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Dr Bryce Wilkinson: How do “we” fairly tax the rich?

Last week, Inland Revenue Minister David Parker gave a speech titled “shining the light on unfairness in the tax system”.


His speech defended an Inland Revenue investigation into the “tax paid by the wealthiest New Zealanders relative to their economic income”. He is proposing a Tax Principles Act in this context.


Parker assured us that this was in the interests of fairness, not envy. Yes, really.


In arguing that the tax system should probably soak the rich more, he asserted that:

  • New Zealand’s income tax system is not progressive;

  • New Zealand is not a highly taxed nation;

  • Wealth is being concentrated “into the hands of an ever-smaller cohort at the very top”.

All three assertions look false. First, on the facts, it is progressive. The top 3% of income earners in 2020 earned 18% of taxable income and paid 26% of the income tax collected. Research has found that the tax system remains progressive, even after factoring in GST.


The average income tax per person in the 3% group was $77,000 compared to a median payment of $4,100. How much more grasping would a ‘fair’ tax system be?


Second, New Zealand is a relatively highly taxed nation. Of 64 countries with a population of at least two million and a reasonably high GDP per capita, 39 had a lower tax to GDP ratio than New Zealand. Outside Europe, only Brazil and Israel had a higher ratio.


Third, on Statistics New Zealand’s estimates, the top 1% (and 5%) owned a smaller proportion of total wealth in 2021 than in 2015 (or 2018).


An article in the latest Sunday Star-Times by Max Rashbrooke presumed to ask, “How do we fairly tax the rich?” It appears that the “we” are a political majority who are not rich.


Apparently, “we” see no conflict of interest in this. Rashbrooke suggests it is fair that “we” should hit the rich with a more comprehensive capital gains tax, a wealth tax, and for good measure, an inheritance tax.


Of course, ‘we’ set the thresholds sufficiently high to exempt ourselves. “We” can be predatory because Rashbrooke assures us that the rich have few emigration options. That is how we like it.


Fair outcomes cannot be expected from an unfair process. Majoritarian plunder is immoral.


A single income tax rate has greater constitutional appeal. Redistribute through the welfare system.


Bryce is a Senior Fellow at The New Zealand Initiative, and also the Director of the Wellington-based economic consultancy firm Capital Economics. Prior to setting this up in 1997 he was a Director of, and shareholder in, First NZ Capital. Before moving into investment banking in 1985, he worked in the New Zealand Treasury, reaching the position of Director. Bryce holds a PhD in economics from the University of Canterbury and was a Harkness Fellow at Harvard University. He is a Fellow of the Law and Economics Association of New Zealand.

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38件のコメント


pdemontalk51
pdemontalk51
2022年5月08日

Think that Minister Parker might have a point. Dr Bryce might well be correct relating to what I would call 'visible income.' By that I mean income that the average person earns in a year. That includes PAYE income, income derived from Kiwi Saver and maybe interest received from a term deposit. For the majority of workers in NZ that is the sum total of their 'visible income.' I other words, every thing that they earn is captured and assessed by the IRD. Then on top of that, on all disposable income (the majority of which is spent by low to medium income earners) is subject to GST. There is no escape!!!! But top income earners find ways in which…

いいね!
返信先

Most other countries with a CGT don't have a welfare state that relies on a massive tax take from their actual workers.


The vast bulk of the wealth that concerns you in New Zealand is bought, paid for and maintained from tax paid dollars and a CGT merely taxes that extra "wealth" that is normaly generated by inflation.


New Zealand is one of few countries where the bulk of that wealth you want taxed is held in residential property. Any income generated by those properties is taxed and any real improvements leading to a capital gain are generally paid for with tax paid dollars.


Imposing a CGT on non owner occupied properties would see a rise in more expensive homes…


いいね!

Many Maori tribes have considerable land and business resources, as well they have substantially benefited from government payouts under Treaty of Waitangi claims. Amongst such tribes is Ngai Tahu, reportedly worth $37 Billion. Therefore, Maoridom has sufficient resources to fund its own endeavours , enterprises, beliefs and needs. However, cunningly, Ngai Tahu for example pays no taxes, it is listed and classed as a charity. There is little trickle down to impoverished Maori from this charity. In fact the government picks up and pays for all those needs out of the public purse. Ngai Tahu is blatantly double dipping. It is a very elite, big, big business. It should be delisted as a charity.( so should Sanitarium). Unless tribes suc…

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Rumpole Bailey
Rumpole Bailey
2022年5月08日
返信先

There is a relatively simple solution o this issue - charitable status should require that 50/75% of net profits be distributed to tribe members. Extend to other "Charities as well" - Sanitarium comes to mind.

いいね!

tom.gollop
tom.gollop
2022年5月07日

Mostly In the past all taxes have come from rich landowners from their poor hard working tenants. They took advantage of their born into right to stand over their poor workers.

This has progressed through time into either Govts or their local tax revenue collecters.

ie councils to collect it for them,== add on== add on. so now we are with more than 50% of our country not producing a practical benefit for our benefit.

This means more taxes for beurocrats and then Govt's who do not know what they are doing then spend billions of dollar of our stolen money on fruitless endeavers to try to convince us they know what they are doing.

The fact remains NO POLITITIO…

いいね!
返信先

Many years ago when we started on this computerisation drive I asked a developer why we were doing a task in the chain and the reply was "because we can".


That seems to have been the driving force over the past 40 odd years rather than implementing what we need to be productive.


A very simple example is an insurance application form, once just a few pages and now into the dozens.


You are dead right that nearly half the people working are doing time wasting nothing jobs and if half the public service was removed tomorrow would it make any difference?


The other problem is the thousands of wasters who are doing nothing other than bludge of the rest…


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David parker could "shine his light" on the Iwi corporations to start with. If he truly wants to work "in the interests of fairness" it would be a n excellent place to start.

いいね!
返信先

Why out of all the hundreds of charitable organisations, e.g. churches, social care groups, animal welfare organisations, have you highlighted Māori authorities as the ones to start with?

いいね!

ron
ron
2022年5月07日

This Government is also looking to levy personal higher tax rates as opposed to corporate tax rates on small businesses where principals are directly engaged in bringing in 50% or more of the revenue. In other words those businesses will be taxed as though they are salary earning persons. So it's not just 'rich pricks' in the gun, but all us bastards who have the temerity to operate as a business rather than as proper working class, Labour voting, union card holding employees.

いいね!
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