Thanks to Gold Survival Guide @goldsurvival www.goldsurvivalguide.co.nz for sharing the article below… good to know who’s really funding NZ!
A while back we received the following very interesting email (from someone who wishes to re main anonymous) detailing exactly what proportion of NZ households pay no tax and what proportion pay the vast majority of tax…
There was an interesting exchange in Parliament on Friday (13 July 2011)
Michael Woodhouse:Which groups now pay most of the tax collected by the Government?
Hon BILL ENGLISH: Our tax and transfer system is highly redistributive, and the number of people paying income tax is surprisingly small. The lowest-income 43 percent of households currently receive more in income support than they pay in income tax. The 1.3 million households with incomes under $110,000 a year collectively pay no net tax—that is, their total income support payments match their combined income tax. The top 10 percent of households contribute over 70 percent of income tax, net of transfers—over 70 percent of income tax, net of transfers. This system is highly redistributive and we believe it is fair.
I asked the Minister’s office for the data that answer was based on, and the table below sets it out.
http://www.kiwiblog.co.nz/wp-content/uploads/2011/07/nettaxpaid.png
This data deserves a wider audience. The gross transfers includes Working for Families, Accommodation Supplement, and other benefits. It does not include NZ Superannuation . I suspect if you included that it would be even more dramatic.
So what does it tell us?
It tells us that overall households with income of $50,000 or below pay no net tax at all. Not only do they pay no net tax, they receive around $4.40 in benefits for every $1 of tax they pay. So they pay $1.7b in tax and receive $7.7b in welfare (and this excludes superannuation).
So that is 44% of households are net tax recipients. Now let us look at the households with income of over $150,000. We don’t know if this is one person earning say $150,000 or two people earning say $ 75,000 each but we do know it includes everyone earning at least $150,000.
So 10% of households have an income of $150,000 or greater. And those 10% fund 71% of net taxation. If we go slightly further down to households with an income of $120,000 or greater – which is 17% of households.
Those 17% of households are paying 97% of net taxation.
So the next time someone talks to you about fairness and tax, use the table above.
10% of households pay 71% of net (income) taxation and 17% pay 97% of net (income) taxation.
It is important that every New Zealander is aware of some basic facts that go to make up New Zealand’s taxation payment balance sheet. It is not a matter of whether we are to the left, centre or right of the political spectrum. Politicians have an uncanny ability to speak in generalisations, pandering to the lowest emotions and promising what cannot be given. That applies across the whole political spectrum.
Hopefully the attached will at least give you something to ponder over, and to use, when next the subject of who pays for what comes up.