Tax fairness

Geordie Hooft’s argument that because the wealthy earn more and so will pay more tax (Feb 28) is hardly a sound argument that they are already paying their fair share.

He would be better advised to consider the proportion of a person’s income being paid on tax when weighing up fairness.

As well as the assessed tax noted by Hooft, a low income family spend almost all their income after rent on essentials such as groceries, petrol and health care (if health care is affordable).

These all attract 15 per cent GST so when this is added to assessed income tax, the actual total tax paid as a percentage of income is inequitable, even after allowing for assistance such as Working for Families.

In contrast, the percentage of income paid in tax by the rich is reduced by taking advantage of tax loopholes and untaxed capital gains. Reverting to a purely progressive tax rate system, abolishing GST, tightening tax loopholes and introducing a capital gains tax would lead to a fairer tax system.

Although not a silver bullet, this would play a significant part in reducing inequality in New Zealand, which would be better for the country.

To see how this might be possible, see "The Science of Inequality" in the Nov 2018 issue of Scientific American. Eamonn Waters, Rangiora