage earners to naff off. He is one of the top 20 percent that would have to pay more under this tax reform policy. I expect that some of the top 20 percent will be vocal opponents of this reform. They will tell you it would be disastrous for the country. The truth is that it will be disastrous for the unearned gravy that embellishes their lifestyle.
I am also one of those 20 percent. The difference between Paul and I is that I care about the problems this country faces more than I care about my own hip pocket. The Hard Right doesn’t, that is their prerogative but thankfully at the ballot box they only have one vote each.
If you want to find out more about the tax reform package, or ask a question, join the conversation at www.top.org.nz/top1.
