Taxing Away Prosperity: UK, New Zealand versus Hong Kong.

In one of my stupid moments – sadly, I have them – some time ago I ended up defending the English economy on Twitter.

 

I know – what was I thinking?  

 

It didn’t start out that way, indeed, the debate was over how Cunliffe was a Keynesian zealot, but then someone tweeted in and changed the course of the thread and suddenly I was into a nonsense relativistic debate comparing UK to Spain, Greece, etc, which then somehow changed to I was advocating the UK economy was something other than crippled. Albeit they do seem to have made some admirable progress via cutting government expenditure, with the UK economy projected to finally September this year surpass the size it was pre the GFC in 2008 for the first time, it is yet a moribund, debt laden economy, struggling under low growth, tax and regulation: perhaps the nature of the impossibility they face can be best shown by a single photo:

 

On the left is the UK’s various taxing legislation, on the right, the little thin blue book, that’s Hong Kong’s. There’s a whole bunch of hooks in applying causation, but I’m unsurprised that according to the International Monetary Fund Hong Kong’s GDP per capita in 2013 was $52,722 international dollars, sixth highest in the world, compared to the UK’s $37,307 way down in twenty first place.

 

New Zealand? We’re back further in thirtieth place on $30,493. I wonder if that has anything to do with the fact of on a total population which could be lost in a single suburb of Hong Kong, our Income Tax and GST legislation looks like this:

 

 

I’m also unsurprised that the gross government debt as a percentage of GDP – per IMF - is as follows:

 

Hong Kong:    32.4%

New Zealand: 38.2%

UK:                 90.3%  (Wow.)

 

For the Leftists, statists of all hues - including too many Tories - who believe in the big brother tax surveillance state: as one of the sharpest minds in the twentieth century said, you can ignore reality for so long, but you can’t ignore it’s consequences; one of those being the cult of redistribution - cult, because irrational, yet chanted like a mantra - funded by taxing away my liberty, privacy, and right to be left alone, creates only a cycle of dependency and poverty.

 

Tax destroys the free society philosophically, and ‘after’ that, destroys our prosperity economically.

To the politicians reading this: just f***ing stop it.

 

Centre Politics: The Economics of Destruction. (Conservative Party V. Libertarianz)

Actually, over time it's always the economics of slavery, but if I use that word in the title, centre voters turn off, thinking me a writer of extremes which don’t concern their lives. Warning, there are extremes in this post, but they don’t come from me: they come from the debt figures produced by centre left and centre right governments, which hold complete power in New Zealand. The numbers are in my below comment to a thread on Whaleoil: my comment first, with context to follow:

I suspect some few of the Whale Army vote National. When National came in 2008 government debt was $10,258 billion. As of September just gone, that debt stands at $60,015 billion.

With the Christchurch earthquake costed in this government continues to borrow $27 million per day. That's per day; to fund government operations that make up over 44% of the entire economic activity in the country. And National is the party of small government ... yeah right.

Look at this fact from a different perspective. The government is borrowing $27 million a day for a country with only just over 4 million population, which we have to repay, with interest ... how's that going to work out?

Worse, a good fact from @RedBaiternz on Twitter, we have only just over 2 million taxpayers having to fund future annual budgets of $70 billion ... how's that going to work out?

Let's burrow - not borrow - down deeper. We know that the top 12% of taxpayers fund over 75% of the net tax take. Ignoring for now company, trustee income tax and indirect taxation that means about 250,000 people only are having to fund into the future some large part of $70 billion annual budgets, including debt servicing, so far, on $60 billion and growing.

Whale would call reasoned classical liberals such as Libertarianz the 'extreme fringe': no, the extremities are in the above numbers. The only way you fund that debt long term is increasing taxation -  I suggest markedly - and forcibly enforcing the continuing destruction of property rights, and personal civil rights, given the first thing the tax surveillance state must do to ensure the tax-take, is take away your privacy, while granting itself access to your property, starting with your income.

In fact, the only sane option 2014 is a vote for Libertarianz. Ironic most of the Whale army will be voting for the bigger and bigger nanny state, which is quickly become mathematically impossible, as the US and many countries in Europe are finding.

