The IRD and the Government have released a report that shows the wealthy in New Zealand pay an effective tax rate of half that which ordinary wage and salary earners pay. Missing from the media and the report is the fact that this is all entirely legal and that none of those the report is about are being prosecuted.
That means the report is a political exercise designed to soften us all up for increased taxation.
The wealthiest New Zealanders pay on average only 8.9% tax on their income, according to a long-awaited study of 311 rich-listers conducted by Inland Revenue.
Revenue Minister David Parker said the low tax rate was explained by the fact they received about 80% of their income in form of capital gains, much of which was earned through trusts and companies and which was often untaxed.
A separate Treasury study, also released on Wednesday, estimated that the average Kiwi effectively paid 20.2% tax on their income, once GST and benefits they received from the Government were taken into account.
The equivalent effective tax rate for the wealthy individuals studied by Inland Revenue, with government benefits and GST included, was 9.4%, meaning that – most commonly – they were effectively paying less than half as much tax on every dollar they received in income as the average New Zealander.
The Treasury study also estimated that the richest 1% of New Zealanders together owned just over a quarter of the country’s wealth.
Stuff
What the report fails to say is just how much of the total tax take the wealthy pay. Fortunately, a week earlier another report was released that does precisely that. It shows that 21.2 per cent of taxpayers paid 68.5 per cent of income tax.
The OliverShaw report used OECD tax criteria and took account of Working for Families and other tax credits, and was based only on income, corporate and investment taxes, but not GST.
It showed the top two tax brackets for those earning between $70,000 and $180,000 a year and those earning above $180,000 made up 21.2 percent of taxpayers and paid 68.5 percent of income tax in the 2021 tax year. Those earning $180,000 to $300,000 constituted less than 2 percent of taxpayers, but paid 9.3 percent of income tax.
The report assessed that people with annual taxable income of $70,001 to $180,000 paid an average rate of tax of 23.9 percent; those on $180,001 to $300,000 paid 28.9 percent; and those on more than $300,000 paid 31.7 percent.
But taking into account various tax credits to find an average effective tax rate, the lowest taxed were retired, home-owning, high-income earners, while those paying the highest average effective tax rate were single, unemployed people in rented accommodation.
However, Oliver said all things considered the tax system was reasonably fair and equitable.
RNZ
Just looking at the effective tax rate paid by the wealthy is, with respect to the IRD, an exercise in comparing apples with oranges, especially as the majority of the “income” that IRD claims the wealthy earn are from untaxed capital gains.
Treasury reckons a comparable tax rate for a “middle wealth” Kiwi was 20.2 per cent – that rate includes GST they pay and any benefits someone might receive like Working for Families. If you leave those out, their tax rate is even higher.
The median wealth of the families was $106 million – but a handful of extremely wealthy people meant the mean wealth of those families was $276m.
Revenue Minister David Parker said the report showed “tradies, nurses, school teachers, hospitality workers, hairdressers, cleaners, engineers and small business owners all pay much higher effective tax rates than their wealthier fellow Kiwis.
“We tax those who earn all their income from salaries at a much higher rate than the very wealthy,” he said.
The culprit in all of this is capital gains, which are largely untaxed in New Zealand.
And this group of people made a killing in capital gains – something the Government is not changing today, Parker said.
NZ Herald
Note the words of envy in the reportage and the statements from David Parker. What these envious idiots fail to grasp is that capital gains are NOT income, you can’t eat a capital gain. Gains need to be realised before they can be eaten; sometimes gains turn into losses, and quicker than you can imagine. Losses are of course able to be offset against actual income.
The IRD knows this perfectly well and so do the politicians, but they play the politics of envy anyway.
The fact that they ignore the fact that this small group of wealthy people pay the vast majority of the tax shows it is all about envy. The real tax rate may be lower but the actual tax rate exceeds every other tax bracket combined by a considerable margin.
The Government may not want to be talking about increasing taxes just yet, but if they are returned then the grasping hand of the socialists will almost certainly be dipping into the already over-taxed pockets of those in the top two tax brackets.
