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The toads are lying again

These wealthy individuals have such a low tax rate because so much of their income (about 80%) is capital gains – money made from selling assets – and that is barely taxed. Only 17% of their income is conventionally taxable income like wages and salaries. So despite being worth an average of NZ$276m ($168m; £135m) each, and typically earning $8m a year, these families pay an average of about $640,000 each in tax – less than 10% of their income.


One objection is that the income of the 311 wealthiest families includes unrealised capital gains: that is, increases in the value of assets that have not yet been sold. For some, this is not “income”.

However, it is an increase in wealth that can be borrowed against, and will eventually turn into conventional income once sold.

Yes, indeedy, the toads are lying once again. Fuckers.

13 thoughts on “The toads are lying again”

  1. It’s a variant of Upton Sinclair’s aphorism. Never expect a reporter to understand something if it would stop them writing an inflammatory article about it.

  2. Isn’t borrowing against capital gains in order to consume exactly what all the ‘equity release’ people did in the run up to the GFC? And who subsequently lost their houses because their debts became much greater than their house value and were unable to continue to service the loans? Not the most sensible financial strategy.

    Of course if the principle of taxing unrealised gains is so important, it should be applied to everyone. I look forward to Mr and Mrs Guardian Journalist getting a tax bill for the 10% rise in the value of their London townhouse…….

  3. I fully agree with you Tim.

    Of course I live in the old family home that I understand cost the parents about 4000 pounds. Needless to say, the council now value it at over 1 million dollars for taxation purposes.

    Then again, I work off the scifi book standard. When I compare the price of books I bought when even I was young with present day prices, it’s evident that the Aussie dollar is worth less than one hundredth of what it was then.

  4. “will eventually turn into conventional income then”

    Fine. Tax it then. What’s the problem? Borrowing using assets as security entails a risk that you lose said assets.

  5. For anyone who believes that fairness matters, and that those who can most afford it should contribute more to the collective pot of taxes, these are outrageous findings.

    Well, of course, the rich do pay considerably more in taxes. According to the article, the rich pay an average of NZ $640,000 per year. The median income is about NZ $62,700 on which the tax paid will be about NZ $12,300. So the rich, on average, pay more than 50 times the tax that those on median income pay, notwithstanding the fact that those on median income will receive more in benefits than they pay in tax.

  6. these families pay an average of about $640,000 each in tax – less than 10% of their income.

    So those lucky families aren’t suffering from tax poverty then, unlike the rest of us.

    The only moral action is therefore to reduce the amount the government steals so we too are no longer in tax poverty.

  7. The Pedant-General


    “Of course I live in the old family home that I understand cost the parents about 4000 pounds. ”

    4000 pounds is the wrong base: It would have been valued for IHT – that’s your base value not the original 4000 pounds…

  8. The Pedant-General

    Actually, bestial Bjelke had abolished IHT by then. It was when he abolished the petrol tax that the rest of the establishment revolted.

  9. For some, this [an unrealized gain] is not “income”.

    But it is for others? How curious.
    I think they’re doing it wrong.

  10. @ dcardno
    When it is unrealised capital losses it doesn’t count. Nor, according to HMRC, when it is realised capital losses (albeit they do allow offsets against later capital gains *provided they are within the same narrow segment*)

  11. 17% is conventionally taxable income, 10% goes in taxes, so an average tax rate of c.60% if capital gains are barely taxed. Except the top tax rate in NZ is reportedly 39%
    Someone is treating us as idiots who are unable to divide 10% by 17%.

  12. We like capital formation. It helps with trade deficits. So don’t tax it or there’ll be less of it.
    Imv, of course.

  13. We have an Election in a few months time (which is why Jacinda cleared off). It is therefore tax the rich ” until the pips squeak” time.

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