The context of this thread is interesting. It was Whale’s analysis of Rodney Hide’s NBR piece about how Colin Craig, leader of New Zealand’s fledgling Conservative Party, in an interview given some weeks before where he had stated his party would forcibly purchase (take) developers’ land from them if they didn’t build on it within a short time-frame suiting the politicians, thus destroyed the central premise of Conservatism, namely, sacrosanct property rights.

One of the first comments to that thread reasonably asked:

Wow i missed him saying that. So there is still no party in New Zealand that believes in Private Property Rights.

I replied that Libertarianz Party was founded wholly and unalterably on property rights. Of course Whale responded with his predictable scorn of the pragmatist, the type of pragmatist voting that has produced the figures in my final comment above:

Yeah, the libertarians...too pure to achieve anything, the happy hand clappers of nz politics

My reply to that stands on its own:

That's a meaningless response, Whale. Libertarianz are the only party left representing Western classical liberal values: the free society. If we changed any of the tenets of belief, as you suggest, then we become just another party representing nothing.

If people want to vote for a party that wholly respects property rights, there is only the one. I was simply answering a question.

In next year’s election, that truly is the voter choice: if you believe in property rights, then Libertarianz is your only option, if not, then vote for any other party, and help grow, at varying speeds, the mathematical impossibility of centre opportunistic fiat moneyed politics - read future tax indentured slavery of your children and grandchildren. And there’s a logical reason for how such politick destroys us; my most oft used quotation from Daniel Horowitz:

“We must understand that there is an imbalance of power in the political system of any democracy in that the forces of statism have an innate advantage over the defenders of freedom. It takes but one legislative or administrative victory for statism to succeed in guiding society on an indelible path towards dependency. We cannot perpetuate the free-market, but we can perpetuate statism by creating inveterate dependency constituencies. Statism enjoys the inherent advantage of self-perpetuation through its own pernicious activities that engender a continued need for the government programs.”

A Tale of Two Dividends: Asset Sales II

This to the uninformed mercantilist, newly patriotic Left, and to the good’ol uninformed mercantilist, nationalistic, conservative Right, both of whom in an orgy of misplaced passion lit up Twitter last night with indignation at the government having passed assets sales legislation by a single vote, which Clayton Cosgrove called a ‘travesty of democracy’. You were partly right, Clayton, though missed the major point that democracy has become the travesty –because a majority vote doesn’t necessarily make something right, does it? Though in this case, for once it was. So for all those emoting on the TV3 news this morning about investments for their children, and their children’s children, further missing the points that our forced investment in the welfare state through these assets has ended us all up in children begetting children, and that currently as you are neither entitled to dividends from these assets, nor have any say in how they are managed, regardless,  you don’t own them anyway, I offer the following. In these, the worst of times, whole economies falling over under a hubris of debt, and the best of times, because we see, again, the disastrous place where the Keynesian form of socialism takes us, I put to you this tale of two dividends.

To really set the xenophobes aflame, the first dividend of $1,000 is going from the asset sales to a family in China that have invested in Mighty River. As a businessman has previously put to me, a mad, bad, sad ‘dividend outflow'. Only, is it? The dividend is paid in NZ dollars, useless to this family, so they must first exchange it for renminbi, meaning they must find someone to sell their NZ dollars too. Fortunately for them, via the beauty of markets, though they are never going to know them, an American family wanting to tour NZ buys the local currency, transfers it electronically back to a bank account in New Zealand, and the entire $1,000 is then spent in the only place it can be: here, in the cafes, restaurants, and on services. So, as no one has answered on my previous post, I again ask the patriots, where is the outflow here? Thus where is the problem?

The second dividend of $1,000 goes to Ma and Pa Kiwi. Thank goodness, intone the Luddites, the pressure from the uninformed has ensured a majority ownership in New Zealand hands still. Oh, no. NO! Ma and Pa what the hell are you doing! Oh for goodness sake, they just used their dividend to purchase that brand new LED TV they’ve always wanted shipped here from Taiwan. Surely, mercantilists, this is a disaster? The whole $1,000 is now only growing the economy of Taiwan! Dividends used to buy imports, this is a disaster for our economy.

