Business
For too long I think, we’ve fixated on income exclusively and not on capital gains when it comes to making investment decisions, and tax policy also. The Green Party have plans to change that.We’re taught from a young age to get educated, get a good job, pay your taxes, repay debt, and then invest, ideally in things that produce positive cashflow. This, default, ‘value-investing’ paradigm places a relatively low reliance on expected gains we should be making from increasing property values or investments. When incomes are now increasingly likely to be at risk of being disrupted in a post-Covid world, and when central banks and politicians, are more than happy to debase our currency a al quantitative easing, is this really the paradigm we should be using in the new world?Our tax system, also supports this baseline assumption that you’re rich if you earn ‘high income’ (a relatively relative statement!). You may think we pay a reasonable amount of tax already in NZ, although I suppose the less you earn, the higher you think the tax rate should be, but only on those who earn more than you. So while your income is taxed on the way into investments, in many (but not all) cases, the growth in your investments is largely un-taxed. This favours those who are ‘already there’, and makes it harder for those trying to get there. The fruit the tree produces gets the attention, but the tree itself is left alone.So is it true that in the new world, gains on investments (capital gains) perhaps can be considered more reliable than our incomes? If it is, understandably, government will try to position itself to benefit from this trend – perpetual money creation to solve the immediate problem will only get us so far.I’m talking with James Shaw today, co-leader of the Green Party. They’ve come up with a proposed wealth-tax – and while I (and perhaps you too) don’t like the idea of giving away my fruit, as well as my wood, they’re trying to solve a problem I think we can all agree needs to be solved – the increasing wealth gap. Next week I’ll have another perspective on this from one of the other parties, but I hope, no matter where you are on the political spectrum, you enjoy today’s show._________________________________________________________________The NZ Everyday Investor is brought to you in partnership with Hatch. Hatch, let's you become a shareholder in the world's biggest companies and funds. We're talking about Apple and Zoom, Vanguard and Blackrock.So, if you're listening in right now and have thought about investing in the US share markets, well, Hatch has given us a special offer just for you... they'll give you a $20 NZD top-up when you make an initial deposit into your Hatch account of $100NZD or more. Just go to https://hatch.as/NZEverydayInvestor to grab your top up. ________________________________________________________Like what you’ve heard?You can really help with the success of the NZ Everyday Investor by doing the following:1- Tell your friends!2- Write a review on Facebook, or your favourite podcast player3- Help support the mission of our show on Patreon by contributing here4- To catch the live episodes, please ensure you have subscribed to us on Youtube: 5- Sign up to our newsletter hereNZ Everyday Investor is on a mission to increase financial literacy and make investing more accessible for the everyday person!Please ensure that you act independently from any of the content provided in these episodes - it should not be considered personalised financial advice for you. This means, you should either do your own research taking on board a broad range of opinions, or ideally, consult and engage an authorised financial adviser to provide guidance around your specific goals and objectives._____________________________________________________________________________