The wealthy trying to avoid new tax

[king1]

The "rich" folks I know of are addicted to making money so I doubt very much that the prospect of a bit of extra tax alone is going to make them pack it all in and move to the 'burbs.  That decision will be made by other factors, such as health, lifestyle, retirement plans etc...

How do you define "rich"? 

In that context, based on the several clients I have in that position, and to some extent based on dken31 statements of "a bit above average" and "This year ... pay about $127K income tax" (the latter seemingly understating the former imho)...

I was trying to make the point that not too many people making that sort of money will simply shut up shop, lay off four staff, sell up all the plant, essentially destroying all he has built up over the years - just because the government might/will increase the tax burden...   This seems to be the arguement or outcome being proposed of an increased tax burden.

The reality I would suggest, is the said business will be put up for sale as a going concern, the four staff will most likely continue to be employed (and pay tax), the company will presumably still make loads of money (and pay tax), and dken31 will move to a life style/sentence block with a nice seven figure payout for his efforts building up the business over the years, invest the funds, earn returns, pay tax...

Or do what everyone else is doing at the moment and put prices up slightly to cover the "cost" of the extra tax burden and blame it on inflation... 

[SueDonim]

How do you define "rich"? 

In that context, based on the several clients I have in that position, and to some extent based on dken31 statements of "a bit above average" and "This year ... pay about $127K income tax" (the latter seemingly understating the former imho)...

I was trying to make the point that not too many people making that sort of money will simply shut up shop, lay off four staff, sell up all the plant, essentially destroying all he has built up over the years - just because the government might/will increase the tax burden...   This seems to be the arguement or outcome being proposed of an increased tax burden.

The reality I would suggest, is the said business will be put up for sale as a going concern, the four staff will most likely continue to be employed (and pay tax), the company will presumably still make loads of money (and pay tax), and dken31 will move to a life style/sentence block with a nice seven figure payout for his efforts building up the business over the years, invest the funds, earn returns, pay tax...

Or do what everyone else is doing at the moment and put prices up slightly to cover the "cost" of the extra tax burden and blame it on inflation... 

From your previous post ..."That decision will be made by other factors, such as health, lifestyle, retirement plans etc...". You are right that most people won't shut up shop directly because of tax, but if they are being over-taxed and are sick to death of the hassles that come with compliance they might think "what the hell" on top of all those other reasons.

When the point comes that you want/need to change what you are doing or where you are doing it, some businesses are saleable (but usually don't have as much value as people think) and relocatable but some are not. If it depends on the owner's unique skills or the precise location, then it might not be saleable at all and the owner then needs to decide what they wish to do. Which is often to just shut up shop and stop trading. If they have built enough reserve it can be a very tempting option and as said, takes a taxpayer out of the workforce. We need to reward productivity more.

[king1]

On the subject of tax rates, the highest tax bracket rate in...

Aussie is 45%
US Federal tax rate is 37%, I believe they have state taxes on top of that.
UK is 45%

NZ at 39% looks fairly competitive doesn't it?

[jim157]

What rubbish. Waste it on what? The health service? Education?

maori bribes

[king1]

What rubbish. Waste it on what? The health service? Education?

maori bribes

Maori aren't the only recipients of politically motivated incentives - just the way politics works...

[Oh_hunnihunni]

Paying tax is a privilege not a burden. Do people forget in order to pay it, you have to earn it?

[Lilith7]

If this has it right then 42% of the wealthiest pay just 12% of their total income in tax on average.


https://www.stuff.co.nz/national/politic...ta-reveals

[Oh_hunnihunni]

If this has it right then 42% of the wealthiest pay just 12% of their total income in tax on average.


https://www.stuff.co.nz/national/politic...ta-reveals

Decent accountants cost more money than us poor folks can dream of spending, lol...

But if we had it, no doubt we would too.

[Lilith7]

If this has it right then 42% of the wealthiest pay just 12% of their total income in tax on average.


https://www.stuff.co.nz/national/politic...ta-reveals

Decent accountants cost more money than us poor folks can dream of spending, lol...

But if we had it, no doubt we would too.

i dunno though - not sure I'd really want to have vast amounts of dosh to the extent I was trying to hide it instead of paying fair taxes. 
Which is really what they're trying to do after all.

[Foal30]

This financial year, I'll pay about $127K income tax, but will avoid paying a further $25K by spreading income between me, my wife and kids and our trust (with very little taxed at 39%). The income I earn comes from owning and operating a business in Auckland that comes with significant risk and responsibility, and employs four well paid full-time staff.

No doubt some of you will have a low opinion of my "avoiding tax" and think that I'm dodging my full obligation to my fellow tax payers. However, if I chose to shut down my business, move to the provinces for a slower pace of life, and take a job being paid only $80K, I'd only have to pay $17K tax and could start getting $23K in Working for Families payments. So, instead of paying $127K, I'd be receiving net $6K. And yet, presumably, none of you would consider me to have any obligation to go back to my current occupation.

I think society needs to be careful not to bite the hands that feed it. For the "a bit above average" like me, the option to chose lifestyle over income definitely becomes more appealing if the tax burden becomes too onerous. For the mega wealthy, moving to another country is more likely to appeal. The point is, rich people already pay most of the income tax being paid; if society keeps trying to squeeze more and more out of them, if it chases enough rich away, the tax take will actually decrease and then the average/poor will be really stuffed

Drawing $360K to pay $127K Tax isn’t IMO onerous

The bigger picture is the employees (and by extension contractors/suppliers etc) Aotearoa shouldn’t be shedding jobs because of perceptions/realities of the Tax Regime.

