New Zealand's wealthy pay 8.9% tax, citizens pay 10.7%: The Guardian
2 Min Read
About 80% of the wealthy's income is capital gains from selling assets and is barely taxed, and merely 17% is considered taxable income like wages.
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The New Zealand flag flying on Parliament buildings in Wellington's Central Business District on March 24, 2016 (AFP)
Citing an Inland Revenue report from this week, The Guardian revealed that New Zealand’s 311 richest families pay just 8.9% of their income in tax, less than that paid by a minimum wage earner who pays 10.5% and by the average New Zealander who pays 19.7%.
About 80% of these families' income is capital gains from selling assets and is barely taxed, while merely 17% is considered taxable income like wages.
They're worth NZ$276m ($168 million) each and typically earn $8 million a year, yet they only pay an average of about $640,000 in tax which amounts to less than 10% of what they earn.
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According to research carried out by the US Council of Economic Advisers, the 8.9% tax rate is nearly identical to the 8.2% paid by America's 400 wealthiest families, who are infamous for paying extremely low taxes.
A “brightline” test is available in New Zealand but it captures just the profits made by selling investment properties within 10 years, and it includes unrealized capital gains, which are increases in the value of unsold assets.
However, if the study covering the years 2015 to 2021, gathered data for only the sales made during that timeframe, the accumulated capital gains of the rich would have been underestimated as critics also claim that increases in house prices in 2020 and 2021 indicate that it is an artificially bloated period.
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