27 July 2012
How many of the Rich List pay a fair tax?
Commenting on today’s release of the annual ‘rich list’ CTU Economist Bill Rosenberg asks how many of the rich list paid a fair tax on the income from their wealth?
Bill Rosenberg said “the rich list represents about 0.01% of households who own 5-10% of all household wealth. This is roughly equivalent to what the bottom 50% of the population own. Yet the bottom 50% are more likely to be paying tax on every dollar they earn while some of our richest individuals are ducking on paying tax.”
“According to information released to us last month by IRD, 50% of the wealthiest kiwis dodge their tax responsibilities.”
“In annual samples of 184 ‘high wealth individuals’ between 2009 and 2011, IRD found that only 49.5% of them reported personal incomes of more than $70,000 (the top tax bracket). This indicates that some of our wealthiest individuals are skirting on their tax contribution.”
Bill Rosenberg said this is a worldwide issue that needs addressing, and the tax changes of 2010 which lowered income tax rates for these wealthy individuals don’t appear to have made any inroads into it. “Governments worldwide lose more than $3.1 trillion in annual revenue because of tax evasion, according to a report published in November last year by the Tax Justice Network. Just a few days ago the same organisation released further research showing that between US$21 trillion and US$32 trillion had been hidden in secret tax havens by the global super-rich.”
“If governments internationally, including NZ, 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. More has to be done to make some of the richest accountable to contribute their fair share.”
“A capital gains tax, which taxes income from increasing asset values, and financial transaction taxes are two ways we could spread the tax base to catch more income from these wealthy individuals. We should also be restoring higher tax rates on higher incomes – such as a 38 percent rate on income more than about twice the average wage ($100,000) and a 45 percent rate on income more than approximately three times the average wage ($150,000). We could also stop trusts being used for tax avoidance purposes.”
“Internationally, the government should be urging other governments to clamp down on tax havens and ensuring our laws – such as our lax company laws and lack of a capital gains tax – aren’t used to avoid tax by corporations and individuals from other countries,” said Bill Rosenberg.