NZ rich suck up more of our wealth

The NBR rich list has been published for 2025. The combined wealth of the 130 listed is $102.1 billion. In 2015 the 180 individuals and families listed had a combined wealth of $55 billion. According to the Reserve bank inflation calculator the percentage of change over the last decade was 32.9%. Given that the 2025 list is much smaller than that in 2015, the increase in wealth for those on the list must be well over 3x that of inflation. For some years average household wealth has decreased. 

Since 1980s and 90s, when New Zealand experienced the fastest growing inequality in the OECD, we have become so used to this wealth capture by a privileged few that when each wealth list is published, it receives minimal attention. When there are criticisms of the systems that favour the rich the current government dismisses it as envy, while continuing to gift even more advantage to the already wealthy. The $2.9 billion tax break for landlords was largely financed through cutting government services, the poor are being sacrificed to subsidise the wealthy.  

The distribution of wealth in our country has reached a point where the wealthiest 10% have captured 51% of our wealth and the bottom 50% have only around 5% to share. 

The Organisation for Economic Co-operation and development (OECD) has warned that the impacts of wealth transfers are likely to become an increasing challenge. Wealthy households tend to receive more and higher-value inheritances and this supports the ongoing increase of intra-generational inequality. The advantages of those at the top of the wealth distribution tables effectively reduce the equality of opportunity. Those born into poverty are less likely to be able change their circumstances. 

According to Forbes Magazine, none of the billionaires under 30 currently are self made, they have just inherited their wealth. In New Zealand the 'Bank of Mum & Dad' (at $22.6b) is our 5th largest home lender. Whether it be housing or education, those born into wealth have distinct advantages. 

Our enthusiasm to embrace the neoliberal agenda led by the UK and and US under Thatcher and Reagan saw us go even further than them, with disastrous consequences. The current levels of inequality and poverty in New Zealand have come about due to political decisions over four decades. This government's fixation on failed neoliberal, trickle down theory to enable economic growth is illogical and damaging. 

The Tax Injustice Network identifies a two tier tax system of 'collected wealth' and 'earned wealth' that operates in most countries. Collected wealth is generated from capital gains, dividends and the rent collected through owning things, while earned wealth comes through wages and salaries gained through work. The latter is generally taxed at a much higher rate and yet collected wealth grows much faster than earned wealth. Less than half the wealth generated globally goes to people who earn a living. 

The wealthy have great influence over most governments and have succeeded, over time, to ensure that tax systems and regulatory controls favour their wealth accumulation. Productivity gains created by those who work for them are not fairly shared. The labour income share (LIS) continues to fall below increases in productivity. Increases in the dividends paid to shareholders generally exceeds any increases in wages. 

The Tax Justice Network explains that the wealth held by our richest is at such a level that even a small wealth tax will generate a considerable return and have minimal impact on those taxed. Spain has increased its top tax rates and introduced a 0.5% wealth tax and, despite some criticisms, it has not led to an exodus of the wealthy and has generated $1.2b NZD in income 2023. 

New Zealand's Fair Tax Coalition has responded to the latest Rich List by making the following points:

• New Zealand's richest pay an effective tax rate of 9.5% including GST, while an average earner pays double that. 
• A forestry worker could put in long hours and earn $250k over 5 years and pay around $40,000 in tax while a property owner could make the same through capital appreciation and pay no tax.
• Having no inheritance tax supports the largest intergenerational wealth transfer ever (Ireland has a 33% gift and inheritance tax)
• New Zealand is not a high tax nation. Tax take as a % of GDP is 42% in Austria and just 31% in NZ. 

The Green Party's Green Budget has been welcomed by the Better Tax Coalition as a genuine proposal to create a fairer tax system. Infometrics have reviewed the Green Budget and rebut claims that the policies will cost too much as the revenue generated will be $5b more than the spending promises. Co-leader Chlöe Swarbrick notes that the proposed wealth tax income from the 10 wealthiest New Zealanders (combined wealth of $10b) alone would generate enough to cover free GP care for all New Zealanders. 

It is about time that our richest New Zealanders recognised that reversing inequality actually supports a thriving economy. Just by paying a little more tax will mean: workers will be healthier and more productive, the country's infrastructure (transport systems etc) will be more efficient and the domestic economy would benefit from greater spending capacity. Workers spend around 85% of their income on goods and services, the more money that they have, the more they spend. 

The coalition government is clearly not delivering the growth that they claim will deliver prosperity for all New Zealanders. Homelessness is growing, health services are in crisis, unemployment and under-employment are at record levels and 70,000 New Zealanders have abandoned our country over the past year. Tax cuts and austerity measures are not delivering (and never have), it is time to do things differently!