Inland Revenue research released today reveals a large differential between the tax rates ordinary New Zealanders pay on their full income compared with the super-wealthy, Revenue Minister David Parker says.
“This internationally ground-breaking research provides hard data showing that the wealthiest New Zealanders pay tax at much less than half the rate of other Kiwis,” said Parker.
“The data, based on full income information from 311 of our wealthiest citizens, shows that the average person in this group pays an effective tax rate of just 8.9% tax on their economic income – that is, income from all sources, including capital gains on investments.
“In contrast, most New Zealanders pay tax at more than twice that rate. For example, someone earning a salary of $80,000, with no other income, pays 22% tax on that income, excluding GST.
“The difference is mainly because the very wealthy earn only a small portion of their income from wages and salaries, unlike most New Zealanders.
“The differential is even larger when GST is included: for the wealthiest, their effective tax rate rises to 9.5%, but for the person on an $80,000 salary, it goes up to around 28 or 29%. That is because wealthy New Zealanders spend a much smaller portion of their income each year, compared with other earners.”
The High Wealth Individuals Research Project is internationally significant because it uses real data, unlike other overseas studies which draw on surveys or scenarios, Parker says.
“In 2020, the Government changed the law to enable IRD to require high-wealth individuals to provide their earnings data, in order to do this work,” David Parker says.
“To be clear, this work is not about chasing tax avoiders, nor is it about attacking the rich. Wealthy New Zealanders are usually hard-working and creative people who comply with current rules. They have assisted IRD with this inquiry, and I am grateful for that.
“The excellent work in this survey will enable future discussions on tax policy to be based on solid evidence. Later this year, we intend to introduce a Tax Principles Bill to ensure that information like this continues to be transparently collected and reported on.”
Today’s IRD report release is accompanied by a new Treasury report setting out effective average tax rates across the population. It uses scenarios to show that effective tax rates paid by middle New Zealanders (including GST) are between 6.8 and 10.8 percentage points higher than for the wealthiest people.
Image credit: Nataliya Vaitkevich
More creeping taxation. They will start with the rich and then work their way down to mum and dad investors, just watch. And yes, its very much about attacking New Zealanders financial wealth. Its not as if too, these politicians are not already drowning in public money, either.
Taxation is theft.
100%.
Stop paying and men with guns will violently seize you and throw you into a steel cage. How democratic.
Not that you COULD stop paying mind you, the government is so polite they automatically take it from you before the money even hits the palm of your hand. How nice of them 😊
Wealthy people pay legions of accountants and tax consultants millions each year to advise them on complicated ways to setup trusts and move their money to a company “on island” etc, and all sorts of other dodgy (but legal) ways to duck the tax man. The average Joe in the streets doesn’t have that advantage.
Which is why I facepalm every time I see and hear these early 20’s, low resolution thinking, Green/Labour/woke numbskulls waxing idiotic about Muh capital gains tax and paying Muh fair share etc.
You are cheering on your own future suffering, voting and protesting your way into financial hardship that the rich you so deeply despise will never share with you.
Idiots.