Help Fund Our NewsDesk
We are building a NewsDesk, hiring journalists and taking the fight to the mainstream media. Will you help fund our NewsDesk?
- For security reasons, credit card donations require Javascript. Please enable Javascript in your browser before continuing.
Your Donation
Your Recurring Donation
Donation Period *
Your One-Time Donation
Details First Name * Last Name * Email * Address Address 2 City State Postcode Country Afghanistan Åland Islands Albania Algeria Andorra Angola Anguilla Antarctica Antigua and Barbuda Argentina Armenia Aruba Australia Austria Azerbaijan Bahamas Bahrain Bangladesh Barbados Belarus Belgium Belau Belize Benin Bermuda Bhutan Bolivia Bonaire, Saint Eustatius and Saba Bosnia and Herzegovina Botswana Bouvet Island Brazil British Indian Ocean Territory British Virgin Islands Brunei Bulgaria Burkina Faso Burundi Cambodia Cameroon Canada Cape Verde Cayman Islands Central African Republic Chad Chile China Christmas Island Cocos (Keeling) Islands Colombia Comoros Congo (Brazzaville) Congo (Kinshasa) Cook Islands Costa Rica Croatia Cuba CuraÇao Cyprus Czech Republic Denmark Djibouti Dominica Dominican Republic Ecuador Egypt El Salvador Equatorial Guinea Eritrea Estonia Eswatini Ethiopia Falkland Islands Faroe Islands Fiji Finland France French Guiana French Polynesia French Southern Territories Gabon Gambia Georgia Germany Ghana Gibraltar Greece Greenland Grenada Guadeloupe Guatemala Guernsey Guinea Guinea-Bissau Guyana Haiti Heard Island and McDonald Islands Honduras Hong Kong Hungary Iceland India Indonesia Iran Iraq Republic of Ireland Isle of Man Israel Italy Ivory Coast Jamaica Japan Jersey Jordan Kazakhstan Kenya Kiribati Kuwait Kyrgyzstan Laos Latvia Lebanon Lesotho Liberia Libya Liechtenstein Lithuania Luxembourg Macau Madagascar Malawi Malaysia Maldives Mali Malta Marshall Islands Martinique Mauritania Mauritius Mayotte Mexico Micronesia Moldova Monaco Mongolia Montenegro Montserrat Morocco Mozambique Myanmar Namibia Nauru Nepal Netherlands Netherlands Antilles New Caledonia New Zealand Nicaragua Niger Nigeria Niue Norfolk Island North Korea North Macedonia Norway Oman Pakistan Palestinian Territories Panama Papua New Guinea Paraguay Peru Philippines Pitcairn Poland Portugal Qatar Reunion Romania Russia Rwanda Saint Barthélemy Saint Helena Saint Kitts and Nevis Saint Lucia Saint Martin (French part) Saint Martin (Dutch part) Saint Pierre and Miquelon Saint Vincent and the Grenadines San Marino São Tomé and Príncipe Saudi Arabia Senegal Serbia Seychelles Sierra Leone Singapore Slovakia Slovenia Solomon Islands Somalia South Africa South Georgia/Sandwich Islands South Korea South Sudan Spain Sri Lanka Sudan Suriname Svalbard and Jan Mayen Sweden Switzerland Syria Taiwan Tajikistan Tanzania Thailand Timor-Leste Togo Tokelau Tonga Trinidad and Tobago Tunisia Turkey Turkmenistan Turks and Caicos Islands Tuvalu Uganda Ukraine United Arab Emirates United Kingdom (UK) United States (US) Uruguay Uzbekistan Vanuatu Vatican Venezuela Vietnam Wallis and Futuna Western Sahara Western Samoa Yemen Zambia Zimbabwe Phone Number Payment Name on Card * .StripeElement { border: 1px solid #ccc; padding: 1em; } #charitable_stripe_card_errors { color: #eb1c26; font-size: .8em; margin: .5em 0 0 0; } Credit/Debit Card Donate
Please share this article so others can discover The BFD.
