Summary:
Mainfreight founder Bruce Plested has given an interview saying that, unusually for a billionaire, he might support a wealth tax
Although taxes on the sale of assets – that is, capital gains taxes – are common internationally, and inheritance taxes too, a wealth tax (in the pure sense) is not
Plested’s big worry is that the resulting revenue might be wasted
There are many ways to improve state efficiency, and those policies should be implemented, wealth tax or no
Image credit: RNZ
An unusually rich interview
One of this week’s big stories was sparked by Mainfreight founder Bruce Plested, a rare homegrown Kiwi billionaire, telling RNZ he might be in favour of a wealth tax – though with a major caveat.
Asked, as part of RNZ’s ‘RICH’ series, whether he supported a wealth tax, Plested replied: "I believe I do. The concern, I think, that the wealthy have, is that the government will squander it and so there's a certain resentment about paying more than you should. But yeah, I think if we had a good enough government, they could get away with it and it could become part of the deal."
Wealth tax: a quick primer
The usual way that a wealth tax typically works is that any assets – investment properties, say, or businesses or shares – over a relatively high threshold are subject to a low-percentage annual levy. Say, for instance, the threshold is $5m and the levy is set at 1%. Then, someone with assets (after debts) of $7m would pay tax on the $2m that sits above the threshold. 1% of that $2m would be $20,000, so that would be their annual wealth-tax bill.
Although New Zealand did briefly have a wealth tax in the nineteenth century, we are much more familiar with income taxes levied on our wages and salaries, and GST on the things we buy, than we are with wealth taxes. Advocates of such taxes, however, argue that wealth is more concentrated than income, and taxation is needed to redistribute it.
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