Labour on Wednesday announced it re-elected, it would not make big changes to the tax system.
The only new tax would be a new top rate of 39 percent on personal income earned above $180,000.
While some have complained - one person RNZ spoke to said she would have to "get back into the job market sooner than thought" because her partner would now be paying more tax - the vast majority of taxpayers will be unaffected.
But how does it compare to overseas, and past tax rates New Zealand has had in the past?
New Zealand right now vs New Zealand in 2021 under Labour if they get re-elected
At present there are four tax brackets.
- 10.5 percent on all income up to $14,000
- 17.5 percent on income between $14,001 and $48,000
- 30 percent on income between $48,001 and $70,000
- 33 percent on income above $70,000
The median income is currently $52,832, according to Statistics NZ. On that income, a person would pay $8869 in PAYE - 16.8 percent of their income (otherwise known as the effective tax rate). Under Labour's plan, this wouldn't change.
A person earning three times the average income - $158,496 - would pay $43,223 in PAYE - an effective tax rate of 27.3 percent. Under Labour's plan, this also wouldn't change (perhaps coincidentally, this is about what Parliament's lowest-ranked MPs get).
Research by the University of Otago in 2015 found the average CEO earns between 30 and 50 times what their workers do. A CEO at the bottom of that range earning $1,584,960 would pay $513,956 in tax for an effective tax rate of 32.4 percent. Under Labour's plan they would pay $598,253 in tax - an effective tax rate of 37.7 percent.
They'd be paying an extra $1621 a week in tax out of a total weekly gross pay of $30,480.
New Zealand under Labour vs the past
The distant past
Tax rates now, and under what Labour's proposing, for next year, are moderate by historical standards.
In 1910, there were 10 tax brackets. People who earned less than £300 paid nothing in income tax at all. Funnily enough, according to the Reserve Bank's inflation calculator that's almost equivalent to today's median income of $52,832 - meaning half of all people probably paid nothing in income tax at all, including the modern-day median earner.
Taxes for those earning between £301 and £400 were 2.5 percent, getting higher for each bracket up to £2000 - the modern equivalent of about $350,000. Income above this amount was taxed at a whopping 5.8 percent.
The result was an average effective tax rate of only 0.4 percent, with most of the Government's income coming from excise and customs duties.
Treasury analysis shows the average tax rate charged increased from there, particularly rapidly after the Great Depression and through WW2, before stabilising at around 30 percent.
The outbreak of WW2 prompted massive hikes to the top earners, with the top rate of 90 percent, then-Finance Minister Walter Nash reluctant to borrow. This dropped slightly to 76.5 percent by the end of the 1940s, with average Kiwis paying virtually nothing "after exemptions and rebates", according to Te Ara - much like it had been half-a-century before.
The 1980s
By the early 1980s, the average effective tax rate had crept up to the low 40s, peaking in 1982 at 44.6 percent.
Labour, and more specifically future ACT founder Sir Roger Douglas, slashed the top tax rate from 66 to initially 48 percent, then 33 percent. All income up to $30,000 was taxed at 24 percent, and the rest at 33 percent - the lowest top tax rate since the early 1930s, according to Te Ara.
If that two-step tax system was introduced now, with the income threshold adjusted for inflation to $66,384, a person on the median income would pay $14,734 in PAYE - a tax rate of 24 percent, since their income wouldn't cross any thresholds. They'd be worse off than they are now, or under Labour's proposal.
A person on three times the median income would pay $49,603 in PAYE, an effective tax rate of 31.3 percent - more than they would now or under Labour's plan.
The CEO mentioned above on 30 times that pay would pay $520,336 for an effective tax rate of 32.8 percent - slightly worse off than they are now, but a bit better than they would be under Labour's new plan.
Keep in mind these calculations ignore the Labour Government's introduction of GST, which pushed prices up, and other taxes and duties.
Under Helen Clark
In the 2000s, the Government introduced a top tax rate of 39 percent on income over $60,000 - about $91,387 in today's money. Other tax brackets below that were 15 percent, 21 percent and 33 percent.
At the time, the median income was about $30,000. This person would have paid an effective tax rate of about 19 percent - more than they would now or under Labour's plan for 2021.
Both the person on three times the median and the CEO on 30 times would have paid considerably more under Clark's tax regime than they would under Labour's proposal.
Under John Key
The current tax brackets and thresholds are exactly the same now, in 2020, as they were in 2010 when the Sir John Key-led Government, with Finance Minister Bill English, set them. The difference is incomes have risen in that time, meaning the effective tax rate for the median earner has gone up from about 15.1 percent in 2010 to 16.8 percent now, as noted above.
Labour's Tax Working Group last year calculated the Government was bringing in $1.7 billion a year in extra taxes thanks to neither they nor National changing tax brackets since 2010, and that figure is rising.
National has promised to link tax brackets to inflation if elected.
New Zealand in 2021 under Labour vs Australia
Australia has five tax brackets.
- 0 percent on all income up to $18,200
- 19 percent on income between $18,201 and $37,000
- 32.5 percent on income between $37,001 and $90,000
- 37 percent on income between $90,001 and $180,000
- 45 percent on income above $180,000.
The median income in Australia is about AU$50,000 - about NZ$55,000. This means the average Aussie pays an effective tax rate of about 15.6 percent - lower than New Zealanders now or under Labour's proposal.
The Australian above on three times the median income would have about the same tax rate as they do in New Zealand now and under Labour's plan.
The CEO however would have a much tougher time in Australia, paying an effective tax rate of about 43 percent - nearly $100,000 more.
New Zealand in 2021 under Labour vs New Zealand in 2021 under the Greens
The Greens have proposed adding two more tax brackets to the existing system - 37 percent at $100,000 and 42 percent at $150,000, as well as wealth taxes on those with net worth $1 million and higher.
It's obvious without doing the calculations the median Kiwi earner wouldn't face any greater tax obligations under this scheme, at least when it comes to income.
The person earning three times the median would pay $45,988, about $53 a week more than under Labour. The CEO would pay $645,103 in tax - about $47,000 more out of their annual haul of $1,584,960 - but still less than they would in Australia at present, under the conservative Scott Morrison-led coalition.
