Don’t the wealthy already pay more tax?

The IRD’s high-wealth individuals project found that the wealthiest people in New Zealand have a much lower effective tax rate than the median New Zealander. While median income earners pay around 20% of their income in tax, the wealthiest individuals pay 9.4%, including GST.

Although the wealthy contribute a greater amount of government revenue in dollar terms, working people still pay more than their fair share relative to their income, which compounds inequality over time.

This imbalance is because, while our tax system progressively taxes income earned from work (i.e. the highest-earning workers pay proportionally more), it does a poor job of taxing income received from assets. Wealthy people earn much more of their economic income from assets (like property, businesses, investments and shares), than they do from work. About 80% of the income of the wealthiest 311 New Zealanders came from untaxed capital gains. This is contributing to growing inequality as wealth becomes more and more concentrated at the top and passed between generations with no inheritance tax.

It’s not fair for those who have to work for a living to carry more of the load of funding our public goods and services than those whose income comes from their accumulated wealth. We can build an egalitarian Aotearoa, where everyone thrives, by making the wealthy pay their fair share.