Summary (TLDR)

In this blog, I will attempt to convince you of the following:

1. Your notion of ‘fairness’ when it comes to tax might need some error correction.
2. Most High-income earners and companies should not be vilified but lauded
   Demagogues that crusade in the name of higher taxes for high-income earners are never giving you a full and clear picture, instead, it is often a biased nonsense view designed to create a common enemy. Because nothing unites us all like a common enemy.
3. If it is possible and practical then you should optimise your 45-year work life to reduce your tax liability in exchange for more personal time.

Govt please just take what you need

It seems a strange ‘group think/echo chamber’ phenomenon that citizens don’t contemplate their personal tax liability and how it impacts their lives. We are programmed to dutifully pay tax without asking how it is used or wasted (I used to think they only wasted 20% but these days I think it’s more like 60%). Here are some examples of taxes we pay in NZ:

1. Income tax – NZ (~25%).
2. plus GST (15%) on most things we buy.
3. plus ACC (accident compensation ~1.97%).
4. plus Property taxes ~3k (property and water).
5. plus taxes on daily commodities like fuel, alcohol, etc.

Give more milk!

“Greed”

Why is everyone else greedy when it comes to what they own, or to paying taxes …but not you?

1. You want to keep more of what you earn? …That’s selfish and greedy!
2. That rich person has more than enough! …they should share what they have (I won’t though).

“Fairness”

We are outraged when we feel rich people and companies don’t pay their fair share, and act as if it is money they have stolen from our pockets! Demagogues and Legacy media have been pushing this narrative for decades.
But why should you feel entitled to 1 cent of the money that someone else has earned? What a subjective notion ‘fairness’ is:

1. Everyone should “pay their fair share” A young or low-income earner thinks the distribution of wealth is a good idea, but a high-income earner gets annoyed when they have to part with so much of what they have earned.
2. 1M vs 2M How is it fair that in a year 1 person pays only 20k in taxes but another pays 100k, or in 10 years 1 person pays only 200k but another person pays 1m? How about in 45 years 1 person has paid only 1m and another 2m?
3. Age and Earning Scenarios We don’t consider any earning scenarios. Especially hours worked and/or age e.g. a 20-year-old might only pay 15k tax that year when a 50-year-old may pay 65k. We move through different tax brackets as we get older and become more economically successful. In your early 20’s you earn FA, in your 30’s you become economically stable, and hopefully if you’ve lived a good life in your 40s and above you will be financially secure. Also, the top-tier income earners often don’t stay in that top-tier income group for long periods.
4. High-Income Earners Whoever is in the so-called 3% of high-income earners does not usually stay there for long, and they usually don’t arrive there until after 30-40 years of work (don’t worry you will be in this category soon enough)
5. Govt waste How is it fair when we give money to a government that wastes so much or spends it on so many things we might oppose (e.g. ideology, minority groups, contrived Carbon Emission Tax, Military spending, Infrastructure spending, Education, government handouts, etc?
6. You don’t pay enough but I do lol Instead of gratitude some people feel not only entitled but also robbed by high-income earners even though those high-income earners might pay 4x more taxes than many others…(see earning table below):

20-45-20 Rule: Lifecycle earnings
20-45-20 Lifecycle maxim
20-45-20 Lifecycle maxim EXCEL LINK

Govt Forced Fairness?

One thing you can rest assured of is that Govt will take from you as much as they legally can.

1. Perhaps that is fairness? It is exactly what they will do.
2. Taxes vs. Prison If you don’t think they forcibly take money from you, then try not paying taxes and see what happens!

How the Ideal Tax Rate Is Determined: The Laffer Curve
The Govt can raise the tax rates but it may not lead to the increase in tax revenue they expect

Don’t kill the goose that lays the golden eggs

If rich people and companies suddenly disappeared, society as we know it would probably collapse!

