Saturday, 6 September 2014

Roiling in the Belly

Labour's Capital Gains Tax To Strike the Elderly--Hard

New Zealand is a socialist country without socialism's formal doctrines.  Its fundamental unstated doctrine, however, is the omni-competence of the state to be as god to the people.  All political parties reflect this basic commitment to one degree or other.  Consequently, each can be categorized as to whether they are more or less Baalist.

The one saving grace--for which we can claim no merit whatsoever--is that we are a small nation.  This necessarily limits the attendant evils of statism.  News about rorts, corruption, exorbitant taxes, government overreach, and state incompetence tends to get disseminated quickly and the electorate reacts. National politicians are just a phone call or e-mail away.  De Tocqueville was right when he observed that small states are "naturally" protected from the creeping evils of soft-despotism.   But the spiritual and philosophical principles at play remain evil, nonetheless.

In this vein we do not doubt that the latest proposal by the Labour Party not to tax capital gains on residential houses until the owners die is going to be an absolute clanger with the electorate.
  Labour, of course, is still a hidebound cloth-cap socialist party, dominated by state subsidised and protected trade unions.  Thus, redistribution of private property to its favoured groups is its categorical imperative.  Tax-and-spend-and-borrow is its mode.  Labour does not just disregard the divine commandments that forbid stealing and coveting the property of others, it has never heard of them. 

But the home is still one's castle.  Now Labour plans to tax the capital gain on a residential house when its owners die, according to Kiwiblog.  We expect this will roil the bowels of the electorate like few other things would. 
Something that many people have not realised is that the so called exemption on the family home for Labour’s Capital Gains Tax is temporary. Almost all family homes will be taxed on their capital gain, when you die, if not placed on the market immediately.

Most people now die in their late 70s or 80s. Their kids will tend to be in their 40s or 50s and hence have homes of their own. So when you die, it is very unlikely a child will move into the home. They already have one. Plus few people want to live in the home their deceased parents lived in. So the home gets sold. And guess what? Labour will tax any capital gain on that sale.

It’s almost a de facto death duty – you get taxed for dying!

UPDATE: You can avoid the death duty if you decide to sell the home with 30 days of your parents dying. Charming. At a time you are mourning, you will be forced into rushing the home onto the market to avoid the death duty.
The pernicious effects are immediately apparent.  Many elderly folk sell their homes to fund their purchases in retirement villages.  Many are buying apartments, cottages, and town-houses in such complexes in exchange for graduated care.  Now, when when they make that transaction or they die, the government will tax the capital gain, leaving less money for the retirement village complexes and the heirs.  The upshot--it will be far more expensive to access retirement care.  Striking at the elderly and the most vulnerable is likely to cause the electorate to burn with anger.

Secondly, the policy will afflict the family.  The death of elderly parents is often a difficult time.  Sorting out their affairs and working through their effects often takes a great deal of discussion and time for the family.  Being rushed to sell the family home will be the worst thing imaginable at a very difficult time.

Thirdly, the market will know all about forced sales of homes of the elderly.  It will demand a lower price because of the state imposed time limit.  Often times the family home is the only asset parents have left to pass on to their children and grandchildren.  Now the Labour Party proposes robbing them.  We believe this will cause anger and resentment like few other things would.

No wonder the disingenuous cloth-cap socialists have been really quiet about that particular piece of fine print in their capital gains tax policy.      

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