Recently Treasury Secretary John Whitehead floated the proposal of a capital gains tax, a regular perennial which predictably induced the usual crop of supporting newspaper editorials and approving comments from socialists, greens and other misanthropes whose underlying belief seems to be that the main function of humanity is to promote the State – with of course them running it.

The Dominion duly editorialised with the standard nonsense this subject invariably spawns, about “distortionary tax-free capital gains on investment property” and “unproductive investment”.

First they ignored the fact that traders in property are already taxed on their gains, indeed the IRD have been particularly diligent in pursuing this sector.

Second, they ignored the reality that as such traders are already taxed on their realised gains then conversely they are allowed deductions on their losses. As I’ve yet to hear of a rich property trader (they don’t exist) then I suspect the net revenue outcome is disappointing and possibly negative.

They also ignored the fact that residential property investors, a financially unsophisticated sector, accept a mediocre return and in so doing effectively provide subsidised rental housing to the 25% of New Zealanders who for whatever reason rent their accommodation.

And what of the distorted investment, away from, to quote the Dominion editorial, “productive job-creating areas of the economy”? Since when has anyone in a free society had some sort of moral duty to invest his or her savings in job-creation? That is an outrageous proposition.

Perhaps the Dominion could pause and think about the poor mugs who have followed this course in recent years, only to see their savings destroyed in the stock exchange, by the investment pension funds, finance companies and the like. In that respect it is noteworthy that the biggest clamour on this issue comes from the investment funds industry, notwithstanding their appalling other people’s, money-losing record.

Far from condemning these folk who have wisely been suspicious of trusting their savings to others and instead kept their money in their own name in something they understand, we should be grateful to them. For if they had not done this then presumably it would have fallen on the State to provide subsidised housing and John Whitehead would then have a real concern and not an imaginary one.

Most of all in asserting that the non-existence of a capital gains tax was responsible for the recent years boom in house prices the Dominion ignored the fact that this was a world-wide phenomenon and house prices rose much higher in countries such as Australia, the USA and others which do have capital gains taxes.

Taxing capital is bad in principle insofar as it has already been taxed in its acquisition process.

Mindful of the old adage that you can harvest the tree or you can harvest its fruit Roger Douglas wiped capital taxes, recognising their distortionary effects in business decision-making.

Frankly, I’ve always felt that capital tax proponents are primarily motivated by envy. Personally I would like to propose a penal tax on public servants’ salaries. Now that would be an excellent idea if useful productivity is to be the guide-line.

It all brings to mind a much publicised conference organised by Victoria University Economics Professor Gary Hawke in the early 1990s.

Speakers were brought from abroad and from many different sectors of society and their individual proposals were all widely reported. When the Conference was finished I wrote a letter to the Dominion pointing out that without exception, every one of the numerous speakers had proposed new taxes that fell on sectors of society other than themselves. What a surprise!