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10:35 am, October 28th, 2025 - 46 comments
Categories: capital gains, Deep stuff, labour, tax -
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This was originally a post about the Future Fund, suggesting that it was unexceptionable, consistent with Labour thinking over decades, and sensible, if part of a renewed focus on economic transformation.
Today’s tax leak shifts the ground.
First, its substance is unsurprising. The later Robertson and long-term Parker views are lost.
Second, this position is at odds with much of the thinking in the Party. And it is too important an issue to be subsumed under a discipline message as it speaks to the fundamental purpose of a party for working people.
Third, the tax debate takes place in particular historical circumstances. My take on these circumstances is this.
The world is entering an extended period of severe political and economic instability.
From Piketty to Varoufakis, commentaries have been suggesting for many years that the post-1930s Keynesian model and its institutions have failed, to be replaced by a political economy dominated by an empowered supra-national capital and its clients, a new global elite with vast wealth and a feudal insight into the wielding of power, authoritarian populist regimes and a brash militarism, replete with new technologies.
Neo-liberal ideology has provided a significant intellectual framework and policy direction for this fifty-year progress.
The fragmentation and disruption visited on national economies and societies by neo-liberalism since the 1970s is damaging evermore the rules-based international order and encouraging profoundly anti-democratic models to prosper.
One thing, once unimaginable for many, must be considered,
The last fifty years have not been an interlude in the progress of the 1930s Accommodation. It is, rather, its extended demise.
One does not need Piketty’s thinking to justify this view, though Piketty understood what was happening earlier than most. We are in uncharted waters, the denizens of which include Trump, Putin, Xi, Thiel, Musk and Bezos.
As in the 1930s, the assailed liberal democracies are uncertain what to do and face having their history made for them. In simple terms, Social Democracy’s commitment to the post-1930s Keynesian model, and its consequent rejection of more radical political agendas, have seen it trapped in a self-denying ordinance of its own making, responding, rather that initiating.
Of course Labour must win elections, but it must do so on the basis of policy settings that reflect the contemporary challenges facing working people. Poll-driven politics doesn’t much like this. Indeed, it cannot do it.
And to understand those challenges is difficult, and implementing a progressive response is not easy. For example, UK Labour’s victory in the 1945 election, and its ability to introduce the welfare state, came off the back of a long, costly war against fascism, in which a people’s army came to reject Churchill and choose Attlee. EP Thompson captures this superbly in his account of military service. Similarly, the great Scandinavian accommodations were forged in a period of major class struggle and militancy.
For New Zealand, this challenge might suggest a strongly defensive national response – if you like, a new, national, defensive accommodation. The alternative is turmoil.
We may not be able to avoid that domestic turmoil, as some analyses of the current crisis suggest. A strong argument may be made that NZ’s political configuration will not permit that new accommodation.
In particular, Capital and the NZ Right may not be open to compromise. One looks at the current combination of incompetence and arrogance in the National Party and sees few shoots of accommodation.
A defensive accommodation, if attempted, requires us to recognise that trade systems face disruption, that import substitution may be a necessity, not a choice, that domestic infrastructure and production may require adjustment towards greater national self-sufficiency, that migration pressures will have to be managed, that defence requirements and expenditure will have to be addressed, and that measures will be needed to promote domestic social and political inclusion. Already vast, and growing, wealth differentials will not support that programme or a necessary social and political inclusion. People must be permitted access to the adequate and certain material means to see merit in a defensive accommodation. Tax measures to flatten wealth differences are essential.
Moreover, it would also be essential to strengthen the voice of working people in work and in the wider democracy as a safeguard against attacks from the Right. This must go beyond collective bargaining, itself an important defence of democracy, into yet unexplored areas of industrial democracy.
Action is needed on the tax front, on the productive economy and on policies for social and industrial inclusion, if turmoil is to be avoided. To add to the cheer, we do not have unlimited time to address these issues. The evident decay of liberal democratic traditions, the rise of oligarchic right-wing politics, military adventurism and “informal” war, the decay of the Bretton Woods institutions, to name just some currents, are stark reminders of encroaching instability.
We have at best a few years to make these changes.
I would support a CGT on realised capital gains on everything, including the family home. Though, there would likely need to be some sort of threshold on asset values and classes to be workable. For instance, should gain on fine arts be taxable etc. But, a comprehensive system would treat gains on assets equitably, and would limit loopholes.
