AARON VINOD JOHN

AARON VINOD JOHN

AARON VINOD JOHN

[1 MIN READ]

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Stop Punishing Success: The Case Against Taxing the Wealthy More

With New Zealand heading to the polls on 7 November, "tax the rich" is back in fashion. Parties are lining up to take a bigger slice from anyone who has done well, and selling it as fairness.

It isn't. Taxing people harder because they succeeded punishes the exact behaviour a healthy economy needs most. Here's what's actually on the table, and why the wealthy should be paying less, not more.

Party

What they want to tax

Greens

2.5% a year on net wealth over $10m; 33% on inheritances and gifts over $1m; a new 45% top income rate over $160,000; 33% company tax for firms turning over $30m+

Te Pāti Māori

Wealth tax starting at $2m: 1.5% to $5m, 2% to $10m, 2.5% above that

Labour

28% tax on gains from selling rental and commercial property (not the family home or farms), from 1 July 2027

National and ACT

No new taxes

The Greens say 99.7% of people would never pay their wealth tax. That is exactly the problem. It singles out a tiny group of people and makes them the villain of every story.

It's their money, not the government's

Start with the simplest point. The money a successful person earns is theirs. They took the risk, put in the hours, and built something people were willing to pay for.

Tax is not the government's share of a pie it baked. It is a cut taken from something someone else created. When politicians talk about the rich "paying their fair share," they quietly assume the state owns the money first and lets you keep a portion. That gets it backwards.

A wealth tax makes it worse. Income tax at least hits money as it's earned. A wealth tax charges you again, every single year, on savings you already paid tax on. Build a business worth $20 million, and under the Greens' plan you'd owe $250,000 every year on the $10 million above their line, whether the business made a profit that year or not. That isn't fairness. It's taxing the same dollar over and over.

The rich already pay most of the bill

The biggest myth in this debate is that wealthy Kiwis don't pay their share. On income tax, the numbers say the opposite.

  • A 2023 analysis by OliverShaw found that people in the top two tax brackets were 21.2% of taxpayers but paid 68.5% of all income tax in the 2021 tax year.

  • The Taxpayers' Union's 2026 analysis says the top 10% of earners pay more income tax than the bottom 80% combined, and the top 1% pay more than the entire bottom half.

  • It's not just income tax. The same analysis says the top 20% of households also pay over a third of all GST.

Put simply: a small group of high earners is already carrying the country. Asking them for even more, while calling them freeloaders, is not a serious argument.

Business owners are the ones creating jobs

Nobody ever got hired by a poor person. Jobs come from people with capital who are willing to put it on the line: starting a business, opening a second site, buying new equipment, taking on staff before the revenue is guaranteed.

In New Zealand, small businesses make up 97.2% of all enterprises and employ over 846,000 people, according to MBIE. Most of the rest of us work for large companies, which were built by people who took big risks with their own money.

Every dollar the government takes from an investor is a dollar that can't fund a new hire. Tax the owner's capital every year and you shrink the pool of money that turns ideas into payrolls. The people who feel that first aren't the wealthy. It's the workers who never get the job offer.

Their spending and investing keep the economy moving

Wealthy people don't stuff cash under a mattress. They spend it and they invest it. They build houses, eat at local restaurants, hire tradies, buy cars and back the startups that become tomorrow's employers.

Their money sits in shares, property and businesses, which is exactly where an economy needs it. A wealth tax forces people to sell those productive assets just to pay the bill, because it's charged on what you own, not what you earn. That pulls capital out of the businesses that need it and hands it to the least efficient spender in the country: the government.

And New Zealand is not a low-tax country to begin with. Our company tax rate of 28% is already the ninth highest in the OECD, according to Deloitte. We don't need to make it even less attractive to invest here.

The world tried wealth taxes, and mostly gave up

This isn't just theory. Wealth taxes have been tested for decades, and the results are in.

