this post was submitted on 27 Oct 2025
20 points (100.0% liked)
Aotearoa / New Zealand
2010 readers
15 users here now
Kia ora and welcome to !newzealand, a place to share and discuss anything about Aotearoa in general
- For politics , please use !politics@lemmy.nz
- Shitposts, circlejerks, memes, and non-NZ topics belong in !offtopic@lemmy.nz
- If you need help using Lemmy.nz, go to !support@lemmy.nz
- NZ regional and special interest communities
Rules:
FAQ ~ NZ Community List ~ Join Matrix chatroom
Banner image by Bernard Spragg
Got an idea for next month's banner?
founded 2 years ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
Yes but let's imagine a different thing. Let's say you buy a horse in 1996 for $5000. Inflation has meant the purchasing power of that money has halved since then, so to buy a horse of the same value in 2025 you'll need $10k (and you have enough money since wages have increased faster than inflation).
Now let's say you bought the horse in 1996 for $5k and sold it in 2025 for $10k and the government comes along and says you need to pay tax on your $5k profit. You'd say "no, I didn't make a profit, the $10k now has the same purchasing power as the $5k in 1996, I sold it for exactly what I bought it for". But now you're paying 28% tax on your horse that you didn't even make a profit on.
Don't get me wrong, I'm excited to see such a high proposal, I was just days ago saying I didn't think Labour sounded like they wanted a CGT at all, but taxing inflation is likely to be called out by the opposition.
Couldn't you say the same thing for shares? You bought some shares for 5K, you sold them for 10K and now if you want to buy them again you have to pay 10K. Does this mean you didn't realize any profit on your 5K investment?
There is no law that says you need to buy a house for the same price, most people will either downsize or upsize anyway.
But hey we can be generous and say you get to sell one house without paying CGT in your lifetime. Would that placate the masses?
No because the shares (in theory) have value behind them. If they went up overnight, it was because the value of the company changed not because the purchasing power of money changed. If they went up from 5K to 10K from 1996 until now, yes you could say it was inflation. But you also wouldn't pay any tax because we don't have a CGT.
I... don't know. Maybe it would?
Here's another question though. That old lady/man everyone knows of that owns dozens or hundreds of houses, do you think they ever sold any? They can still accumulate wealth without paying tax by simply hoarding it like a dragon.
That's where a wealth tax works better. Because this tax only applies if you sell, if you have enough assets and lenders are confident they'll continue to grow in value you can just keep buying more and then borrowing against them to cover your expenses year on year.
Yeah, so a wealth tax would be that every year you have to declare your net worth and pay a percentage of that as tax?
I wonder what the administration and enforcement cost of that would be. This very narrow CGT has on benefit in that there isn't really much extra admin since most of the relevant parts are already done in one way or another.
Yep CGT is a simpler system to apply I think, but doesn't address the real problem which is that once a certain amount of wealth has accumulated wealth begets wealth and the vast disparity ends up with a small class of people fully insulated from the problems their horading causes.