And, it should also be allowable to claim deductions for capital losses to be equitable.
Taxing unrealised gains becomes way too complex IMO, and would be God’s gift to valuers and accountants.
Given the decades accrued in CG without any taxation there should be an estate tax. The UK threshold is cNZ$750,000 (and the tax is at 40%). Our median home value is about that atm. Our tax rate might be at 33% on the amount above the median house value.
It is the obvious consensus with Greens, who will first seek a wealth tax.
Another revenue source is stamp duty on purchase of homes valued at over $2M.
Given the decades where CG was accrued without any taxation …
— Niccolò Machiavelli
An important subtext in what was written. It’s why our gaze is so often on the immediate, short-term, familiar, not on the longer term. A focus on polls exacerbates this tendency.
A question I have that you probably don't have the answer to is: Who is being polled?
Especially Labour party polling.
From afar, polling seems to have an inordinate effect on policy. That and advisors.
All appear to be in the comfortable bubble. A bubble that is conservative in the sense of maintain the status quo.
This results in incrementalism in policy and in selection of white collar folk who, perhaps haven't felt the harshest impacts of neo liberalism.
I know there are some exceptions, the shadow finance minister being one.
There is not yet an "ism" to replace neoliberalism even though it is not benefitting for the many, just the few. Particularly in the provision of the social wage. My thought here is a bit less than what Nigel implores, but here it is
I recently read a commentary about the baby boomers commanding an excessive chunk of the nations wealth at the expense of the young. I pointed out that the political project was neoliberalism politics rather than a generation thing. A project that privileged white middle aged and older males.
I am an xer, neither a boomer nor young. But my message to the young, if you want a future in this country, do not sit and wait and hope political parties deliver it. Do not be a consumer of politics. The only real way to change the future to something you want – work together, get organised, get collective, agitate and campaign.
Older Millennial here: Sure.
But politics is rapidly becoming a luxury many of us can’t afford. We’re caught between a cost of living that rises faster than wages, an economy on the verge of implosion thanks to “steady” National party management, and the scars of surviving three supposed once-in-a-century crises in just 25 years: 9/11 (when we were kids), the GFC (when we were leaving uni), and COVID-19 (when we were trying to build families and pay off mortgages).
I’m in my mid-30s, and almost none of my friends own their own homes. Maybe I just picked a particularly dumb and unambitious friend group. But, somehow, I doubt it. The gap between my generation and my parents’ has never been starker.
And to be honest, not many of my friends even care about politics anymore. As far as they’re concerned, we’re screwed no matter who we vote for. So why bother?
Given everything we’ve lived through, can you really blame them?
We're just really tired, boss.
Yup easy to say far harder to do. Reality is though uber eats wont deliver the government someone wants to their doorstep, nor can they order inline and get it couriered. If we expect and act that way, those who are organised and influence the political economy influence what we get.
Whereas, I know plenty of people in that same age range who are buying (or have bought) homes (family, workmates, friends kids – and no, most aren't relying on the bank of Mum and Dad). They have made sacrifices to do so (moving cities, flagging overseas holidays, reducing lifestyle expenditure, changing jobs, etc.)
Is it harder for them, than it was for their parents? Yep. They're definitely buying later by 5+ years, and will be tied into mortgages for longer. Several of them are buying apartments (what they can afford), rather than the starter homes their parents had: single house on a section (which is what they'd really like).
However, most of them don't care about politics either – they're too busy dealing with their own lives/families.
However, that absolutely is a generational thing. The boomers are going to die off – and their wealth will be inherited by the next generation.
And, given that men still die substantially earlier than women, and that most married couples have an age gap (husband older than wife) – it would be better characterized as a project that privileges middle aged and older females.
Whether it's via inheritance or death duties – the wealth gets passed to the next generation.
Boomers is a problem that time will solve…..
The Boomer demographic isn’t a problem. Wealthy Boomers can't take wealth with them, but keeping it all in the family is a problem time alone won't solve.
The issue isn’t, inheritance per se, but the way so much wealth becomes locked in so few hands, largely shielded from taxation.
Yes, the boomers will pass, but their untaxed, unproductive wealth will persist in the hands of their gentry heirs.
Who will no doubt use it to further tilt the playing field in their favour.
https://thestandard.nz/new-zealand-treats-the-wealthy-better-than-comparable-nations/
https://thestandard.nz/luxon-appears-to-serve-wealthy-foreign-interests/
I gather that your personal will leaves your estate to the IRD – for whatever use they want to make of it…..
