Peter Dunne, Spending Cap & the Fortress Of Legislation / Plus Euthanasia; Marriage Equality.

The government has had to shelve Rodney Hide’s ‘old’ Spending Cap Bill because the Minister of Taking by Totalitarian Means, Peter Dunne, won’t support it.

This is a travesty.

Before continuing it’s important to state that the Bill itself was pure doublespeak, regardless. It only claimed to limit spending increases to the rate of inflation (which Government/Reserve Bank, have a surprising amount of influence over) and population increases. So it was not a spending cap at all, just an attempted, largely symbolic, brake on the rate of government spending increases, across spending that currently sits on a massive 44% of GDP.

But symbolism does have a place in the context of this Bill, and the Minister of Taking not signing up to it has an additional symbolism again, because for him it is a conflict of interest as it bears on taxpayers, who should not just be worried, but angry, about this. He is effectively saying he does not have to responsibly constrain spending, because as Minister of Taxing he can simply force entry and sack the bank accounts of private enterprise and individuals. And handing the temptation to spend, with the means to achieve it, to a crusading politician is like letting a kid immured of Generation Obesity, loose in a lolly shop.

Mr Dunne, of course, doesn’t see it like this. His spin is, quote: ‘...the spending cap was ''part of an unnecessary right-wing agenda'' and was not consistent with constitutional principles which prevented one parliament binding another.’ Oh dear.

Quite apart from the fact you joined up to a right-wing government with supposedly (though mostly laughingly) a right-wing agenda, so showing ‘coalition’ is really just about the electorate double-cross and hypocrisy, this is symbolic, yet, of something far worse, because it’s philosophical. For this demonstrates the Minister has his head so far up the politick, he’s blinded to where his feet are; trampling on the bowed and broken heads of those current, and as yet unborn, taxpayers, this irresponsible no-constraints spending binds to tax slavery, and to his department. Aren't their interests what he is representing?

Taxpayers have to get the feeling that the Fortress of Legislation, where ominously Mr Cunliffe is waiting in the wings for 2014, has become a thing unto itself for the careers and egos of the compromised crusaders holed up in there who force the theocracy of state on the lives of free men. Though that's democracy, faulty; not one of those crusaders represent me, albeit I'm one of the serfs forced to pay for them, and the disastrous consequences of their decisions. Even taking this last week, none who daily pontificate and barbarically joust in there seem to understand the mere fact that they are debating the right they arrogantly feel they have to meddle in the grown-up relationships of consenting adults who are harming no one, and soon on whether, should I get struck down, with no quality of life, and thus wanting to die with dignity, my wife holding my hand without fear of criminal prosecution, is in itself, an offence to free, civilised men. There is no debate needed on this by our Masters. Neither of those issues has anything to do with them, or anyone outside ourselves and our loved ones: they are matters solely of personal sovereignty. The fact politicians are debating such fundamental issues attaching to the individual, is further proof we do not own our lives in this kindy of a country.

And if you want my opinion to end with: this doublespeak spending cap, which is not even a cap on spending, is next to useless, even if in some future period it gets in, no thanks to Mr Dunne; government spending needs to be slashed before we join Europe and the US, as another cot case born of Keynesian socialism, and the social chaos that now entails for them. It's time to sack the Fortress from its foundations - in our minds - and reclaim our lives as sovereign states unto ourselves. And so with this crick in my neck from paying Tuesday’s provisional tax instalment, I’ll go off and do something constructive, trying not to think of Mr Dunne in his lolly shop of my wallet …

To David Cunliffe: Deep Tax Cuts For Rich Sensible

As my ban from posting is still in place at Labour’s blog, Red Alert, a ban I earned some years ago from MP Trevor Mallard simply for voicing my view on how unjust the blog’s moderation policy was, allowing Labour stalwarts to post in real time, while dissenting posts were held in moderation; and thus as Labour’s all inclusive view, apparently doesn’t include my views, despite when they win in 2014, they’ll be taking my money in frightening amounts to fund their view of a society, one which free men like myself view as a nightmare, I shall have to post my quick response to David’s current post, here (sorry for the big sentence, I know that will sorely test the Left’s attention span):

Let's change the rhetoric a wee bit. Tax cuts aren't making the rich, richer; it just means the state is not taking so much of the money they've earned. And all income levels are keeping more of their money under the tax cuts. Don’t get all tied up in the envy stakes, take a big breath and realise  not only the middle class, but even beneficiaries, have a better standard of living, now, than any generation before them, and the more unfettered capitalism has been allowed to be by men like you, the more prosperous, overall, the people have been. That’s why no boat-people are trying to get into third world countries, they're trying to get into the capitalist ones.