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The "rich" folks I know of are addicted to making money so I doubt very much that the prospect of a bit of extra tax alone is going to make them pack it all in and move to the 'burbs.  That decision will be made by other factors, such as health, lifestyle, retirement plans etc...

How do you define "rich"? It's a very fluid term no matter how you look at it. I know people who live a lavish lifestyle but hover on the edge of bankruptcy most of the time. And I know people who live very frugally and have a lot of background resource but you wouldn't know unless they tell you. A while ago when they were threatening a wealth tax and some commentators were speculating what level that should kick in at we were in that category. Yet our combined income is less than the threshold for the cost of living payment being handed out this winter.

I agree with dken31. People should stop biting the hand that feeds them and the rest of that paragraph is so right. People should stop trying to drag down those who have worked and achieved in their lifetime and should look hard at those who are deliberately under-productive and wasteful yet cry "poor". A few years ago DH was working in a house with three generations of beneficiaries. The matriarch was on the computer every Tuesday and Thursday and from the ensuing conversations he overheard he gleaned that there was far more money going into that house than ours. Yet they considered themselves "poor" (but could still drink lots of beer and eat takeaways every day).

As has been said, tax evasion is a crime and I abhor people who cheat. I spent over 40 years on PAYE which gives no ability to claim the cost of actually going to work. On the other hand, structuring affairs to legally avoid paying more tax that is due is fair and reasonable.

The two biggest issues are the "charities" that are just businesses that hide behind this status while also competing against others that do pay tax, and the fact that IR doesn't do the most basic things to pull in tax that is due. How much have we had the "bright-line" rules and threats of capital gains tax rammed at us when in fact the rules were always very clear - if you buy anything (including property) with the intent of on-selling it, then any profit is income and should be taxed.

The older I get the less convinced I am of Hard Work = Big Money
Certainly as we get deeper into the “Free Market” Capitalism this becomes less and less the reality

I pay significantly less Tax owning my own business than I did years back on PAYE (% wise)

Working for Families and the Accommodation Supplement should be factored as per your “Charities” comment. These are benefits for the Wealthy, by the Wealthy. They distort the market and embed Welfarism. Often people won’t recognize or acknowledge this simple economic fact.

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It’s batshit mental to me that a Wage or Salary of 80K can attract WFF subsidy/benefit

It says the system has serious structural flaws

[zqwerty]

At the moment we have a Labour government and national (lower-case deliberate) followers (businessmen) will be doing their best to make Labour look bad, like by declaring that inflation is about 12% and putting up prices by the same amount throughout the economy thus actually causing said result and effectively getting more money for less product as they are always trying to achieve.

Bring back price controls, running a supermarket is not rocket science. Super-profits seem to be a normal expectation in NZ.

[Lilith7]

At the moment we have a Labour government and national (lower-case deliberate) followers (businessmen) will be doing their best to make Labour look bad, like by declaring that inflation is about 12% and putting up prices by the same amount throughout the economy thus actually causing said result and effectively getting more money for less product as they are always trying to achieve.

Bring back price controls, running a supermarket is not rocket science.  Super-profits seem to be a normal expectation in NZ.

Agreed; price controls makes good sense.


The older I get, the more I think our entire deeply unfair system needs dismantling & changed into one which is fairer to us all. No one should have to go hungry or work 4 or 5 jobs just to survive, & no one should be making obscenely massive profits, especially when that comes in some way from the suffering of others.
As many of us know very well, it wasn't always like this. And what has been done once can surely be done again, but better.
We can fix inequality here & we should be doing exactly that; fairer taxes might be an excellent start.



This is an article from last year on what needs to happen to our health system, in response to an earlier article ( by a Dr) which advocated the 'rationing' of acute health care.
Which in reality translates to 'just let poor people suffer until they die.'

https://www.nzdoctor.co.nz/article/opini...healthcare


"Dr Connor’s arguments are based on one premise “The attempt to meet all the healthcare needs would overwhelm any country’s resources, including the need for other social goods, etc …..”. This is a central mantra of neoliberal philosophy, with its policies for free-market economies and the private provision of public service.1

High levels of unmet need and a creaking system should suggest a need to examine the underlying reasons for both and not rely on a managerialist technical solution.

It is obvious that a major contribution to the high level of unmet need lies in pre-determinants of health such as: poverty, access to primary healthcare, inadequate housing, and poor diet. The other main reason for the creaking health and welfare services, is the thirty years of underinvestment.

i.Multi-national European studies have shown that investment policies in health and other welfare services pay large positive fiscal dividends and promotes economic growth (i.e., for every dollar put into health services governments get more dollars back, often referred to as fiscal multipliers).2 Even the International Monetary Fund, a bastion of neoliberalism, which initially disagreed with the results of these studies, has since conceded that such positive fiscal multipliers do result from health and welfare investment.1
ii.Finland is an exemplar of a country that has shown what can be achieved by a policy of welfare investment.3 By comparison (Table below)4 our own level of social expenditure per capita is much lower and we can afford to do much better."