Thursday, February 25, 2021

The rich should pay their fair share

New Zealand is supposed to have a progressive tax system, which taxes people according to their ability to pay. But it turns out that the rich are cheating:

The wealthiest New Zealanders pay just 12 per cent of their total income in tax on average, according to research from Inland Revenue and Treasury, Stuff can reveal.

The same research found 42 per cent of the wealthiest New Zealanders were paying lower tax rates than the lowest tax rate paid by people who earn their money from an ordinary job or a benefit.

That compares with an effective tax rate of about 16-18 per cent on New Zealanders earning the median income from salaries and wages of $55,000-$60,000.


According to Treasury, a full 42 per cent of High Wealth Individuals (HWIs) pay less than 10 per cent of their total income in tax.

That is lower than the lowest income tax rate which is 10.5 per cent, which income earners pay on income up to $14,000.

How do they do it? Largely, because most of their income is from untaxed sources like capital gains, or pretaxed sources like corporate profits. The report highlights that the top 1% own an estimated 11% of all housing wealth, and 70% of New Zealand companies. Which highlights the need both to tax these untaxed capital gains, and to make sure that its not just housing, but corporate wealth which gets taxed. Otherwise, we'll continue to see a situation where us plebs pay tax, while the ultra-rich don't. And that is simply not socially sustainable any more.

(Its also absurd that information on how much the wealthy have hoarded is so lacking that the government needs to turn to the NBR rich list to estimate it. And now its been used for that, I wonder of the rich will cease their annual gloating?)