Let's not forget that the top 10% of NZ taxpayers, pay 50% of the total tax take.

Better be careful, David, you're scaring the horses again. Have you been reading the stats on the exodus of the wealthy from Hollande's France? With his 75% tax, and their new tobin tax, the city of London is laughing all the way to the bank.

Although, I sadly note that London has its problems also, on Nick Clegg deciding to feel, rather than think, about the important issues, and chase envy taxing also. If either of these men were to think, they might realise that perhaps the best stimulus for depressed economies, rather than the artificial stimulunacy of government spending, would be deep tax cuts for the 'rich', as they tend to spend their tax cuts - which are true discretionary dollars - in the economy, compared to those on lower incomes who (wisely) put their cuts simply into the mortgage.

Why will politicians never learn there’s not just a big pot of money sitting out there they can go and take without consequences: it’s people’s property – that’s real human beings with goals and desires, just like people with less money.

The United Welfare States of America.

Another of my themes readers will have noticed is the (huge and increasing) size of the state spend in Western nations, many of which are approaching an irresponsible - because of its economic, philosophic and moral implications - state spend that is half the spend in the entire economy: this theme is logical, given it is because of this we’ve had such complex, draconian semi-police state tax and enforcement legislation stripping our personal freedoms, forced on us. But how does this then explain the United Police States of America sinking under its own hubris of Keynesian debt? There is a mistaken notion, particularly from the Left, America doesn’t have universal health care (despite Medicare being, from memory, their biggest single spend), thus it is falsely perceived they have no welfare state, and so that once great, once free, nation is constantly cited by the Conspiracy of the Caring - because if you ask 'the Left', only the Left care - as the bedrock of cruel capitalism. (The same capitalism, where it has been allowed its state shackles to be loosened, that has given the West, in the context of history, a higher standard of living than any era before us.)

All lies, of course, as childish and stupid as the taunt thrown at me on Twitter this week, and by two grown, middle aged men from the MSM, no less, that ‘Libertarians don’t like people’: apparently, as with caring, only the Left have some type of monopoly on 'liking people' – Rand wept. I shall be dealing with the confounding notions on the caring society soon, but for this post just want to point out America is as much a Gulag of Forced Altruism, with the creeping cruelty that denotes, as the rest of the West. First, the US with its pork barrel politics and lobbying is crony capitalist corporate headquarters of the Western world, and as I’ve written before, crony capitalism is to laissez faire capitalism what sea horses are to horses. But also, even I’d not realised just how big their welfare state actually is: the irresponsibility and immorality of US politicians and voters is every bit as bad as in Europe. Small wonder the IRS is one of the most ruthless IR’s in the world, and the United Police States of America states the case pretty well. From US analyst John Mauldin’s latest e-letter:

Two Workers for Every Social Security Recipient

●      As of 2012-06 the civilian labor force was 155,163,000.

●      As of 2012-06 there were 111,145,000 in the private workforce.

●      As of 2012-06 there were 56,174,538 collecting some form of SS or disability benefit.

●      The ratio of SS beneficiaries to private employees has thus passed the 50% mark (50.54%).

Think about that a minute. There are now half as many people getting some kind of Social Security benefit as there are workers in private employment paying into Social Security. And the trend is clearly advancing. This cannot be sustained. And solving the Social Security problem is the “easy” part of the budget debate. Health care is far more difficult.

We read that one in eight families is now getting food stamps and that over 50% of US families get some form of government check each month, while the percentage of workers in the private workforce is shrinking. There is a limit to how much you can take from out of the private sector and still have a growing sector to take something from.

Remember, austerity is not an ‘option’ that politicians can choose, or not, anymore, for more and more western countries as they are culled by the immutable truth of mathematics: ultimately, austerity is not an option at all; austerity is simply a fact of the real world when you are broke.

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Blog Posts Coming Soon:

Legislating Orwell’s Slogan of the Police State, 2 + 2 = 5, Into Actual Tax Law. We've Done it.

The Bride of Gramsci – Deborah Russell, Tax Lecturer, Massey University, and the Supposed Caring Society. … Mother-load post.

Rural Sector Warning – The Great Stagnation Thesis.

Stay tuned …

Of Black Markets in Milk, & NZ’ers Urged to Take Farming Overseas:

See if you can spot the bull in the paddock from these two quotations?

From the Taranaki Daily News today:

A Government-commissioned report is urging dairy and sheep industry players to seize opportunities to farm overseas. [The report’s writer] acknowledged there were already New Zealanders … farming in Chile, Brazil and Uruguay, but few were operating at any scale.

