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Rob MacCulloch: How did the wealthiest 300 Kiwi families each make $50 million...

...when our economy busted in 2021?


The IRD "High Wealth Individuals Research Report" states that "The Project population’s annual economic income varied over the Project period from $1 billion in 2017 to $14.6 billion 2021". Hold on. It was 2017 when Labour came to power and between that year and 2021 the economic income of the wealthiest 300 families rose 15 times. Most remarkably, each family made $50 million, on average, over a period of time during which Stats NZ says "Average annual GDP declined 2.3 percent through the year to March 2021". I doubt there is any other five year period in our history in which that has ever happened.





The IRD defines economic income as: "the sum of annual net income (base income); realized capital gains; accrued capital gains (for assets not sold); non-taxed distributions from companies & trading trusts; Trustee taxable income (& capital gains on assets in trusts); Taxable income of land-rich entities (this replaces distributions from those entities & is in addition to capital gains on real property) & Imputed rental on owner-occupied housing".



The "2021" year in the IRD "high wealth" report runs from March 2020 to March 2021. It confirms one fact - this Labour government presided over what appears to be the biggest ever increase in inequality in NZ history - at least between the top 0.001% and the rest. What could be the reason? My hunch is that it was a combination of the poorly designed wage subsidy scheme & Reserve Bank's disastrous $50 billion money printing program.



How much money was paid in wage subsidy in the year ended 2021? The Auditor General states: "Between March & December 2020, the Government paid businesses more than $13 billion through the Wage Subsidy Scheme as part of its response to Covid-19". I have no issue with the wealthiest 300 families in NZ and don't believe any more capital & wealth taxes should be introduced than we already have. However, the way our Finance Minister structured the wage subsidy scheme meant it was a gift of public money to large firms. The scheme only had to add a clause like, "should the firm receiving these funds report a profit at the end of the year not materially different from last year's, then these funds must be refunded" and then the taxpayer would have been saved $15 billion.



The upshot is that David Parker's IRD "High Wealth Individuals" report's main finding has little to do with the desirability or otherwise of capital taxes - indeed the report does not say a thing about the optimality of our tax system. Instead it stands as official confirmation that our government - a government that stood for equity more than anything else - has delivered more unequal outcomes than ever before.



Sources:





Robert MacCulloch, a native of New Zealand, worked at the Reserve Bank of NZ, before he travelled to the UK to complete a PhD in Economics at Oxford University. He pursued research interests at London School of Economics and Princeton University, before joining Imperial College London Business School. Robert subsequently returned to his alma mater in NZ.



This post originally appeared at Down to Earth Kiwi



2,005 views20 comments

20件のコメント


zekewulfe
zekewulfe
2023年6月20日

Should a free market exist.... there would be a balance across the total economic spectrum.

Now; who do you think wants to preserve the current status quo? FFS.


Maybe; just maybe, folk will one day wake up to their con.

Have no fear, they are well aware of the economic position they intend to prolong. If they are not aware, then they should never have been given the positions they have.


Think about it... in the interests of freedom for all, that closed market has to be dismantled

いいね!

Ron
Ron
2023年6月20日

That'll piss the jealous monsters in power off no end!

Their own action demonstrates how pathetic their policies really are.

いいね!

Treasury would undoubtedly have identified this before the scheme was enacted, but for the fact Labour exempted all covid legislation from Regulatory Impact assessment.

Like a pilot disabling ground-approach radar in a white-out and then subsequently crashing, it's no mystery.

Labour deliberately disabled NZ's economic warning radar before enacting these policies.

If anyone thinks this was an accident, I have several harbour bridges to sell them.

That the Reserve Bank went along with it... that is a separate discussion which should involve the word "treason".

いいね!

Octavian Augustus
Octavian Augustus
2023年6月20日

This shows exactly why the extremely wealthy shouldn't have any more political influence than someone with nothing. When the extremely wealthy fund political parties and therefore ensure they get the policies that make them even richer, regardless of whatever disasters they help to get elected with their obscene wealth, then we've all got a collective problem. It's hard to argue that the mega rich have any interests that align with yours and mine, because their main concern is becoming even richer no matter the social cost. People who think that our politicians are "socialists" are living in a deluded fantasy land – without exception, they are effectively owned by the filthy rich capitalists who fund them and reap the rewards…

いいね!
zekewulfe
zekewulfe
2023年6月22日
返信先

Trying to convince the bottom feeders is a futile task. The rent seekers are aware but will never want true competition either. Somehow the politicians need forcing so to recreate a free and open market.

A situation whereby the devil looks after his own right enough. Hard to contemplate; but it is the only place where Joe Blow will ever find across the board true freedom.

And the ills and woes of a BS fiat currency cannot possibly exist.

いいね!

There are many reports that MSD is now looking to sue many employers to claim back the wage subsidies. In all the cases I have seen the $$ have been paid onwards. Are the staff going to be sued to get the $$ back? Is IRD going to refund the tax?

いいね!
Sonya
Sonya
2023年6月20日
返信先

I thought the wage subsidy was for any Employer to pay their staff due to the forced lockdown....However, I do question the Resurgence Support Payment that Companies and businesses could claim.

いいね!
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