People are envious and feel entitled to the fruits of someone else’s labour, telling themselves that the successful have somehow stolen it through unfair means and exploitation. Yet those who have found success in life have almost always done it through hard work, fair means, and voluntary transactions with others.
Business owners are often demonized when they should be lauded for their contribution to society for many reasons including:

• Jobs and industries are created: That support countless families.
• 3rd-party Taxes are paid: If a business employs 100 people then 100 people pay taxes (and support their families)! Also, all kinds of trickle-down taxes are paid by: Accountants, Lawyers, Bankers, Cleaners, Groundskeepers, Drivers, Kitchen Staff, Hospo workers, local pie shop, etc.
• Luxury Cars, Homes, Yaughts, etc. Imagine a 20-million-dollar luxury thing is built. That requires 120 people working (off and on) over a 2-year period. I wonder if you got rid of the wealthy what would happen to people dependent on those industries?

But wait I want to pay more tax!

…said no one ever. 🤥

Intelligent people pay as little tax as they have to. Not a single business person in the country seeks to pay the maximum amount of tax. Businesses will do whatever they can to avoid paying additional taxes and they would be incredibly stupid if they didn’t! They can easily avoid tax by increasing expenses (spending profits back into themselves), sending money offshore, etc.

Signs suggest the rich are trying to dodge new tax – here’s what’s being done about it
New Yorkers confirm high taxes are pushing them to flee the state in droves

But I can’t do anything about it!

hmm some years true and some years not. It depends on many different variables including (but not restricted to): age, income, tax status, assets, liabilities, relationship status, dependents, lifestyle, etc.
Instead of feeling nihilistic about tax on a financial year-by-year basis – perhaps it is better to think about tax over the course of your working lifetime (~45 years), and how you can optimize your lifestyle against your tax liability so it benefits you and your family. Consider some of the following:

• Low income = low tax / No income = no tax.
• Is it better to have more time (than money) at a specific point in your life?
• Is my life better if I am able to work 8 months per year instead of 12?
• How can myself and my family benefit the most?
• Am I better off as an employee, contractor, business owner, etc.
• What Govt benefits are available to me based on my income or tax status? e.g. Working for Families
• What is my actual weekly/monthly/annual cash burn rate (expenses only), and can I change that?
• Can I earn more money overseas or live cheaper short term or long term.

Places like casinos, insurance companies, and govt, have most things mathematically weighted in their favor – is there a way you can shift tax liability in your favour?

Also consider also the following points:

1. You can’t fix inequality by diminishing the successful down to the same level as the not-so-successful. Better to let a thousand flowers bloom.
2. You can’t have a welfare system without first having wealth
3. Forced Equality is unfair especially if you are taking from those who have earned to give to those that have not. e.g. If you work 100 hours and I work 1 hour but demand equal pay to you.
4. The government doesn’t create wealth! It’s the Business Complex that produces capital
5. Tax Rebate: We celebrate a tax return when maybe we should be annoyed the govt has been taking too much each week. Technically they are not giving you anything back – you have overpaid and they are returning what is already yours – of course without any interest.
6. Tax Cuts: Every election comes with bribes and tax cuts are often part of it. It is surprising when people resist, seemingly oblivious to the fact it is their own hard-earned money being returned back to them – or moreover their own money not being taken from them. These very same people think the govt of the day can spend their own money better than they can.
7. What is best middle ground? Hmm, I’m not sure here – a smaller government with less spending or maybe some form of optimised taxation. Max fairness is when the govt does not waste excessive amounts of taxpayer money.
8. Isn’t it amusing when wealthy or elite people preach about taxing the rich when they already belong to that group but will not volunteer any additional payments themselves.

Blog notes:

Disclaimer: Before you start getting triggered and ranting about the 1000 benefits of tax – yes I already agree! This post acknowledges those benefits but is not about that – it is about exploring hidden reality that might affect you, and also poorly understood tax memes.

Tax is a tax on people that are bad at Maths!

98% of people get their taxes done on time. …finally I’m in the 2%

Selfish Altruism Just so you know…I’m not greedy, once I gave a homeless person $2…everyone else is greedy though…especially my boss…and successful people…and the wealthy!