Showing posts with label Abusive process. Show all posts
Showing posts with label Abusive process. Show all posts

Tuesday, June 21, 2011

Lawyers profit at taxpayers expense

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There is something very wrong about the world when financial institutions are suing each other for negligence or incompetence, when those financial institutions are both government-owned and by implication, exposing taxpayers to law suits. If one looks back, it was the governments of the Western world which precipitated the crisis by:
1. Not properly regulating financial markets
2. By aggressively stimulating or distorting markets with various incentives like First Home Buyers grants, relaxed bank regulations and ultra-low interest rates.

The culmination of the crisis was that banking executives were able to leverage their exposure to profits by profiting hugely from their options incentive schemes, leaving shareholders and taxpayers with the losses as they walked away with their bonuses. They then benefited from a stimulus-induced recovery in the market, only for taxpayers to experience a succession of law suits. Yes, government officers are using taxpayer funds (in the interests of taxpayers) to engage in high-cost law suits against other governments. This of course can only result in lawyers getting their share from taxpayers. If you are severely repressed, then this will be of no concern to you. If you are angry, then there is only one thing to do - direct your energy - your minds - towards making those perpetrators accountable. The reality however is - the perpetrator - is probably yourself - for not thinking...for surrendering your personal sovereignty to government; for allowing them to freely tax you. You can sanctioned the actions of government. Yes, all you practical people in the world who thought if you just worked and saved, there would be plenty to go around...that you would be ok. Nothing is assured if you surrender the realm of ideas to the collectivists, whether they occupy seats in government or lead lobbyists in your state capital.

Sunday, May 8, 2011

Trusts another false economy thanks to government

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Its an election year in NZ, and the NZ Herald is drawing attention to a tremendous false economy. The resources that people sink into setting and administering trusts. The problem of course is that this piece of statutory folly is destined to change because its senseless policy. Yes, you might decide to set one up, then the rules arbitrarily change. It effectively turns you into a slave to the tax code. Citizens of other countries beware! This is what arbitrary government can do to you.
We need to get rid of trusts. Get rid of deductions! Get rid of subsidies! Get rid of tax! Bring the country back to its essential services. Strip out the minimum wage and watch the price of labour fall. Strip out all forms of private and public extortion and watch costs fall, and see people resume spending. No one but the super-rich can afford to build in NZ at the moment given:
1. The high cost of building approvals by local govt
2. The extortionate regime for land ownership (i.e. zoning) - worse in Australia because it actually has a growing population. You can still but cheap in NZ where the population growth rate is negative....if you can get a job.
3. The extortionate mark-ups by builders to buyers, whom are effectively using the market power given them by their customers to run a cozy deal with the hardwares. Tradesmen need then only work for 3 days. If they were aspirational, they'd just go to Australia for a 50% higher wage.

Trusts are a form of unfair tax persecution that hurt the poor more than anyone else. They are a productivity nightmare. It is not just the professionals you need to pay, its what its doing to people's judgement. People's capacity to think conceptually is impaired when their lives are governed by arbitrary ideas - as opposed to the logical, long range ideas that they would live by if the market actually followed principles, and not arbitrary statutes. If you want to succeed as an investor in this market, you need to sleep with Ben Bernacke, not study economics. Yep, if you are a seductive prostitute, you might just be over-qualified in the modern era.
Read more about the trusts industry in NZ.

Tax collection - its all in the interpretation

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Do you happen to think the tax office has too much power? Well, you would be right for a number of reasons:
1. Legal extortion: The tax office actually has the 'near' unlimited resources to spend on tax policy or 'precedent', whilst you, as a taxpayer are constrained (in most cases) with minimal resources, and a desire to seek redress for just your case. Doesn't it seem like an unlevel playing field? Well, you ought to be more anxious than you know. The implication is that for a minor expense of say $5000, you might need to fight your case to the High Court, which might cost you $500,000. Oh, and tax payers will probably pay $5mil. The bureaucracy are happy, because they just made the state $300mil a year (my guesstimate) in additional revenue.
2. Arbitrary powers: The power for the tax office to extort more money from business and individuals is a very arbitrary matter. The reason is that many moons ago, common law was supplanted by statutory law. Now, common law is rather commonsensical, whereas statutory law is 'ok' on a good day (when its enacted), but it quickly turns to quicksand in the interpretation. The reason is that, unlike common law, which actually has a context established by its framework tied to fact, statutory law has no framework, so policies are only inclined to ensure its correspondence to their existing policy. i.e. Rationalism. The implication is that one bad law begets another bad law, after business finds loopholes, or the judiciary is forced to interpret bad law.

Here we have an example of the arbitrary powers of NZ Internal Revenue. It was probably asked by the government to find more revenue. The reason is that the NZ govt is between a rock and a hard place. Its an election year, and the government has a non-performing treasury dept. It needs money and it is reluctant to cut spending, even if the polls suggest its ok. Well, of course they will do that after the election. In the meantime, the tax office is after cash.

Here we have NZ Internal Revenue arguing that you cannot claim deductions for software development which is unsuccessful; the argument being being that unsuccessful development does not lead to revenue. This is silly policy because:
1. The development is undertaken with the intent of making a profit. If this principle is not retained, then capital losses would seek to be deductions, as well as a great many other expenses and losses.
2. The policy is not consistent with other laws, or even other countries.

Frankly, I think the tax office cannot reasonably expect such an interpretation to stick. The business community will lobby against it. Why would the tax office do this then? I would suggest the NZ government is engaging in some creative accounting of its own. With an election in one year, a budget due before then, the NZ government will use the law as the basis for its budget, and then after it has benefited from it, it will reverse the decision. Its the public sector equivalent of a corporation making a provision for some contingent liability....except its contemptibly dishonest. Sounds like government, our moral authorities, doesn't it? They are fictitiously creating revenue that they have no desire to collect, lest they upset their constituency.

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