Fortunately, I shall push the narrator’s wise head in here to sooth the sweating brows of those who feel wronged. Nay, betrayed. The only thing I am attempting to show, is that just as exports are merely the cost of our imports, that in this tale of two dividends lies no argument, none, zilch, zero, nadir, against privatising and selling ‘our’ assets. And my plea is for all of you to please use your minds, and figure this stuff out, because your emoting has me imprisoned in this slave state of taxation. In other words, we all need to grow up. Plus why have you all forgotten the best way to a peaceful world, is global trade based on the voluntary transaction, and that includes cross border investment.

Oh, ps, thankful for inspiration, and bowing down before the Cactus ;)  Further debt owed to Paul Walker of Anti-Dismal, for the 'dividend outflow' heads up.

Related: Asset Sales I.

Persecuting Rich Pricks. An ABC of Ignobility from OBE to IRD.

I want to highlight the philosophical menace of the immorality reported by Granny Herald over the weekend, because it’s a certainty the MSM will never get to it, and it’s important. Look at what we do to the people who pay for this increasingly violent, second hander society:

‘New Zealand's richest people have paid more than $500 million in extra tax after an Inland Revenue crackdown.

IRD investigators have unravelled the complex tax affairs of individuals who have, or control, more than $50 million each to ensure they pay their fair share of tax.  …  Since the unit was set up in 2003, it has collected $467 million.’

Don't hold me to the following figures, as I'm too depressed to go confirm the stats somewhere on my hard disk, but this group of, to quote a former finance minister (the one who didn't believe in knighthoods, then took one), this group of 'rich pricks' form part of the 19% of taxpayers that pay 86% of the tax take (See update 1 below). In a civilised country you might think a thank you would be in order, but not in our social democracies: no, what we've done is have IRD set up an elite group of pricks to deal to them, and citing ‘fairness’ of all contradictory things. Aren’t they already paying more than their fair share? I don't know what the group is known as, in-house, though I suspect it rhymes with Gestapo, but if you show the initiative to make it onto New Zealand's rich list, unlike the two-faced politician with his knighthood, the one thing guaranteed is that you will earn a series of visits from them. Indeed, your privacy will be totally invaded, your life will be turned inside out, and if your accountant has got some part of our income tax legislation wrong - and this is as likely to be bad or wearisomely common retrospective tax law, as ‘cheating’ - then you may well lose a house.

If I can get more than 370 followers on Twitter, I think I'm going to start a movement for transparency in politics; given the only thing I've seen a Western politician do, for years now, is decry the selfishness of rich pricks, my first recommendation will be that all taxpayers with the cheek to have worked eighty hour weeks and taken the risks necessary to be worth fifty million dollars - and despite that in earning this they have delivered goods and services that will have improved the standards of living of all of us - I'm going to recommend they be forced to wear something in public to identify them, IRD shouldn’t be the only ones with access; perhaps a little yellow dollar sign on their lapels, so that we can spit at these brazen scapegoats in the street. We want what they've got, and in fairness, the IRD better take it from them. They're even so selfish as to think the state shouldn't decide how and on whom their money is spent.

Hang on, I need a wine to steady my anger down to rant, again (a wine which, with the excise taxes, I've probably paid fifty percent more than I would have had to in an actual free market. Dashwood Sauvignon, Marlborough, by the way, currently best buy for those who've blown the wine budget).

Right.

IRD hold compliance meetings every year, the last one I attended was three years ago where the department's chief commissar in charge of persecution/compliance, a Wellingtonian, of course, was bragging at how he loved using 'private sector assets against the private sector.' Those, remarkably, were his exact words. At the time I thought this very confrontational for a man whose wages were paid by the tax slavery of private sector risk takers, as I didn't think this was supposed to be a ‘them and us’ war. And, frankly, I didn't think it was very nice. In that instance he was talking about how IRD were mining the Waikato University benchmarking database; a database to which small business gives it's data freely - with a good faith now thrown back in their faces - so that they may obtain in return information to help them run their businesses better. The commissar was awfully pleased with himself that from the database they'd extracted the profit a painter should make on a litre of paint, and they were about to launch their blitzkrieg, demanding to know why, recession aside - which IRD audit know nothing of - each poor sod painter might not have made his quota of profit on his paint purchases for the year, with the intention, I assume, to levy tax on any difference ... if you remember, I've already written on where the burden of proof lies in a tax case. Anyway, that finished it for me, I've never been back to a compliance meeting for fear I might break someone, sorry, something. Instead I have simply been getting morose about my job, fearful of the consequence of getting it wrong, sleeping with my professional indemnity policy, and scaling back by asking some of my bigger clients to please go elsewhere. I'm over it, it’s not living, and I'm looking around me, with purpose, for something else that’s actually satisfying.

