How everyday kiwis dodge income tax and why you should care - Whiteboard Friday

That's right Kiwi's are great a dodging paying income tax. The result is the PAYE tax payer pay too much and house prices are getting more expensive.

We thought we would explain in a video how people avoid paying income tax when they own property or a lifestyle business, and how our idea solves this.

This is the first video we have in our Whiteboard Friday series where will try to explain complex economic, social and environmental ideas as simply as possible. Please let us know what you think of this whiteboard Friday idea, if you have any questions on a CCIT, and give some ideas of other videos we could make.

[hedins]

Ive just stumbled upon your videos some how and already finding you very intersesting, im currently a student and from what I can see do you have really open my mind to what is really going on in this country and how we the people can resolve these issues that are occurring. You just explained a whole years worth of education in just a couple of mins, by the way cool shirt bro! 👌👍

[softwareofexcellence]

Property owners pay rates. Its a tax to pay for local government. However there is now a CGT if you own property for under 10 years and loss of interest deductiblity that is made available for other business activities.

[cruzwhitehead]

Thank you for sharing this was great. I learned heaps ! Love your shirt bro. Easy to understand

[flyingkiwi]

Where is the income from an owner occupied house prior to it being sold and a profit or loss realised. Are we talking an annualised tax on a speculative number that may or may not be realised. What are pensioners going to do? reverse mortgages to pay the tax?

[Vulcan-ztob]

A Comprehensive Capital Income Tax is pure socialism and takes from one group to pay the government.

First of all, supply and demand is the primary controller of house prices, so to bring the prices down, build more houses and plan cities better so more houses and apartments can be built. Taxing investors on property will just push the price up and pass the costs onto renters and others. So just build more properties and problem solved. We are not short of land.

Secondly, I agree with the idea of an Unconditional Basic Income for everyone regardless of circumstances. It would solve a whole heap of problems. However, there is no need to pay for an Unconditional Basic Income from taxes of any sort.

Lets start at the beginning. Money is created out of thin air by banks. It is either lent to governments or individuals and they pay interest on the money until the loan is payed off. Instead of lending money into the system via government and private loans why not just spend it into the economy via an Unconditional Basic Income (yes it must be totally unconditional) and other projects voted for through a form of direct democracy (the Swiss model makes the most sense because they vote on everything and if the people on a local level and national level don't want it, then it doesn't happen) and not representative democracy.

As a Citizen or Resident of a nation like New Zealand, we are all part owners of said nation. Which logically implies that we own the creation of money at source, so when it is created out of thin air, as it is, we should all, as individuals, get our percentage. Simple. Is there any reason why this doesn't make good sense? The Unconditional Basic Income doesn't have to interfere with anything else that is going on. We can still have a public and private health system. People can choose to go to work for someone, pursue a vocation, start a business, stay at home with their kids, go fishing, or whatever, its no one elses business what people do with their time. So the Basic Income would provide all citizens their rightful basics as part owners of the nation. Its not a socialist system because no one is giving anyone anything, they already own it as citizens.

So its not necessary to tax people more who are doing well and investing in things. It may be necessary later to have rules (that may include taxes) to stop people hoarding properties they don't need, but we can deal with that after the Unconditional Basic Income is up and running.

Need new roads, new bridges, money for scientific research, a decent airforce, intelligent alternatives to using New Zealand as a mammary gland for the rest of the world, high powered weapons for our navy to stop people stealing our fish. No problem, we can just print the money and spend it into the economy.

[brucegibbins]

Why is it so difficult for the New Zealand government to introduce a CGT on property when its just a routine and easily understood obligation in countries that do have a CGT on property. Tax payers in countries that do have a CGT on property may not like the tax, but who does like paying taxes, but the tax is just part of the economy in those countries. What makes New Zealand so special in this regard.

[marshmallowpuff]

Great simple explanations.
Nice shirt.

[scottparker]

Have you considered who will actually pay this tax?  If you put this tax on a rental property, the renter will ultimately have to pay the increase in cash costs the owner faces.  How is this a good thing?

[vaiona]

WOW... I hope you keep doing videos like this, I've found something new to learn and enjoy your videos :) I don't understand any of the big jargon words in these things but you keep it simpler and I find it easier to understand. You are the man bro, am so glad I found your videos. Thankyou heaps Happy New Year

[jamesparone]

Hi Geof can you bring more talks on trading on sharemarkets taxes or investment in property that are feasible or any taxable products love your work

[donha]

yeah we should tax dishwashers too and tractors. NON-CASH BENEFITS. We don't want the tractors to get too expensive. Those farmers are getting non-cash benefits, like working 1/10th the time they would if the used oxen or horses... but even then horses have utility compared to nothing... and they look pretty and are fun... if you're not renting it you're receiving NON-CASH BENEFITS. WE MUST TAX TAX TAX EVERYTHING THAT IS OWNED BY ANYBODY... never mind the low central bank interest rate manipulation... don't look over here, nothing to see here...

[roberthooker]

Is this similar to ideas on garys economics about the debt based economy?

[GeRaiDah]

here's what id put on the table, 50k and under income 0% tax and anything above 15 to 25%(debatable numbers) this would probably be the best thing to help the lower income people in nz, not this UBI crap.

[johnwhite]

Hi Jeff, how do I make the capital I need to get out of the poverty cycle?

[Smokey]

There one thing that isn't mentioned. Rates....aren't they a tax? OK its not from the central government but it's a cost you pay every year when you own your own house. Also real money IS changing hands. There is also the maintenance cost but I'll not go there 'cos the variables are considerable.

[ghelhead]

I like your hair cut. I like your shirt. I like what you are saying about taxing property.

[etuate]

Hey - I'm really enjoying your channel - thank you for your work!

Just a quick question in trying to understand this a bit further.

Say for example, I work and save towards buying a house. I finally am able to afford to pay a mortgage on an average house in Auckland. At some point I hope to have paid this house off. Under such a tax system as you have proposed - where and what would I be paying tax on?

I guess I'm trying to better understand as a general fear is that even after I have paid a mortgage off - I would be required to continue to be paying a tax on the property despite it not being an investment property. What happens when I retire?

[jimowen]

Capital taxes are a great idea especially if you are an economist but when we start studying the political side of the issue the sell becomes much harder as unfortunately people start asking questions about what it does to the value of their MacMansion, would they need need to find another wad of money each year to pay it and how would they do it if they are only on a pension. Can we answer the WIFM (whats in it for me) as it has huge advantages

[DeadMakar]

Having a tax on a property is a bit absurd. Following the logic in the video all assets that are not taxed already should be taxed. Say cars, works of art & etc. In extreme you would start charging people for having clothes (as you could have invested the money you've spent on them into bonds and you are clearly benefiting from wearing clothes).

[bruceh]

This is assuming that you are making a return on your property. What happens to those whose property value goes down. Do they get a tax refund, who works out what the value is, or are you suggesting we assume that the property is returning the same rate as govt bonds