Detail on the Green Party ‘wealth tax’

A key part of the Green Party ‘Poverty Action Plan’ announced yesterday was a wealth tax that would partly fund major benefit increases. The Green website soliciting support and petition signatures has very sparse information:

A 1% wealth tax for those with a net-worth over $1 million.

Media gradually provided details.

Newsroom:  Greens unveil plans to overhaul welfare and tax systems

In its first election policy announcement, the Green Party has called for a guaranteed minimum income (GMI) of at least $325 a week for anyone not in full-time employment, including students.

The policy, costing a total of $6.6 billion in year one and around $12 billion a year from full implementation by 2023, would be funded by a wealth tax – where people with assets of more than $1 million will pay a 1 percent levy per year – and two new tax brackets for high income earners. The Greens expect to raise $8 billion from the wealth tax in the first full year, rising to $9 billion by 2023/24.

To pay for the Poverty Action Plan, two new tax brackets would be created to tax income above $100,000 and $150,000 at a higher rate of 37 percent and 42 percent, respectively. This would affect the top 7 percent of income earners, the Greens say, and generate $1.3 billion a year.

This suggests the wealth tax and tax bracket changes will not fully fund the benefit increases – $9b + $1.3b is less than $12b.

This must just be based on estimates, as valuations would have to be done on wealth/assets-liabilities.

It will be calculated on an individual basis, meaning a couple would have to own at least $2 million in assets for both of them to begin paying the wealth tax.

The tax will also exclude certain assets from consideration, including individual household assets – furniture, electronics and vehicles – worth less than $50,000 and Māori land under the Te Ture Whenua Māori Act. Charity organisations with assets held by individual members would not be counted either.

The wealth tax would affect just 6 percent of New Zealanders, according to the Greens’ figures.

For most people property will be their only assets considered as wealth – as well as businesses, which could be quite hard to value annually.

Some examples:

Image

I had to search for details and eventually found them via Scoop. The Summary document is also very sparse in details. For that you have to go to their policy document. The Summary of this is again very sparse, so here are some key details on the wealth tax:

Those who receive more money from the Government will think it fair.  Those being “asked to pay a small annual contribution” may think differently.

I presume that most of those applauding this wealth tax will not be in the 6% of people who would have to pay more tax.

But this is all subject to:

  • The Greens being re-elected back into Parliament
  • Coalition negotiations with Labour (Grant Robertson said they would have their own welfare/tax policy)
  • Veto of NZ First if they are also part of the next government
  • A “detailed policy development process”
  • A decision by Cabinet to proceed with whatever comes out of the process.
  • Legislation being passed in Parliament.

That could take a year or two at least if it is able to proceed.

Full policy document:

Click to access Poverty_Action_Plan_policy_document_EMBARGOED_2.pdf

 

 

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37 Comments

  1. John J Harrison

     /  29th June 2020

    Typical Green policy.
    Sums do not add up, 1% would rocket to 10% within a decade.
    Then they will belatedly realize that they have run out of the productive members of society to gauge tax from to keep Shane’s nephs on the couch.
    Straight out Communism— and not by stealth.

    Reply
    • Ray

       /  29th June 2020

      Same old, same old, tax to be paid by people “we” don’t like with much fudging and dodging.
      Māori Trusts to be treated quite differently from all others, Auckland houses different from farms, and no doubt all art collections will be declared taonga and non taxable (got to keep the Chardonnay socialists on side).

      Reply
      • Duker

         /  29th June 2020

        Where does it say Auckland houses are different to farms. Its the nett value. ( which is less any mortgage) for both .
        Should push people into productive assest like farms that can pay the tax rather than houses which unless rented dont.

        Reply
    • Blazer

       /  29th June 2020

      The non productive ,well paid service sector has exploded in the West since the 80’s.

      Real work is for …poor people and those on working visas to depress costs and increase profits.

      Reply
      • If you think that people like my stepfather who began with nothing as one of 9 children whose mother was widowed and ended up exceeding his ambition to have 100 men working for him don’t work hard, you’re dreaming. In the early days, he took home less than the workers did.

        Reply
        • Blazer

           /  29th June 2020

          How many tiny violins can you play in one day?

          Reply
          • Charmless & full of spite and envy as ever, dear, but you do seem to have learned how to use capital letters.

            If you can’t see the point that he had to work hard to make the money that he ended up making (he had 9 entries in the Business Who’s Who), you must be very dim. But I fear that you are just being your usual nasty self and indulging in your usual putdowns.

            If you really imagine that people who make a lot of money don’t work for it, there’s no point in trying to explain it to you. Do you really imagine that people like Michael Hill and Stephen Tindall didn’t work for their money ?

            Reply
            • Blazer

               /  29th June 2020

              which one of those is your stepfather?

              Your fantasies are..amusing.

    • Blazer

       /  29th June 2020

      How/why will 1% rocket to 10% within a decade?

      Reply
      • John J Harrison

         /  29th June 2020

        Blazer, because that is what all lazy, socialist politicians do.
        At no stage will they every address the bloated public service which has exploded by 20% since the COL came to power.
        They just tax, tax, tax.