Unfortunately my advocacy of laissez-faire capitalism - noting the crony capitalism we have is to capitalism what sea horses are to horses - has never been about money; it's only ever been about that wonderful, evolutionary thing that capitalism, and only capitalism, is based on - the voluntary transaction. I'm a freedom freak: peace baby, the true sixties legacy, not those suited communists in the Greens Party whose every policy is the advocacy of force. Only on the voluntary transaction can there be a voluntary, free society. I said unfortunately because this has meant that while I'm comfortable, I'm not rich enough to build a space station. That's what I would do if I had money in real quantity. I'd build a space station and remove myself from the ugly, brute society we've created for ourselves, yet again. As generation text say, 'I'd be outa here'.

And unsurprisingly, they are - getting 'outa here'. There is a currently a prudent migration of the rich. The socialists’ Hollande in France, and Obama in the US, have been the best thing for the economies of Asia, where many of these wise ones are escaping to. I've heard the exodus of the rich from the taxing banning Mayor Bloomberg of New York is reaching biblical proportions. And so it should. The West is collapsing under a Keynesian hubris of debt, and the rot's so deep because it's philosophical, meaning there is no longer a fix. I give as proof of this, over there, that drunken youth, beer bottle in hand, slouching down the street, his bum hanging out of his pants. For myself, I can't escape, I've got domestic responsibilities, so the best I can do is perhaps learn to play the fiddle. For any IRD investigators reading this, note the 'the' in that, and fiddle as in burning. Don't go bringing my file up, I'm as scared of you as I would be of the Gestapo ;) 

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Related Posts: Chris (The Fist) Trotter. 


Update 1:

Quoting from Stuff, 5 August, 2012:

"... roughly 40 to 50 percent of total net income tax is paid by those in the top 10 per cent income bracket, suggesting that the tax burden falls most heavily on the wealthy". 

 Hattip Cactus Kate.

Quotation: Economic Liberty Essential For Literature

In a broadcast over June, 1941, George Orwell made the point that literature depends on economic liberty for its existence. And what he said then, is no less true today, as economic liberty, which is individual liberty, is squashed in the West under the weight of socialism, or as Orwell aptly names it, state capitalism. For those who believe a thriving arts sector is dependent on state funding, I say it's the death of the arts, because it's part of the process that is pushing the individual into the margins of the new police states that have been voted in behind the IRon Drape.
From his Literature and Totalitarianism:

... Modern literature is essentially an individual thing. It is either the truthful expression of what one man thinks and feels, or it is nothing.
As I say, we take this notion for granted, and yet as soon as one puts it into words one realizes how literature is menaced. For this is the age of the totalitarian state, which does not and probably cannot allow the individual any freedom whatever. When one mentions totalitarianism one thinks immediately of Germany, Russia, Italy, but I think one must face the risk that this phenomenon is going to be world-wide. It is obvious that the period of free capitalism is coming to an end and that one country after another is adopting a centralized economy that one can call Socialism or state capitalism according as one prefers. With that the economic liberty of the individual, and to a great extent his liberty to do what he likes, to choose his own work, to move to and fro across the surface of the earth, comes to an end. Now, till recently the implications of this were not foreseen. It was never fully realized that the disappearance of economic liberty would have any effect on intellectual liberty. Socialism was usually thought of as a sort of moralized liberalism. The state would take charge of your economic life and set you free from the fear of poverty, unemployment and so forth, but it would have no need to interfere with your private intellectual life. Art could flourish just as it had done in the liberal-capitalist age, only a little more so, because the artist would not any longer be under economic compulsions.
Now, on the existing evidence, one must admit that these ideas have been falsified.