Minister of Revenue, Peter Dunne, from Hansard:

I will take just a brief call at this point to acknowledge the work of the Finance and Expenditure Committee, in particular, in dealing with what I think is the second-largest tax bill to come to this Parliament, the Taxation (International Taxation, …) Bill. This is an 842-page job. It does not beat my previous effort of 3,500 pages, … I acknowledge the fact that the select committee had a monstrous job in working through some very important, complex legislation in order to get it to this stage. I note that Supplementary Order Paper 34, which I have tabled, is 50-odd pages, so it is nearly a bill in itself. All those things really go to point out how complicated our tax law is …

Oh yes, let’s all jump into the penalty system known as our, quoting the Minister, ‘monstrous’ and complex, international tax regime. Perhaps the boffins who wrote the report, which I definitely agree with, should first have a word with the boffins who’ve made our mish mash of international tax laws. When you have a contradiction like this, then the Minister, and government, needs to re-examine their premises, and in this case some fundamental ones on how our society is structured, which has led to such complex tax laws being required to fund the ‘monstrous’ size of our state, where in every budget delivered by Bill English, despite the rhetoric, the state spend continues to be bigger in dollar terms than the year before, and approaching 50% of the entire spend in our economy; a phenomenon which is currently destroying the economies of Europe and America.

And I write this with the somehow connected thought in my mind, a thought in the form of a joke, of watching the article about Australian farmers on TV 1’s current affairs show, Sunday, last night, who are partaking in the black market their government has created in selling raw milk.

Yes, I said milk. Australian regulation has created a black market in milk.

Said one such farmer who was raided by food safety officers and armed police, after an expensive multi-departmental sting operation on him daring to blatantly sell milk to hippies at a farmer’s market - ‘I kept trying to tell them,' he said, 'all these officers with guns; it’s just milk. This is a farmers’ market, and I’m just selling milk.’ His fine was A$184,000, and his last musing to the camera was whether it was perhaps heroin in his plastic bottles: but no, it was just raw milk. I guess he’s no longer thinking of taking his farming overseas: he’s probably just thinking of taking himself overseas. At least if he’s got any sense.

Now remember that 380 page food bill signed off in New Zealand last year, where Minister Wilkinson’s comment on the draconian powers being given to our food officers was, ‘well, they’ll not be used.’ If they’re not going to be used, then they shouldn’t have been given such draconian powers, at all. And yes, I know, raw milk could, in the rare case, kill you: but if an individual wants to take that choice, because such milk also has more nutrients, then that’s their choice. A society must operate on that basis, for there’s far more important principles at stake. The freedoms we should be able to take for granted in the West - freedom being the right to be left alone - sometimes involves the freedom to take risks and die stupidly, whether it be test piloting a new jet engine, or drinking raw milk, for without risk, there will be no innovation, and it’s by innovation from the entrepreneurial pursuit fostered by true capitalism, that we have the best standard of living from any generation before us in history, that has allowed us to live in the first world, where we can have the absurd problem of a black market in milk.

And don't go thinking we're alone: I said this was a Western problem - hattip Offsetting Behaviour have a look at this clip and wonder no longer why the West is falling over:


 

Film Review: The Iron Lady (2011).

The subject of this film was, of course, not Margaret Thatcher: it was Margaret Thatcher as pastiched together for us first by the film’s writer, then the producer, director, and lastly, Meryl Streep acting the main part. The making of such a film is not something I’d be brave enough to try: the protagonist in real life is surrounded by iconography that swamps the cinematic bio-bite, plus she must be the politician of the twentieth century most susceptible to stereotype, as demonised now, as she was vilified at the time by those who didn’t understand the philosophical, political and economic importance of an individual's liberty to pursue their happiness unhindered by the state. I’ll give the film a grudging pass, but only in terms of entertainment. Outside of that, I have many misgivings.

I’ve not Googled whether the film won any major awards, but would suggest it should have made a ‘special mention’ for employing a subterfuge the Iron Lady would not have been best pleased with, and to that extent its treatment of her is subversive. The group of people who brought this to screen, from concept/novel/whatever on through to screenplay, and finally in the editing room, to parse Margaret’s own mind, in the most memorable scene - and in personal terms no greater sin could have been committed against her - based the movie on their ‘feeling’ toward, rather than what they ‘thought’ of the woman and mind that is Margaret Thatcher.

Why do I say this?

