By Eric Crampton
Patri Friedman asks in the comments for info on the desirability of New Zealand for libertarian expatting; C.L asks about the cost of living. I’ll see what I can do on both fronts, beneath the fold.
Patri’s especially concerned about taxes, drugs, guns and culture. Let’s take them each in turn.
Taxes: High but relatively uncomplicated. The top marginal tax rate of 39% kicks in at income of $60K. The 33% rate hits at $38K. All income up to $38K is taxed at 19.5%. There’s an additional 1.3% ACC levy imposed at all levels. The ACC is NZ’s second-best solution to tort law reform. If you’re in an accident, ACC compensates you for it and suing for damages beyond ACC’s compensation is difficult. So you have to assume more risk, but that’s not necessarily a bad thing. Tort law in the States has made everyone paranoid about allowing anyone to do anything for fear of being sued; here, far fewer such worries. Note too that there are no state-level income taxes: it’s a unitary system. If your only earnings are wage income, taxes are so simple you don’t even have to file. The payroll deduction takes care of everything. There’s a 12.5% GST charged on everything – no exceptions. Of course, this is eminently more rational than Canada’s hodgepodge attempt at a GST. But it’s pricey.
There hasn’t been a capital gains tax but there are worrying signs on the horizon: so much so that anyone considering moving here with substantial foreign-based assets should really hold off until IRD has sorted out whether it’s going to tax unrealised gains on foreign investments. The way the bill currently stands, anyone with more than $50,000 in foreign assets will be taxed on unrealised capital gains. This, of course, would massively penalise anyone coming here with substantial IRAs or 401(k)s. If you’re thinking of moving here, check first whether the bill’s been passed. It currently looks like the bill will either be softened or dumped. Stay tuned.
Drugs: For the most part, the drug laws here are pretty similar to those in the States. “Party pills” remain legal (BZP); I think you can also buy NOx for non-dental uses. Because we don’t have the same civil asset forfeiture rules, incentives for police forces to become overly exuberant in the application of those rules are attenuated. Nevertheless, a report on sentencing notes just under 13,000 drug convictions per year on average (see Table 2.10 in the linked document). US District Courts in 2002 reported 27,000 drug convictions, so we have way more per capita drug convictions. NORML will also have more info for you. I’ve not found any of these constraints binding on me so I haven’t really much noticed. I don’t see many stories in the press of botched drug raids, but maybe I haven’t been paying attention. I’m also no expert on crime stats – this is just the result of some quick Googling on my part. If I’m comparing apples and oranges here, somebody please let me know. My read is that if drugs are an important part of your preferred consumption bundle, this isn’t the best place to move.
Guns: More regulated than in the States. You need a possession licence to buy a gun. You have to have specific permissions to own handguns and either have to be a member of a shooting club or a collector. All firearms are subject to storage requirements that make them basically useless for speedy self-defence if you follow the rules. Full details are available in the Arms Code.
Culture: Far more free than in the States. The bars in most towns are not subject to closing laws – they open and close subject to demand. Nitrous Oxide bars were in vogue a year or so ago. I’m essentially anti-social and have little clue what goes on. But other folks seem to have a lot of fun. Prostitution’s legal: there are a half dozen or more brothels I notice when driving around downtown; one is above a very good cheese shoppe. Liquor laws are generally pretty relaxed: they’re a matter of city by-law rather than criminal code. In Christchurch, open liquor’s generally allowed except downtown or at the popular beaches on weekends. I live at one of the less popular beaches; a bottle of wine at the beach there is acceptable anytime. I think open liquor in vehicles is also permitted so long as the driver is sober, but dig up the rules for yourself before trying it. Obscenity regulation on TV / radio is much less strict. Deadwood airs unedited after 8:30 PM; most HBO series wind up airing unedited on broadcast about a year after they air in the States. An interview with model Nicky Watson on NZ’s version of 20/20 last week included a segment that would have drawn fines in the States. Most of the time, radio stations play the unedited versions of songs. There’s far less popular tolerance of “political correctness” than you’d find in the States.
Would you find yourself freer or more constrained here? Depends on your optimal consumption bundle. I feel less constrained here than I did in the States. I’m more constrained with respect to firearms ownership than I’d like, but am still less constrained overall.
C.L. asks about cost of living. Most things here are much more expensive than in the States, even after making the currency correction. If you’re currently in DC and own a house, you could likely come out OK – housing is pricey, but certainly not as pricey as in DC. Mortgage interest rates range upwards from 7.5% — bring over the money to buy a house, and keep in mind that housing quality is much worse on average than in the States. If you’re not making more here in nominal dollars than you’re currently making in DC, you’ll be poorer here. If your NZ salary in $US terms is less than your current US salary, you can still be better off depending again on what your preferred consumption bundle would be. I found in moving here that I could no longer afford the consumption bundle I was used to in the States. That consumption bundle involved a lot of travel, electronics, Netflix, Dish Network, frequent updating of computers, chuck steak, a 2-br condo in Reston a 20 minute drive from the metro and a 35-40 minute drive to school, a Honda Civic bought new and a 30-year old Buick Skylark. I reoptimised given the change in relative prices. My new consumption bundle involves a decent but (c)older house with pool about a 4 minute walk from a beach and 20-25 minute drive from work, lots of concerts and theatre, lots of hiking, penguin viewing, less frequent updating of computers, lamb chops, some caving, drives in the mountains in a 10 year old Rav-4 or a 10 year old Mazda sedan. New cars are expensive; used cars are cheap. Were I to move back to the States, there’s no way I could afford to replicate there my current consumption bundle. Which bundle is better? I prefer our current consumption bundle, but I may be self-deceiving. I strongly recommend that you check out the NZ prices of things you think critical to your consumption bundle as well as of things that might not be a big part of your current DC bundle but could be here. Essentially, goods from non-traded sectors here are cheaper than in the US except where those services in the US are provided by migrant labour. If you’re not easily able to respond to changes in relative prices, don’t make the move.