Who Are the Real Bludgers?

A constant whinge from the green-left and their media cheerleaders is “Tax the Rich!” Millionaires paying tax rates lower than the lowest earners, whines Stuff. How super-rich Kiwis dodge tax, bellows the NZ Herald. All of which amounts to them running puff pieces for the Greens’ proposed “wealth tax”.

There is a certain amount of irony in the party of the super-rich constantly honking about the rich “paying their share”. Not to mention a great deal of barefaced cheek: as Kerry Packer pointed out, he didn’t write the tax laws. The government did — in fact, the same Labor government which hauled him before an inquiry to grill him about his tax affairs. He just followed the laws as written, to the letter.

He wasn’t evading tax. He was minimising it, perfectly legal. As anyone would.

After all:

But, as with so many idées fixe, the notion that the rich aren’t “paying their fair share” is firmly lodged. In the ever-shrinking heads of the media left, more than anywhere else.

Is it true, though?

The highest-income earners are paying their fair share of tax, according to new research.

The study, done for tax consultancy OliverShaw, has concluded the rich in New Zealand paid most of the tax collected, and the higher their income the more they paid; while the least well-paid often effectively ended up paying less because of the various tax credits and other payments they received.

This is the counter-balance that is so often ignored by the green left: what tax the lowest-income earners pay is often more than offset by what they receive in government benefits. Even the middle class often profit handsomely from “middle-class welfare”. Consider the generous rebates for child care or solar panels, and the tax breaks thrown at EVs that cost as much as a luxury car.

The firm’s principal, former deputy IRD commissioner Robin Oliver, said the report answered the question whether the highest earners paid tax at the same or higher rate as middle-income earners.

“This research shows clearly that, whether you consider taxable income or other measures, such as economic income, the answer is yes, they do.

“The key conclusion of the report is: average effective tax rates increase as the net real economic incomes of households increase” […]

He said a key issue was how to define income, whether it should include KiwiSaver earnings, government assistance, the rise in values of property and other factors.

Of course, the Greens might whinge that this is shifting the goalposts. Yet, that is exactly what they do, when they advocate taxing wealth, rather than income.

And, as Kerry Packer so brutally reminded the government: they write the rules. He only followed them.

Oliver said the tax system and the effective rates people paid were a reflection of the political and social choices made by governments to achieve redistribution of wealth, social support for lower income groups through such schemes as Working for Families, as well as funding of government activities.

Kerry Packer was able to minimise (not evade) his tax because he was able to afford lawyers who understood the laws. Them’s the breaks, I guess. But what it means is that the government adding yet more complexity and fiddling with tax laws is hardly likely to change things.

“Those who earn most also have most discretion about how they earn. Wealthier individuals generally derive a greater share of their income from sources other than wages and are encouraged to take advantage of the different tax rates payable on income from companies, trusts, property and PIEs (portfolio investment entity).

“Thus, increasing the top marginal income tax rate will likely have only a modest effect on their effective tax rate.”

And the biggest winners from the tax system? None other than my favourite whipping boys, the Boomers.

Taking into account various tax credits to find an average effective tax rate, the lowest taxed were retired, home-owning, high-income earners.

Cue indignant screeching of “But I worked hard for what I have…!” Newsflash: so does everyone else. They just don’t get middle-class welfare thrown at them by the fistful.

And in the meantime, the real problem isn’t that the rich — even the Boomers who are already getting hot in their Depends over my last couple of paragraphs — aren’t paying enough tax.

“But real government expenditure is now becoming too high basically for the system to work.”

Newshub

It’s that the government is getting too big and too expensive.

But, sure, green-left: tell us that more government is the solution.