Average Wages Rise. Wanted. Journalists for The Sunday Newspapers.

So we don’t have to be spoon fed rubbish Repeater propaganda. Sorry to Danya if this is a bit mean given Uncle Simon most likely outlined the story: Yes I know he is a Herald journo.
Taken from the Sunday Star Times:   
Half NZ’s super-rich dodge tax

            DANYA LEVY 
Last updated 05:00 26/08/2012

Inland Revenue has found only half of wealthy individuals worth more than $50 million each are paying the top personal tax rate, despite Government moves to combat tax avoidance.
There are about 250 New Zealanders with wealth in excess of $50m, deemed “high wealth individuals” by Inland Revenue.

My commentary;¬† We are talking about net worth in assets not income per annum here. Who the heck is going to work a taxable day job if they have 50 million dollars worth of assets? No day job, no personal tax paid. I’m guessing that those high net-worth individuals who aren’t taxed in the high personal tax bracket are business owners, ie. farmers or property developers. Now, there is an angle to follow. If they don’t declare personal income where does IRD get to clip the ticket? And just maybe they employ workers that pay tax to the consolidated fund. (Sarcasm intentional)

New figures obtained under the Official Information Act show a sample by Inland Revenue of 184 of those individuals, taken between 2009 and 2011, found 49.5 per cent had declared they had earned $70,000 a year or more. The rest declared they earned less. Those who earn more than $70,000 are in the top tax bracket and pay 33 cents tax in the dollar.

My commentary: If you win lotto or you inherit the family jewels, you’re a gunna sit on your ass and pay others to mix you cocktails, Danya. You’re not going to have a day job. Again, no day job, no taxable personal income. New Zealand’s equivalent of lotto winners are farmers (who don’t often sit on their ass or their farms get sold to the Chinese). I don’t feel great animosity to them due to the mercurial nature of the industry. Undoubtedly some farmers are taking the piss (claiming WFF for example), but you can’t set personal tax policy on one class of business owner.¬†
BTW, Some high net-worth individuals hold assets in NZ and earn income overseas.
   
The figure has fallen slightly from the Inland Revenue’s previous sample, taken between 2001 and 2008, which found 50 per cent declared they earned enough to put them in the top tax bracket. The top tax bracket over that period kicked in at $60,000 and paid 39 cents tax in the dollar.

My commentary: What you talking about Willis? (80’s TV series reference). Why is this a surprise?¬† If you raise the top tax earner bracket from Red Helen’s puny $60,00 up to $70,000, of course the number paying tax rate at the higher rate is going to decrease. Those in the 60-70k band will no longer be caught in the highest tax bracket.¬† Google “Bracket Creep”.

Concerns about the rich avoiding the top tax rate through income sheltering devices such as family trusts were raised in a 2010 report by the Tax Working Group.
My commentary: Trusts are primarily used to protect assets, actooally, and can be broken wide open if the primary purpose is to shelter income. Google “Penny and Hooper”, Danya.¬†
 
Later that year, the Government took steps to reduce tax sheltering by reducing the top tax rate from 39 per cent to 33 per cent to align it with the tax rate for trusts.
My commentary: Yeah, this was to reverse the dumbass tax increases by Clark/Cullen in 1999. such was the success of Red Helen’s tax increases that trusts sprung up overnight. The tax base actually shrunk by 18 billion a year (up until 2009. That’s why Mallard had to close schools by the score. Less tax was paid to the gummit by businesses that were coping on the previous tax rate. Envy tax targeting the “rich pricks” missed the mark. As far as¬† I know, Fay and Richwhite are still laughing all the way to the America’s Cup and it was my generation entering the workforce that got penalised. We hated it and fled to Australia and the UK. Most of us found that life was okay in a different country and stayed. Again, no taxable income, no tax. Thank God for for our elderly that agencies like Pharmac exist, in lieu of adequate average personal wealth.
 

