We have, as most countries do, a variable tax regime. Tax is charged on personal earnings in brackets based on the gross annual income. Earn less, pay less. Earn more – pay more.
The scale looks like this:
Earn upto $14,000 and pay 10.5c tax in the dollar
$14,001 to $48,000 and pay $17.5c tax in the dollar
$48,001 to $70,000 and pay $30 c tax in the dollar
$70,001 and over pay 33c tax in the dollar
So lets take a look at what that means:
Person A: making $25,000 per annum will pay $3395 tax per annum and take home $21,605 a year (total 15.7% of income).
Person B: on $48,000 per annum will pay $7,420 tax per annum and take home $40, 580 a year (total 18.2% of income)
Person C: on $70,000 per annum will pay $14,020 (total 20% of income)
Person D: on $100,000 per annum will pay $23,920 (total 23.9% of income).
Person E: on $170,000 per annum will pay $47,020 (total 27.6% of income)
As you can see – the people on bigger incomes are paying vastly more tax. Person E on $170,000 is paying 6.3 times the amount paid by Person B on $48,000 despite earning only 3.5 times the amount of Person B.
Person D is paying 3.2 times the tax that Person B is paying despite the income being twice the amount. Person’s D and E get thumped.
During the reign of Helen Clark the top tax rate on personal income was a whopping 39% although these days its 33%. So those top two peep’s would have been paying a lot more. Read more »