As Labour have decided that they need to penalise those earning $150,000 by taxing them more, I thought I’d remind people of how much tax they already pay. Households (which is not the same as individuals, but that is all we have data for) earning over $150,000 make up 14% of households. They generate 42% of taxable income, pay 50% of gross income tax and 73% of net income tax.
This table was put out by Bill English a couple of weeks ago.
It only deals with income tax, and direct welfare payments such as benefits, WFF, PPL and accomodation supplement. I’d be keen to see a fuller dataset that includes indirect taxes (such as GST) and also indirect subsidies (education, health etc).
But it is still a very useful look at basically cash in the hand. It is how much you directly pay to the Government, and how much the Government directly gives to you.
As you can see households with income under $50,000 overall receive more in direct welfare than they pay in direct income tax. Their net income tax contribution is -30%.
Households with income from $50,000 to $110,000 contribute +30% of net income tax. So in one sense the total net tax contribution from households under $110,000 is zero.
It is households over $110,000 that then make up the $18 billion of net income tax that the Crown gets to spend on education, health, defence etc. Of course the Crown also gets company tax and GST.