The pattern is always the same. The truly rich have lawyers, accountants and passports. They restructure, relocate, or leave. The money raised usually ends up far smaller than promised.

Push successful people away, and they'll leave

Here's the part "tax the rich" campaigners never think through. Wealthy people are the most mobile people on earth. They can move their money, their businesses and themselves almost anywhere.

Put yourself in their shoes. You've built something. You employ people and you already pay a mountain of tax. Then the country turns around, demands more every year, and blames its problems on you. Why would you stay? Why would you want to be part of a country that treats you like a villain for succeeding?

So they leave. Look at Britain. After it scrapped its non-dom tax status and raised taxes on wealth, the Henley Private Wealth Migration Report forecast that the UK would lose 16,500 millionaires in 2025, the biggest outflow ever recorded for any country. Meanwhile the UAE was expected to gain 9,800 and Switzerland, with low taxes, around 3,000.

New Zealand is not immune. Our own Treasury has warned that a 2.5% wealth tax would push significantly more wealth offshore than the Greens have allowed for. When the wealthy go, they take their businesses, their investment, their spending and their tax payments with them. The country doesn't end up with more money. It ends up with less, plus a reputation as a place where ambitious people aren't welcome.

It won't stop at the "super-rich"

The sales pitch is always that only a handful of billionaires will pay. Don't believe it.

Wealth taxes hit what you own, not what you earn. That means the people who actually get squeezed are often asset-rich and cash-poor: farmers, family business owners and retirees whose wealth is tied up in land, buildings and equipment. They can't move a farm to Switzerland. They just have to find cash every year for a bill on wealth they haven't sold.

And thresholds have a way of creeping down. Only last year, the Greens' alternative Budget set their wealth tax at $2 million, not $10 million. Te Pāti Māori's plan this year still starts at $2 million. In Auckland, that's within reach of plenty of ordinary property owners. Once a wealth tax exists, the line only has to move once to catch the middle class.

Punishing success means rewarding failure

Whatever you tax, you get less of. Tax cigarettes and people smoke less. Tax success and people will chase it less.

Why start a business, work 80-hour weeks or risk your savings if the reward gets clawed back the moment you make it? The message a wealth tax sends to young Kiwis is simple: don't aim too high. ACT's David Seymour called the Greens' plan a product of tall poppy syndrome, and he's right. Cutting down the tallest poppies doesn't make anyone else grow.

We should want more people to become wealthy, not fewer. A society that resents its most successful people will eventually stop producing them.

Instead of taxing someone else, build something yourself

A lot of the loudest support for "tax the rich" comes from people who feel stuck. I get it. But taking money from someone else's family won't build anything for yours.

If your parents didn't leave you anything, that's not the end of the story. It's the starting line. Here's the plan:

  1. Get the best-paying job you can. Chase the scholarship. Take on the student loan if it gets you into a real career.

  2. Live below your means. The gap between what you earn and what you spend is your future.

  3. Invest consistently for 5–10 years. Max out your KiwiSaver, buy index funds, and leave them alone.

  4. Turn that capital into an asset. Buy a business, start one, or get into property.

  5. Build for the next generation. Something in your own name that you can pass on to your kids and theirs.

It won't be quick and it won't be easy. But that's how generational wealth actually starts: not by tearing others down, but by building up.

The bottom line

The wealthy already pay most of New Zealand's income tax. They create the jobs, take the risks and keep capital working in the economy. Asking them to hand over even more, year after year, on money they already earned and already paid tax on, isn't justice. It's envy dressed up as policy.

The countries that tried it have mostly given up. The ones still trying are watching their entrepreneurs board planes to Switzerland and Dubai.

If we want a more prosperous New Zealand, the answer isn't to drag successful people down. It's to make it easier for everyone else to climb up. Scrap the wealth tax idea, lower the burden on those who build, and let success be something we celebrate again.

What do you think? Drop your thoughts in the comments.

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