Because this film largely took the politics out of political bio-pic and replaced it with something quite other: The Iron Lady was filmed as a love story. Worse, the deceit was twofold. Not only did the film revolve around the love of the protagonist to her elusively portrayed – due to the lack of detail necessitated by film – husband, Dennis (Jim Broadbent), but it also, cowardly, tried to cut the icon and the stereotype of the Iron Lady down to her knees, by focusing on her trapped in an apartment, as well as in old age, at the start of her slide into dementia. On both counts I’m sure the woman she is would have been furious with the artistic licence taken.

So, entertaining movie, enjoyable, even; Meryl Streep near her best, tasked with an impossible feat: but I do feel the need to come to the defence – as much as she’d hate that also – of Mrs Thatcher: this was not the Iron Lady, certainly not as she would have wish to be remembered, nor for the achievement she made of her life – first and only woman prime minister of Britain, likely to be so for the foreseeable future, and in times that were extraordinary, when she outshone every world leader of the time, even Reagan. (Quick question: what are the full names of Britain’s two current coalition leaders?) Whether you agree with her politics or not, it’s a stunning, gigantic thing she did with her life, which should have been deserving of more respect than this film gave her.

Or not? As I write, ideas tumble over themselves to slowly solidify in place, but can be dislodged again. The film could be interpreted as giving the Iron Lady back what the maker’s saw as a needed humanity that has been lost in all the politicking. I remember hearing an interview with Streep in which she, who had no agreement with Thatcherism, said as much, and that acting the part had changed her view of the subject – though hating Thatcherism is Hollywood for you: I used to idolise Barbra Streisand until I heard her interviewed on her politics; by which I not so much mean what she believed in, but the unthinking way she believed in it - she could only emote her views, as badly as Jane Fonda, not explain them. Regardless, whether Margaret Thatcher would have been interested in such a reconstruction at the expense of her private life and dignity in old age is highly debatable.

Stop the press. I couldn't resist searching for an indication of Maggie's response after all. As it happens, not highly debatable: it seems she was not ‘best pleased’ with this portrayal:

Former British Prime Minister Margaret Thatcher refused to view an early screening of Meryl Streep's portrayal of her in The Iron Lady after snubbing director Phyllida Lloyd's personal invitation.

The Hollywood actress tackles the part of the UK's first female leader in the movie, but rumours emerged last year suggesting Thatcher's grown-up children Carol and Mark were "appalled" by the film's plot.

And it seems Thatcher herself has no desire to see the film - she and her offspring rejected the chance to attend a screening of the project.

Lloyd says, "They were the first people we invited to see the finished film. They didn't take up our offer."

Parenthetically, the main interest I take from the film, otherwise, and I wonder if it’s a sign of aging in myself, is a curiosity about the man behind the woman, husband Dennis. I know little about him, I’d like to know more, plus what on earth is the personal history of their son, Mark, last seen, from my memory, facing trial for trying to organise a military coup in Equatorial Guinea. If there was going to be a more informing movie about the family, I reckon it would be about Mark: albeit from what I have read, more in the genre of Mr Bean, than the Bourne trilogy. 

This shouldn't put you off, however: worth watching.

LTC Regime: Reprise – Fairness for Dummies, Mr Dunne. (For NZ Readers Only).

Premise: As only bureaucrats could, they’ve over-analysed the criteria of economic loss, into a loss limitation absurdity, that mistakes the nature of income and has careened, totally, off the road of commercial reality and onward down our road to serfdom …

I have now received back a reply from IRD Legal and Technical Services regarding questions I submitted pertaining to LTC’s. As ever, IRD are always helpful on these matters. My queries related to a number of different issues, but this post relates only to the issue of the deduction limitation employed by this regime. The following should stand alone, though knowledge of my previous LTC post here might fill out some of the details. The point of that post was my chagrin at how the Look Through Company (LTC) regime employs a deduction limitation rule, rather than a loss limitation rule. This means, per example given in that post, that although a LTC may earn a loss, by the time that flows through to the shareholders, some shareholders may be in a position whereby they still have to pay tax on a positive income amount, because they may not be able to utilise all of their share of the LTC’s deductions in any year. It’s worth giving the example again (without getting bogged in the specifics of the calculations):

The hypothetical company has a single shareholder with share capital of $1,000; the owner had a nil balance in his current account with the company at the start of the year, but over the year drew out $6,000 to live on. Over the year’s trading the company made total sales of $6,000, and incurred legitimate expenses/deductions of $10,000, meaning it made a bone fide loss of $4,000. Let’s assume no non-cash depreciation, nor debtors or creditors at year end, thus the company’s bank account, on nil at the start of the year, is now $10,000 overdrawn (being the $4,000 loss, plus the owners drawings of $6,000).

