RICHARD PREBBLE: Who really pays tax?
The poll this week on tax finds that only 4 percent of people think they should pay more tax, while 64 percent support a wealth tax.
I wonder if the pollster had read this statement first, would it have changed the answer?
We have a progressive tax system. The more you earn, the higher the proportion of your income you pay in tax. The top 10 percent of earners pay 48 percent of all personal income tax.
But we also have a progressive system of government transfers. Those with the greatest needs receive the most.
When the IRD takes the tax people pay and subtracts the benefits and tax credits they receive, it finds that the top 10 percent account for 101 percent of net income tax.
How can it be 101 percent?
The other 90 percent, taken together, receive slightly more in benefits and tax credits than they pay in income tax.
The top 10 percent therefore provide all the net income-tax revenue — and a little more.
If the poll question had been:
“The top 10 percent of earners provide 101 percent of net income tax. Do you think they should pay more?”
Would 64 percent still say yes?
Richard Prebble is a former Minister and ACT Party leader who writes at I've Been Thinking
Who really pays tax? A: every honest person who works for a living and is known to IRD.
Roughly 51% of tax revenue come from wage and salary earners, 24% from GST which is only paid on value add by companies and is effectively provided by wage and salary earners. 10% is paid by NZ owned companies while 5% is paid by offshore owned companies. The remaining 10% is paid by wage and salary earners, via excises, duties, withholding taxes, RUCs etc.
Around 20 to 29 billion flows out of our economy every year on the 160 billion of foreign direct investment in our economy, an 18% return after tax. I’d like that on my capital. This is without the outflows of the 29% of the population who weren’t born here and are sending money out.
Former CEO Fonterra, Miles Hurrell resigned with a final handshake worth some $8 million.
I'd give my right arm and left testicle to be in that tax bracket.
“The top 10 percent of earners pay 48 percent of all personal income tax.”
The counter to that has become, “Yes, but that same 10% get all their capital gains tax-free!”
It’s worrying when a not insignificant proportion of the voting public seem willing to add a CGT or wealth tax onto the small group of New Zealanders who are effectively supporting everyone else’s lifestyle….
And who don’t seem to grasp the idea that such behaviour might very well ‘kill the golden goose’ by driving away that 10%.
Typical Prebble. First, identify the problem and address it as such in order to resolve it. What a shame our politicians today seek an answer without defining the problem or considering the consequences. The idiots are full of answers without substance or merit.