(03-07-2022, 01:15 PM)dken31 Wrote: 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.
(04-07-2022, 11:31 AM)SueDonim Wrote:(03-07-2022, 01:31 PM)king1 Wrote: 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.
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