The problem is that what is known as the Owner’s Basis calculation means that by the time these figures flow through to the single shareholder, that shareholder can only claim $1,000 of the $10,000 total deductions, in this instance, with the balance of $9,000 having to be carried through to the next year. This then means that though the company earned a loss of $4,000, the shareholder, in the year of the loss, has to pay tax on an ‘income’ of $5,000. As I shall demonstrate again, via the advice from IRD technical, which clearly informs me, quote, ‘Inland Revenue’s Policy Advice Division (PAD), and the Minister, are fully aware of the issues [I] raise’, this is batshit crazy; but another issue first.

My original post was posted to propertytalk.com, where in the comments fields accountant Matt Gilligan, from Gilligan, Rowe & Associates (recommended if you’re looking for an accountant for your property investment – he knows what he’s doing), stated, under disadvantages of the LTC regime:

Possible impact of deduction limitation rules (less of an issue in 99% of cases and easily worked around with a bit of thinking and pre-planning if an issue)…

This was one of only two points Matt made I disagree with. My response to that was simply: ‘I suspect, but only time will tell, that number will be lower than 99%, and the pre-planning may be more hopeful, than actual, and in many instances will involve significant transaction cost which is not 'good legislation'. I do believe that some companies elected into the LTC regime will ‘over time’ come to grief on the provisions of the deduction limitation. But, actually, that was not the point of my original post, or this one. Let’s give Matt the point and say this may be so rare – it won’t be, but let’s pretend - it only happens to one taxpayer a year: well that’s one too many when properly thought out legislation, fair legislation, could have avoided it. And so to my remaining point, proper, the nonsense that is the deduction limitation.

Here’s what the deduction limitation is attempting to do, I’m copying it directly from IRD Technical’s correspondence with me because it sets it out well:

The intention is to measure an individual’s ‘economic amount of risk’ over the lifetime of a business; so overall an individual will be able to claim in deductions only what they have personally funded by taking on an economic risk … I note your comments that the rules are not truly ‘loss limitation’ because in certain circumstances they can lead to taxable income for a shareholder even if the company overall … has made a tax loss … This is the intended outcome of the loss limitation rule. This is in keeping with the policy rationale discussed above, because it indicates that the company’s losses are not being ‘funded’ by that particular owner. In this example, the current rule is operating with the intended policy that their tax deductions should be restricted to their economic loss.’

Right, now look above at that example I’ve given, again. And look what happens when your life is voted over to the policy making of bureaucrats.

Yes, the shareholders economic interest in the deductions may be only that amount, in my example, $1,000, but who financed the rest? In this case, it was the bank, hence the perilous cash position. Some might say that can’t happen, no bank would finance that: but, actually, this does happen. Where this then goes wrong is that to limit the shareholders’s deductions to that lesser amount, IRD are assuming that shareholder has access to the whole gross income that is covered by the non-allowed deductions, for them to pay the tax from: which is a nonsense. That income is not sitting in an account, it, and an overdraft, were used to pay the non-allowed expenditure. There is no cash this shareholder has access to pay tax on what is an artifact that can (and will) result sometimes from these calculations: effectively, an artificial income amount.

As stated at the start of the policy advice, ‘PAD (and the minister) are fully aware of the issues raised’ – well in that case, I question the judgement of this Minister; because this situation is not acceptable. I would have hoped that any politician who saw it was possible under his legislation to end up paying tax on a $5,000 ‘profit’ when a business generates a $4,000 loss, would have realised he had stuffed up. Just look at this one simple result of a worked example: how could that, to a sane person, possibly be right? For someone who keeps twittering about fairness, the Minister has achieved the opposite. And here’s where it happened: the calculations involved with the loss/deduction limitation, are the result of bureaucrats, unsullied by the real world of business, completely over-analysing theory, the theory of economic loss, through to an absurdity, which may well, now, wash up some poor taxpayers on the reef of bureaucratic cruelty. This result of tracing through economic loss to deductions, while disregarding the nature of income, the structuring of balance sheets, bears no regard to the commercial realities of operating business. Mind you, that’s taxation, and the enforcement of it, period.

This is not good legislation, and there needs to be an amendment that ensures enough deductions are allowed, to at the least mean a shareholder need return no more than their share of the profit made by the underlying LTC, and no less of a loss, than a nil result in their own tax return. That would not be hard to enact.

Tell me how I’m wrong?

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Final Post on LTC's: Legislating Orwell.