Monday, July 13, 2015

This is wrong

The median Auckland house "earned" more than a backbench MP last year:

New Zealand house sales and median prices rose in June, with Auckland's median house price rising a record 26 per cent to $755,000 over the past year, amid signs that supply shortages and surging prices in the country's largest city may be prompting buyers to look elsewhere.

The number of houses sold nationwide increased 29 per cent to 7,426 in June compared with the same month a year earlier, according to the Real Estate Institute of New Zealand.

This is what a bubble looks like: when your house "earns" a top-end salary just by existing. And its a perfect example of why we need a capital gains tax. If it had been earned honestly, that $156,000 would be taxed at the appropriate marginal rate (meaning 33% for most of it). The failure to plug this loophole allows wealthy property-owners to reap enormous incomes without paying a cent of tax on them. And that is simply wrong.

Meanwhile, those MPs with multiple Auckland properties are probably laughing all the way to the bank.