Discussion Tuesday
Let us talk about New Zealand. This is an important question, I hope you guys will give me all the answers 🙂
New Zealand is the type of country where taxes on land and taxes on capital are appropriate new policy tools
Once again, remember that these are points for discussion – I am not saying I agree or disagree with them.
Why wouldn’t it be? Land is valued more highly when there is less of it. One could argue that people would move away from over-taxed land, but I don’t think that would be an issue in NZ
I vote in the affirmative. First, I remember some Treasury citing research saying taxes on corporate profits and income taxes are the worst for economic growth, and this makes intuitive sense. Second, a better balance between income, corporate, consumption and land taxes would be nice and should reduce the incentive for fancy structuring, if done right. From a normative point of view, I have a problem with people in the bottom quartile of the income distribution paying 12-19% tax rates. They should be paying zero. I also think that wealth inequality is quite important in this country particularly as the demographic that gets the most generous deal out of the welfare state also owns most of the land. (Hence I don’t like Len Brown’s noises about income-based rates).
I’d prefer to see the land tax should be on the unimproved land value, to remove any disincentive to land use. As for a wealth tax on other assets, e.g. equity, I think it could be OK as part of a broader reform (e.g. much lower taxes on corporate income).