I wonder what you'd need to believe was true with respect to incremental FDI for this to stack up?
Simply, if FDI was earning a pre-tax ROI of 10%, then you'd need an additional $65bn in FDI, which is an increase in around a third. ($65bn investment *10% ROI *20% tax). This would be less if you factor in other taxes such as PAYE.
It's hard to imagine that the change would stimulate material additional investment. However, assuming it did, I can't see how that much capital could be deployed rapidly without driving significant inflation.
The whole debate is also an excuse for government to not invest. NZ does not need a heck of a lot of speculative or entrepreneurial investment. We, like most neoliberalized gutted countries, need BASIC investment, and in our people. That is the proper role for a government that cannot ever run out of Its own scorepoints and can control prices using the automatic stabilizers. FDI is a total distraction. (imho)
The appropriate policy/law is that if a foreign owned Corp. manufactures in NZ then they must accept a wage share minimum, hence a profit share cap. Then the corporate tax rate can be zero, which is far better. It also eliminates a huge amount of waste of "GDP" on tax compliance and (on the other end)) tax evasion, which is pointless ꕗꖹꝆꝆꕷꖾꕯꖡ human activity that serves no public purpose. There is no point in taxing profits then. Let the sales go more to wages.
Remember, the labour market is not a fair game (in the most technical sense). It is completely justified for government Law to dictate firms give fair share to wages.
What NZ needs is to maintain a current account deficit. Our imports are our *real* benefit. We only need export to optimize *real* terms of trade.
Coproate tax is ꕗꖹꝆꝆꕷꖾꕯꖡ. It is a pass-through to the shareholder and consumer. If the corporation is fintec or rentier we should not merely tax them, but fine them out of existence. They are parasites. If the firm is a producer of real goods then we do not want to tax them at all. You never tax that whihc you wish to incentivize (if at all possible). See Mosler's proposals for payroll tax "holiday" — can be put on permanent vacation.
You seem also completely blind to the massive waste of human activity spend annually on tax compliance and (on the other end) tax evasions. If there is no underlying reason for the tax, then we should not have that tax. Since government doe not need tax revenue in order to be able to spend (mark-up bank accounts) the purpose of the tax needs to be born in mind. It is to drive demand for the NZD and move resources out of the private sector into the public sector. A blanket corporate tax does not achieve this in any well-targeted way, so is nuts. A particular polluting or decrepit firm that produces garbage is the one you want to tax, and tax to the high heavens so they disappear.
If the objective is to benefit the worker, then you want firms producing real goods and services to be taxed at zero rate! And the policy instead should be increased wage share —written into law.
For foreign companies. They can be either told to ꘝꕯꕷꕷ off (our government can always make any investments if the real resources are available) oir if they are decent real goods producers they ca operate on NZ soil but should be forced by law to allocate a fair share to wages. If they do not like that, then tell them to take a hike.
NZ does not need foreign currency. We need the imports. Imports are our real benefit. The currency flows are largely irrelevant (if government understand the importance of a floating exchange rate, whihc I know they do not!🤣.) It is real terms of trade we should seek to optimize, and a higher wage share. The workers tend to spend all their income remember. Markets thrive on the spenders, not the savers. Corporate tax does not help with this.
When econs obsess about capital flows and currency flows they are revealing they know nothing about the policy space government have available when the state unit of account is on a floating exchange rate. It does not matter if foreigners hold a lot of NZ treasury securities or bank deposits. They cannot claim our resources if we refuse to ship them. (Tourism being an export: we can refuse tourists too, our nation does not have to rely on tourist "revenue". The tourist got the NZD from us in the first place.)
I wonder what you'd need to believe was true with respect to incremental FDI for this to stack up?
Simply, if FDI was earning a pre-tax ROI of 10%, then you'd need an additional $65bn in FDI, which is an increase in around a third. ($65bn investment *10% ROI *20% tax). This would be less if you factor in other taxes such as PAYE.
It's hard to imagine that the change would stimulate material additional investment. However, assuming it did, I can't see how that much capital could be deployed rapidly without driving significant inflation.
The whole debate is also an excuse for government to not invest. NZ does not need a heck of a lot of speculative or entrepreneurial investment. We, like most neoliberalized gutted countries, need BASIC investment, and in our people. That is the proper role for a government that cannot ever run out of Its own scorepoints and can control prices using the automatic stabilizers. FDI is a total distraction. (imho)
The appropriate policy/law is that if a foreign owned Corp. manufactures in NZ then they must accept a wage share minimum, hence a profit share cap. Then the corporate tax rate can be zero, which is far better. It also eliminates a huge amount of waste of "GDP" on tax compliance and (on the other end)) tax evasion, which is pointless ꕗꖹꝆꝆꕷꖾꕯꖡ human activity that serves no public purpose. There is no point in taxing profits then. Let the sales go more to wages.
Remember, the labour market is not a fair game (in the most technical sense). It is completely justified for government Law to dictate firms give fair share to wages.
What NZ needs is to maintain a current account deficit. Our imports are our *real* benefit. We only need export to optimize *real* terms of trade.
Coalition of Criminals. They know exactly who they care about, and it's not New Zealand.
Coproate tax is ꕗꖹꝆꝆꕷꖾꕯꖡ. It is a pass-through to the shareholder and consumer. If the corporation is fintec or rentier we should not merely tax them, but fine them out of existence. They are parasites. If the firm is a producer of real goods then we do not want to tax them at all. You never tax that whihc you wish to incentivize (if at all possible). See Mosler's proposals for payroll tax "holiday" — can be put on permanent vacation.
You seem also completely blind to the massive waste of human activity spend annually on tax compliance and (on the other end) tax evasions. If there is no underlying reason for the tax, then we should not have that tax. Since government doe not need tax revenue in order to be able to spend (mark-up bank accounts) the purpose of the tax needs to be born in mind. It is to drive demand for the NZD and move resources out of the private sector into the public sector. A blanket corporate tax does not achieve this in any well-targeted way, so is nuts. A particular polluting or decrepit firm that produces garbage is the one you want to tax, and tax to the high heavens so they disappear.
If the objective is to benefit the worker, then you want firms producing real goods and services to be taxed at zero rate! And the policy instead should be increased wage share —written into law.
For foreign companies. They can be either told to ꘝꕯꕷꕷ off (our government can always make any investments if the real resources are available) oir if they are decent real goods producers they ca operate on NZ soil but should be forced by law to allocate a fair share to wages. If they do not like that, then tell them to take a hike.
NZ does not need foreign currency. We need the imports. Imports are our real benefit. The currency flows are largely irrelevant (if government understand the importance of a floating exchange rate, whihc I know they do not!🤣.) It is real terms of trade we should seek to optimize, and a higher wage share. The workers tend to spend all their income remember. Markets thrive on the spenders, not the savers. Corporate tax does not help with this.
When econs obsess about capital flows and currency flows they are revealing they know nothing about the policy space government have available when the state unit of account is on a floating exchange rate. It does not matter if foreigners hold a lot of NZ treasury securities or bank deposits. They cannot claim our resources if we refuse to ship them. (Tourism being an export: we can refuse tourists too, our nation does not have to rely on tourist "revenue". The tourist got the NZD from us in the first place.)