My estate? Ah B, you gather so much – can't take it with you
That's not the question. Do you plan on spending the lot on riotous living (there is certainly a group in favour), or leave it to someone else?
It doesn’t matter how much the ‘estate’ is – it’s what you plan to do with it.
"Riotous living" or "the IRD" – c'mon B, are you that narrow-minded.
https://www.publictrust.co.nz/resources/gifting-and-bequests-explained-how-to-think-about-leaving-a-lasting-legacy/
Couldn’t agree more.
Waiting with bated breath for the outcome to be declared…..
In actuality, there is not "so much wealth" – it's inflated by the cost of housing. When the average Auckland house is $1 million + – it's easy for a huge number of people to be paper millionaires.
When the reality is that the majority of the money they leave will just pay off the mortgages of their kids. Exactly the same scenario as the generation before them – when the sale of their parents house (deceased estate) paid off their mortgage.
Really, in order to be entirely 'fair' no one should be allowed to inherit anything (and we can all live in the socialist paradise of Soviet Russia). /sarc/ in case you didn't realize it……
Or, you know, actual millionaires, if they paid less than $400k for that house 30 years ago. Or if they own five, six, or seven of them.
Nobody here is arguing for the abolition of inheritance, comrade Belladonnavich. All we’re suggesting is that untaxed capital gains being passed on from generation to generation:
a) aren’t a fantastic foundation for a taxation system that claims to be fair,
b) allow increasingly large amounts of wealth to remain untaxed, idle, and therefore useless to the wider economy, and
c) are precisely how we end up with a new class of landed gentry.
We spent a lot of time and energy dismantling our homegrown gentry class in the early 20th century. And now we’re running the real risk of re-creating them.
Only this time, they’ll have all the noblesse and none of the oblige.
.
If they sold and relocated to a smaller house in the same area – they would get very little (even in absolute terms, as opposed to relative terms) out of the deal.
Good luck with your campaign to persuade the vast mass of ordinary Kiwis that they should buy into a capital gains tax on the inheritance of their home. I somehow think that your policy will remain on the fringes of politics, comrade ResPublicanovich.
Why is the fact that some people own (say) 5 houses more morally reprehensible now, than it was 30 years ago?
It seems to me that the Soviet rabbit hutch style apartments are your spiritual home. Everyone gets the same low-level of accommodation (apart, of course, from the commissars – who are given dachas by the 'grateful people') There are your landed gentry….
Do I think house prices are too high? Absolutely!
Do I think that the best outcome for NZ would be for 20 years of price stagnation, and even mild falls? Couldn't agree more. I look at Wellington price falls as a desirable outcome – and would like to see the rest of NZ follow the same trend.
Do I think that the best way to achieve this goal is to tax the heck out of the assets that ordinary people plan to pass on their kids? Not at all.
The "ordinary Kiwi" you’re fighting so hard on behalf of, on average, can’t actually afford a house. Let alone five or six.
The statistics are stark: more than a third of New Zealanders can’t even dream of owning their own home. And for those who can, with a median household income around $105,000 and a median house price near $780,000, that dream now depends far less on hard work and far more on pre-existing wealth or inheritance.
If you genuinely cared about fairness, or the wellbeing of the middle class, you’d want to tax capital accumulation more and labour income less.
We also need to confront the structural problems holding back real growth: problems that siphon vast amounts of our limited capital away from productive investment that creates jobs and spreads wealth and instead trap it in land-banking and speculation.
If that means I have to pay tax when I sell my property, then so be it. It’s a small price to pay if it means my kids, and everyone else’s, might one day have a fair shot at owning a home of their own.
That's absolutely nuts.
Boomers are a demographic.
Wealthy boomers leave their wealth to kids or grandkids. Poor boomers leave nothing to anyone. Exactly the same as the generation before and (presumably) the generation later.
The only issue with boomers is that they are a greater (in numbers) bulge in the demographic chart – than the succeeding generations.
This is an issue for us as a society (having to pay more pensions, having greater elderly health-care costs); but it's a (relatively) short term issue (25 years or so).
If it wasn't a problem for previous generations to 'leave it to the family' – why is it a problem for boomers to do so?
The NZ government once applied a 'death duties' check on this privilege – the Nats eroded and, in 1993, abolished that particular wealth tax.