Greens co-leader Russel Norman said the new figures showed the changes had no effect on the amount of income tax some wealthy people were paying.
My commentary. The wealthy sure as shit didn’t get wealthy paying 60%tax.¬† At least not in the last decade.

It comes at a time when inequality in New Zealand has hit record levels. A report released last week by the Ministry of Social Development found wages of low-income earners fell between mid-2009 and mid-2011, while high-income earners’ pay increased.
My commentary: Wages fell because a whole lot of public servants got shit-canned and Timaru type businessmen ran the ship  fast and loose. This dragged down the wage index. But check this out: 

Wages rose in the year to March 2012: 

In the March 2012 quarter, salary and wage rates (including overtime) rose 0.5 percent.
In the year to the March 2012 quarter:

  • Salary and wage rates (including overtime) increased¬†2.0 percent.
  • Overtime wage rates increased¬†2.5 percent.
  • Private sector salary and ordinary time wage rates increased¬†2.1 percent.
Sector Salary and ordinary time
wage rates
Percentage change
All salary and wage rates
(including overtime)
Percentage change
From previous
quarter
From previous
year
From previous
quarter
From previous
year
All sectors 0.4 2.0 0.5 2.0
Public sector 0.4 1.6 0.4 1.6
Private sector         0.5 2.1 0.5 2.1
 Labour Cost index from Stats NZ.
¬†Norman said middle New Zealand, who paid the bulk of tax, was “in the gun” under the National-led Government.
My commentary: I don’t seem to remember the middle income earners having their taxes raised in 2009.¬† This is what happened under Red Helen in 1999.

 The 2010 tax changes had given more money to the wealthy, not low and middle income earners, he said.
My commentary. The only valid point here. GST hikes affect the lower incomes more, this is the regressive nature of sales tax. Also, people don’t buy as much which penalizes producers. That’s why we pay politicians, to figure this shit out.¬† How do we broaden the tax base without killing the economy.¬†
 
“Yet here we see a proportion of the very wealthy are cheating on their taxes.”
My commentary: Those 50 million dollars worth of assets might be dud earners. In fact they are potentially bleeding cash and the individuals that they are shackled to will eventually be declared bankrupt. Over two decades I have known at least five high net-worth individuals that this has happened. to .Satisfied? Can we stop baying for blood now?

Council of Trade Unions economist Bill Rosenberg said tax avoidance was a worldwide issue which had led to the loss of more than $3.1 trillion in annual tax revenue. ‚ÄúIf governments internationally, including New Zealand, could do more to track down dodged taxes we might not be facing the degree of financial austerity and government cuts that we are seeing around the world.”
My commentary: You’ll be waiting a long time Bill, trying to write other countries tax laws. Start with China. I doubt the unions will get a foothold there. Best we start being smart with our tax laws; if we water-board high income earners they head for California.¬†
And that is saying a lot. I live in California and high income earners pay 42% tax. The state of California is nearly bankrupt as a result. 
  
Revenue Minister Peter Dunne said the figures did not include tax that may have been paid on income from trusts and dividends.
My commentary: So hows about asking Peter what the percentage rise or fall in trust and dividend income is, Danya? That might give us the basis for meaningful comparisons.
 
Disclaimer:
My husband and I are not high net worth individuals. We have enough for our children’s education, our retirement and to invest in Mongolia instead of NZ assets, should the opportunity present itself. (Yes, Mongolia is where it is at, in terms of growth as long as their govt doesn’t renege on their original Oyo Tolgoi mine invstment agreement with Rio Tinto and Turquoise Hill.¬† )¬†


America’s Cup. Spot NZ”s rich Uncles: Michael and David.
Discuss and share:
  • http://www.blogger.com/profile/14665903378623921185 Unknown

    Good post Monique, I enjoy your insights. Hope all is good for you and your tribe in outer Mongolia, or wherever!
    Mark

  • http://www.blogger.com/profile/12538783137602201932 Monique Angel

    Ha ha thanks. Don’t think I’ll be able to drag the tribe off to Mongolia this year. Maybe next.

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