Shouldn’t risk taking be rewarded?
"Wealthy people often take great personal risks to grow their businesses and should be able to reap the rewards"
It is true that many business individuals have taken considerable personal risks in building their businesses and should be appropriately rewarded for that (although some have inherited their wealth and others may have been assisted by good fortune). No one would argue otherwise, but the rewards should be treated like all income and taxed appropriately. The Inland Revenue Research into High Net-Worth Individuals released in March 2023 shows that New Zealand’s 311 wealthiest families pay just 8.9% of their income in tax – less than the rate paid by a minimum wage worker (10.5%) and less than half the rate paid by the average Kiwi (19.7%). These wealthy individuals have such a low tax rate because so much of their income (about 80%) is capital gains – money made from selling assets – and that is barely taxed. Only 17% of their income is conventionally taxable income like wages and salaries. So despite being worth an average of NZ$276m ($168m; £135m) each, and typically earning $8m a year, these families pay an average of about $640,000 each in tax – less than 10% of their income.
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