I had a friend call the other day. He was telling me that if the Green Party managed to get anywhere with their proposed new wealth tax, he would leave the country. Indefinitely.
Then I began wondering how many others would do the same. Wealth refugees from New Zealand. And it seems there would be plenty of countries willing to take them.
While New Zealanders can travel and work in Australia, they do not automatically qualify for permanent residence. With net assets of AUD 2.25m and the willingness to invest AUD 1.5m in a state bond, anyone can enter the residency investment programme.
With £2m to invest in the UK, applicants can qualify for leave to remain via a Tier 1 Investor Visa. With £50,000 to invest in a new business, they could alternately qualify for an Innovator Visa.
With a minimum net worth (you and your spouse) of CAD 2m and the ability to invest CAD 1.2m for a period of 5 years, you can gain permanent residency in Canada.
You have a minimum net worth of USD 1m and are prepared to invest 1.8m in a new enterprise that creates jobs — or 900,000 in certain regional areas.
By investing EUR 500,000 in Italian shares or corporate bonds (or 250,000 in innovative start-ups), you could qualify for permanent residence in Italy and potential access to the entire EU.
So, what are the rates of the Green Party’s proposed wealth tax?
1% above $1 million.
2% above $2 million.
So someone with net assets of $4 million would pay $50,000 a year in extra tax every year. On top of whatever other income tax they pay.
Probably enough to seriously consider permanent relocation.
And there are plenty of people with this sort of net wealth. Perhaps more than the party is suggesting, reckoning only ‘6% of the wealthiest New Zealanders’.
Has this 6% included assets in companies or trusts? Or overseas assets controlled by wealthier New Zealanders?
It seems to me this wealth tax would have unintended consequences. Wealthier citizens would flee and look to become tax resident elsewhere. They would pull their investment out of New Zealand.
Meanwhile, who would want to migrate here? Knowing that if they brought in — or managed to build up meaningful wealth — they would pay a heavy price.
Now, more equality in wealth is a good thing. But everyone needs the opportunity to work, earn, and build wealth. And this policy could pull the carpet out from under them.
It seems to me this new policy from the Greens — well-meaning as it may be — would simply mean New Zealand becomes a country to be poor.
Despite all the heavy criticisms laid against the current American administration — which defied the 2016 polls and slashed taxes – desperate levels of poverty hit record lows for all races, especially black and Hispanic.
Incentivising work builds wealth and aspiration. This is not achieved by punishing wealth and savings.
What can you do?
You’re probably safe. Labour seems to have ruled the policy out. But you never know with coalition governments. Without New Zealand First, we may well have had a capital-gains tax.
The Taxpayers’ Union has set up a petition to oppose the wealth tax. It’s the ‘Campaign for Affordable Home Ownership.’ You may support this here.
We also have an opportunity to help people build wealth globally. And protect their hard work, diligence, and savings from the politics of envy. It’s called Lifetime Wealth Investor — where we look at how to build a global wealth portfolio.
Editor, Wealth Morning