And, amazingly, Labour was sufficiently happy with the outcome, that they had no apparent desire to reverse this over the last 30 years. Shame on Clark and Ardern….
Oh, for shame, for shame indeed
The NAct1 CoC is govt by and for the sorted. “Everything is going to plan.“
The boomers began paying 33% top rate of tax (down from 66%) in the 1980's.
This allowed some of them to store savings, investment CG untaxed into growing wealth.
Estate tax exemption is usually around the median home value (the UK one is about our median value $750,000).
These people own homes of a much higher value.
Average house price in Auckland is over $1 million.
Presumably, in your strange view of accounting, Auckland contains a greater percentage of wealthy boomers than the rest of NZ.
What about those people paying the top rate of income tax do you choose not to understand?
For shame indeed.
The part about the 'income' being paper only. Since most people buy and sell on the same market.
But, Hey, don't let reality interfere with your worldview.
What do you not get about an estate tax?
Dead people do not buy a new property.
What is this different world view nonsense. 2/3rd of the OECD have an estate tax. The exemptions they provide go towards the median value of property for a reason.
Your wanting New Zealand with a pampered elite is so "special".
I have to agree with Nigel. In my view we need to foster a sense of "we are all in this together". If Capital wins a class war, then we are all losers.
THE TAX is only on REALISED gains?
Yes
There is so little patience within our voting public for democratic results that do not deliver, that Labour's narrow tax policy is about as close to perfect as you are going to get in the foreseeable future.
Push Piketty and Varoufakis aside for the fundamental pessimists that they are and deal solely with the frame of New Zealand.
1. Legacy.
National did not change the tax bracket for income over $180,000. So Robertson's legacy remains.
National has weakened but not eradicated the Bright Line test brought in by National and strengthened under Labour. So that part of the legacy is intact.
Labour's policy simply strengthens what is already bedded in. Honestly that's the way to do it now.
2. Efficiency
We remain one of the most efficient tax systems in the world. The bulk of the government's income comes from PAYE and automated company tax returns. Other key income streams include fuel tax, excise taxes, service fees, and ACC levies.
Labour's proposal is again a simple advance on what is already built. Some critics are complaining that the revenue will be gradual. I view that as a virtue.
It is also efficient in that its revenue faces the worst growing budget any NZ government has: health.
3. Taxpayer return and democracy
The most important support for democracy that Labour can deliver is proof that the taxes we pay are delivering for actual concrete policy outcomes. The policy of translating the narrow CGT into a card with a specific credit is well know by Australian citizens, and by New Zealanders through the SuperGoldCard and Community Services Card.
It is very close to being as hypothecated as NZSuper, ACC, and Fuel taxes. People see what they are paying this tax for, they can use it easily, there's a limit, and you hold it in your hand.
That is now the only way you keep democracy strong in New Zealand. It also answers the charges of Labour's chronic waste of taxpayer money throughout its terms 2017-23.
So Nigel my advice is leave the melancholic theorists behind. They do you or us no good. Now prepare to fight for the policy, win the people, and win power to deliver it.
It is very close to being as hypothecated as NZSuper, ACC, and Fuel taxes. People see what they are paying this tax for, they can use it easily, there's a limit, and you hold it in your hand.
It would be the same with land taxes.
Honestly if all councils in New Zealand haven't been able to make that connection with rates in five generations, there's no reason to believe your claim holds at all.
You cannot hold land in your hand of course, but you can see what you are paying for.
There is no such thing as "taxpayer money", the government spends by issuing its own currency and taxation later deletes it again.
https://ourmoneyus.org/money-creation-through-public-spending/
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Mod note
It was a reply to Ad commenting on Labours waste of taxpayers money. If you don't find my input of any value then a shan't bother any more. I thought that you had one of the more progressive and informative news sites but apparently not. I shall now confine my reading to elsewhere. A rather rude response from you in my opinion.
Of course the tax debate will continue. Labour's been debating it already for six months. And that's ok. But as one well known political commentator said along these lines this week – Labour is not a debating society ; its purpose is to win elections and make real change and now it has to get out and sell this policy. From what I've been seeing and hearing, this policy hits the mark, especially with the CoC screaming all over social media. Not all of us have such learned wisdom around tax policy, Piketty etc and especially working class voters. The good things for me, is Labour has put CGT on the election manifesto and the cost of doc's visits and our captitated PHO system – and the underfunding of health care paints a stark contrast with National, Seymour, Simeon and Winston.