        Reply
        • Blazer

           /  29th June 2020

          That is merely your prejudice John…there is no substance to your argument.

          The public service sector budget reflects demand.

          National increased G.S.T by 20% and borrowed money for tax cuts=go figure!

          Reply
          • John J Harrison

             /  29th June 2020

            Blazer, you are absolutely correct.
            I am extremely prejudiced against Communism by stealth.

            Reply
            • Blazer

               /  29th June 2020

              At least you do not need to look under your bed to find a ‘commie’ these days.
              A quick perusal of Nationals Parliamentary line up will suffice.

  2. FarmerPete

     /  29th June 2020

    Either my maths are bad or theirs are. In the example above why is Bills tax $10k and Melinda’s $30k.
    This is a good way to tax retirees out of existence. They pay off a property of their working life, have one major asset (i.e. most people) and are largely reliant on super. Rates go up and now they may have to find an extra $10k plus a year?

    Reply
    • Blazer

       /  29th June 2020

      Nationals ..talented finance spokesperson…Paul ‘I’m not Maori’ Goldsmith seems to have trouble with simple maths,so you are in good company.

      ‘The wealth tax would be particularly severe. A successful small business person, owning a $1 million house and a business worth $1 million would have to pay $40,000 a year for the 2 per cent wealth tax.’
      Completely wrong,completely misleading,completely incompetent….completely expected National strategy a la the non existent ‘homeless man’ story.

      Reply
      • Going by the very vague information initially supplied by the Greens on their website – “A 1% wealth tax for those with a net-worth over $1 million” – then there is nothing wrong with Goldsmith’s claim.

        I had to read through various media reports (that took time in becoming available) and search for links to details before I could see the Green fine print.

        Greens are being quite misleading (by omission of details) on their website still: https://www.greens.org.nz/support_our_poverty_action_plan

        That’s a bigger issue for me. It’s their grossly substandard ‘policy’ they are using to try to recruit petition signers and contact information givers.

        Reply
      • Ray

         /  29th June 2020

        Blazer, if that example had his/her wealth in one of those evil Trusts then that is what they will pay.

        Reply
        • Blazer

           /  29th June 2020

          ‘It is clear from the Green’s detailed policy document that the tax applies on the value of net assets for an individual above $1 million. That means if you have assets of $1.1 million you pay 1% of $100,000 which is $1,000. You don’t pay $11,000 and work out how you can get rid of $100,001 of your net worth.

          Paoara claims however that once you become a millionaire the tax applies to all of your assets, not the proportion above $1 million.’
          MS@TS.

          Reply
          • Duker

             /  29th June 2020

            Yes . A $1 mill home pays no wealth tax per year.
            A $2 mill home with a $1 mill mortgage pays no wealth tax per year, as the ‘nett’ wealth is still $1 mill

            A couple with a $3 mill home with a $1 mill mortgage have a nett wealth of $2 mill but still pay no tax as they are joint owners of that home.

            Reply
      • FarmerPete

         /  29th June 2020

        In the meantime you have totally sidestepped the question.

        Reply
        • Blazer

           /  29th June 2020

          Apologies…you are in fact correct…Bills assessment on 2mil is wrong.

          Reply
          • FarmerPete

             /  29th June 2020

            As the rugby sides would say ‘full credit’ for acknowledgement.

            Reply
      • Alan Foster

         /  29th June 2020

        In the policy, Wiremu (page 14) owns $1.2 million & has to pay $2,000 i.e.10% of $200,000

        Reply
  3. Pink David

     /  29th June 2020

    Wealth taxes are just another way of raising revenue. It won’t bring in very much money and will be complex to administer creating a lot of distortion, but that isn’t why the Greens are putting it in.

    It’s quaint given the financial problems NZ are going to have that this is even an issue. Many tens of billions have been spent as a result of the lockdown, this tax will raise a few hundred million per year.

    Reply
    • Blazer

       /  29th June 2020

      I’m sure we can find a use for a ‘few hundred million a year’.

      Reply
      • Pink David

         /  29th June 2020

        I’m sure the people who’s money it is can also find a use for it.

        Reply
  4. David in Aus

     /  29th June 2020

    This kind of policy will prevent me from coming back to NZ. You don’t come back to be taxed to oblivion. If you have wealth in NZ that is fungible think about leaving.

    Reply
  5. Dole Bludger

     /  29th June 2020

    Why not tax every income earner 50% and give the money to the breeders and bludgers? I can become one easily.

    Reply
  6. David

     /  29th June 2020

    So I have 5 million dollars of property and debt of 4 million to my children/mate/trust/company on it so pay no tax.
    The cost of administering a wealth tax would be eye watering. Its such a bloody stupid policy from a bunch of idiots who have managed to get zero environmental policies through. How about sorting the sea sancturies and cameras on fishing boats you useless fools.

    Reply
    • They also seem to want to reintroduce death duties. If the money comes out of the estate…what does that make it ?

      Reply

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