I think I made a mistake.
I took a side on Capital Gains Tax (CGT) and have since been called everything from an ‘F…wit’ to a ‘right-wing secret agent’.
I’ve been compared with folks like Winston Peters to Cameron Slater of Whale Oil.
I’ve received emails from my fellow publishers in New Zealand, telling me that I’ve slipped up here…that I’m limiting my readership to far-right extremists.
Frankly, I’m afraid to walk the streets of Auckland…fearing that I’ll be ‘Steven Joyced’.
So if I can’t take the heat, maybe I should get out of the kitchen…
But, before I do, please give me a chance to explain my position.
Firstly, I’m apolitical.
I don’t care much for any of the power-hungry, fear-mongering, money-spending politicians in the Beehive…nor do I much like when they unilaterally decide to meddle in my affairs. I especially don’t like when they try to influence my decision-making through taxes.
In my view, the government is about 98% larger than it ought to be…and we the taxpayers pay dearly for that organisational obesity.
Now, the state will always be quick to point out the various schemes and programmes that they run and we fund…and the good that they bring to society. That was certainly Sir Michael Cullen’s approach with his ridiculous Tax Working Group recommendation.
But here are five problems I have with this sort of aggressive taxation regime:
It’s fundamentally insulting to Kiwis. It suggests that the government knows better how to use your money than you do. That by taxing your money and rerouting it as they please, politicians can improve your standard of living more than you could if you spent it yourself.
I’d disagree. I’d say most of the Kiwis I’ve met have been pretty intelligent…and certainly capable of navigating life on their own…and many are highly charitable and generous when they reach a time of prosperity.
It suggests that taxation is a solution to problems. That taxation is a good thing because it rights the wrongs of society. Property, for example, is overvalued in New Zealand. I fully agree there. So could Cullen fix the property market by triggering a crash? Not a chance.
The problems all centre on too much government intervention (e.g. costly consenting processes, complicated construction regulation, poor immigration strategy, etc). I’ve documented at least 10 solutions to the problem here…but most centre on less government, not more. [openx slug=inpost]
The government is terrible with money. Not only do they spend way too much, they spend it in the worst ways. In fact, research shows that one in three dollars of government spending here in New Zealand is wasted.
Here are a bunch of examples of the stupid stuff your government spends your money on. So, by creating a new tax out of thin air to fill the Beehive’s coffers, Cullen is quite literally robbing more from Kiwis so that the government can waste more.
This tax has become extremely politicised…which to me, as an outsider, is scary. This shouldn’t be an issue over parties and votes. This is a personal issue. It’s between two entities: the government and your household. By tying it to political sides, you’re changing the discussion from ‘How does this affect my future?’ to ‘How does this affect the careers of my party’s politicians?’
To put all of that together, this discussion should be economic, not political. And when you look at it from an economic perspective, it quickly becomes obvious how this could hurt New Zealanders by hindering investing as a whole.
As I told a fellow publisher in a recent discussion:
‘For me, it’s just basic economics. If you put a tax on something, you’re disincentivising it. So by taxing investments, you’re discouraging investing. To me, there’s nothing right-wing, left-wing about that…it’s just cause and effect.’
Investing is the fuel that keeps markets moving forward, particularly through stock investing. Your investments help companies expand…and by doing so they become more productive…and it grows the economy. By throttling that flow of money from individuals to business, you’re throttling the economy altogether.
What it all comes down to is one’s weltanschauung — one’s worldview — particularly on the topic of wealth distribution.
Do you believe it’s wrong that for the rich to have more than the poor? Or put another way — is wealth inherently bad?
Carefully consider your response…because we’ll discuss this very issue in an upcoming Money Morning NZ.
Editor, Money Morning New Zealand
PS: Quiet word on my political leaning — across the entire political spectrum, you’ll find a peanut gallery of swindlers, fleecers, flimflammers, birdbrains, nincompoops, bottom-feeding swamp creatures, bloodsucking barnacles, sweet-talking stooges and cotton-headed ninny muggins. The whole lot’s all cut from the same cloth. Gerry Rafferty hit this nail on the head when he sang:
‘Clowns to the left of me. Jokers to the right. Here I am…stuck in the middle with you.’