How wasteful is the Oz company tax? @TheAusInstitute @GrattanInst

How wasteful is the Oz company tax? @TheAusInstitute @GrattanInst

Source: The incidence of company tax in Australia, Xavier Rimmer, Jazmine Smith and Sebastian Wende, Australian Treasury working paper.

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Sharp ratios of @NZSuperFund since inception @TaxpayerUnion

The Sharp ratio describes how much excess return you are receiving for the extra volatility that you endure for holding a riskier asset. If manager A generates a return of 15% while manager B generates a return of 12%, it would appear that manager A is a better performer. But if manager A took much larger risks than manager B, manager B may be a better risk-adjusted return.

The Sharpe Ratio such as those below of the NZ Superannuation Fund can be used to compare two funds on how much risk a fund had to bear to earn excess return over the risk-free rate.

Source:New Zealand Superannuation Fund response to Official Information Act request.

98% top US economists disagree @NZSuperFund strategy @VernonSmall @JordNZ


There is always one. Liran Einav had to be the only economist out of 100 or so top American and European economists who disagreed with the proposition that:

In general, absent any inside information, an equity investor can expect to do better by choosing a well-diversified, low-cost index fund than by picking a few stocks.

The New Zealand Superannuation Fund’s policy of active investing has one supporter out of 100 surveyed by the Initiative for Global Markets. I suppose it is better than none.

The chief executive of the fund quibbles by claiming there is a 3rd way between active and passive investing but there is not as William Sharp explained in his timeless 1991 article, The Arithmetic of Active Management:

    • A passive investor always holds every security from the market, with each represented in the same manner as in the market. Thus if security X represents 3 per cent of the value of the securities in the market, a passive investor’s portfolio will have 3 per cent of its value invested in X. Equivalently, a passive manager will hold the same percentage of the total outstanding amount of each security in the market2.
    • An active investor is one who is not passive. His or her portfolio will differ from that of the passive managers at some or all times. Because active managers usually act on perceptions of mispricing, and because such misperceptions change relatively frequently, such managers tend to trade fairly frequently — hence the term “active.”

An active fund is a fund that is not a passive fund. If you do not own a balanced portfolio of every security in the market, you are an active investor.

The majority of the New Zealand Superannuation fund is passively invested but some of it is not. It is invested in dogs like KiwiBank, in Z service stations and even in some bad Portuguese loans.

It’s "threadbare" to question @NZSuperFund’s investment strategy @TaxpayersUnion

It’s "threadbare" to question @NZSuperFund’s investment strategy @TaxpayersUnion

Letter to @DomPost on @NZSuperfund performance @Taxpayersunion — Jim Rose (@JimRose69872629) March 18, 2017 There really is an issue on which economists are unanimous, a big issue to boot. Source: Diversified Investing | IGM Forum. Actively-managed mutual funds … Continue reading

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How much is Working for Families per year?

The last Labour Government so hated tax cuts that it would not call its family tax credit a family tax credit. For those on the minimum wage, it could increase your income by 1/3rd. Oddly enough, because of abatement rates of 22.5% after $36,000, two minimum wage earners do not get much at all.

working for families

Shouldn’t @NZSuperfund be funded by earmarked taxes? @TaxpayersUnion

Pre-funding of New Zealand’s old age pension obligations requires contributions to the New Zealand Superannuation Fund now, higher taxes now in return for lower taxes later through the joys of compounding of the returns on the investments. If that is so, when the contributions are not made, the $3 billion in annual taxes should not be collected.


Source: Andrew Coleman, PAYGO vs SAYGO: Prefunding Government-provided Pensions, Motu Economics and Public Policy 26 Oct 2010.

There should be a separate New Zealand superannuation fund contribution levy that should lapse when contributions are suspended, as they were from 2009, and the pay-outs start after 2036? Otherwise, taxpayers will never see the promised lower taxes in the future. Never?


Source: Andrew Coleman Mandatory retirement income schemes, saving incentives, and KiwiSaver at 

Constitutional political economy matters despite the reluctance of most who specialise in Social Security reform to think about that backend public choice risk. Unless there is iron-clad guarantee of lower taxes in the future, the whole deal about pre-funding superannuation pay-outs is a con.

That politicians can pass a law in 2003 to pre-fund old-age pensions 40 years hence and expect the politicians of 2036 and onwards to honour the deal with tax cuts is politically naive.