The taxation of top income earners or high-wealth individuals has been the subject of considerable research in international literature over recent years. One area of study is whether top income or wealth households disproportionately earn the types of income that are subject to lighter taxation in tax systems.

This report describes the outcomes of the High-Wealth Individuals Research Project (the Project). It contributes to this literature by investigating how much tax a group of high-wealth New Zealand families pay relative to their income – that is, their average effective tax rates (ETRs). It paints a comprehensive picture of ETRs for those high-wealth families by estimating the families’ ETRs based on economic income. Economic income is a measure of income that includes all items that increase an individual’s ability to consume goods or services, that is, both taxable and non-taxable sources of income.

This report breaks new ground as ETRs for the high-wealth families (the Project population) are calculated by combining tax administration data, public data and survey data collected specifically for this Project. The main period for which ETRs are calculated is the six-year period 1 April 2015 to 31 March 2021 (the Project period).

The tax system supports the well-being of New Zealanders by providing revenue to fund public goods and services, influencing behaviours, and as a means of redistribution. The progressive nature of New Zealand’s income tax means that the tax system plays a role in reducing inequality and encouraging social cohesion. This report supports the fundamental objectives of the tax system by providing insights into how the tax system impacts on New Zealand society.

Download: Full report; factsheet.


Comments are closed.