In a media conference staged opposite Mr Key’s Parnell mansion, Mr Morgan said his own asset portfolio would incur an extra $350,000 tax a year under the flagship policy aimed at making the revenue system fairer.
The tax policy, first proposed in a Morgan Foundation report on tax released in April, proposes expanding the definition of annual taxable income to include a minimum rate of return an equity owner gets from their productive assets, including houses, farms, equipment, cars and even intellectual property in a business. Those who already declare at least that level of income will be unaffected and those who do not will pay more.
The only exemption would be financial assets such as shares, deposits and bonds which already have tax paid on them. It was an extension of what the Government already did under the Fair Dividend Rate regime for New Zealanders who owned shares overseas, Mr Morgan said.
"Government is already doing this policy but only to a select few. No-one wants to go near housing," he said.
He stressed the policy was not a tax grab. Overall, the fledgling party’s package would be tax neutral, with every additional tax dollar collected given back via income tax cuts, which Mr Morgan said he would make bottom-ended so those on lower incomes got more.
When questioned whether the policy would be a hard sell to house-owners, he said: "I’m going to give you more money back in tax cuts than you have an increase in rates. You’re better off. Only 20% of people won’t be better off and they will hate me."
The level of the minimum rate of return would be up to the government of the day, but in his view, 5%, the same rate paid on foreign shares, would be appropriate.
Mr Morgan said winning over the public rather than politicians that the tax policy was a good idea, would give his new party leverage if it got sufficient votes in the next election.
"We want to be the tail that wags the dog, whoever the dog is in parliament," he said.
"We want to stay on the cross benches and we’re for sale basically to the highest bidder in terms of who makes the most of the seven policies we’ll be putting out."
Mr Morgan said the current tax system was biased with wage earners paying too much of the tax bill. The radical policy he was proposing addressed the fact the trickledown promised under Rogernomics still had not happened 30 years later. Income inequality in New Zealand had gone up markedly since the early 1980s.
Mr Morgan said despite the fact Mr Key was a nice guy, "I think his legacy will be inequality went up yet again under his reign. And the biggest riser of inequality over this latter period has been the increase in housing costs."
Since 2010, the country with the strongest rise in house prices relative to income had been New Zealand.
