The rich, poor and taxes

Tax is often a bit of a sore point in many conversations. Most people think they are paying too much of it. Without getting too political in this blog, many people don’t like paying taxes to people on benefits. Read some of the comments here (if you dare) about how people feel about paying taxes to help the poor.

Some of the rich truly believe that they are in that position because they made great decisions and worked extremely hard. By default, they believe that the poor are only poor because they have not worked extremely hard and haven’t made great decisions.

By thinking in this way, the rich are framing their minds in a way where the poor have options to get out of their situation if only they worked harder and made better decisions. They believe that the poor are all out there smoking, drinking, gambling, doing drugs and buying take-aways on the tax payer dollar. The reality is people are not all born into the same situations. Some get lucky with good families and support. Some get lucky and never divorce. Some get lucky and never get sick. Some get lucky and never have a life changing accident. Some get lucky and never have a family member that needs full time care. This is nothing to do with poor choices and lack of hard work. There is a lot of luck involved.

I hit the jackpot, where I was raised by a loving and supportive middle-class family and received a good education. Did I work hard? You bet I did. But I also know that someone can work equally as hard as me, but be in a much worse position due to unfortunate circumstances. Life is not always in our control. Some people can get out of bad situations but they do need our support as a nation.

Sure, there are always people that take advantage of the system and don’t even try to make the changes needed. We can’t stop this and is an unfortunate universal fact of life. BUT, there are a majority that really do want to make changes, and with the right support they can achieve it. I think as a country we have a duty to support our most needy. If we don’t, the cost to society may be even greater and your tax could be even higher.

Without benefits, there would be higher healthcare costs for an increase in sick and hungry. There would be higher police and justice costs for higher crime. There would be more uneducated people driving wages down. There would be less tourism to the country as it won’t be a desired destination. All these things will lead to higher costs in other areas which would make not one iota of difference to how much tax you pay. In fact, if we don’t provide the bare basics for them, your tax rate may be even higher.   

 

Let’s get some perspective

Do you know how much you are paying in taxes ever year? If you are on a $70,000 income, then you are paying $14,000 in tax. This is 20% of your income. Some mistakenly think that just because they are in the 30% tax bracket then all income is taxed at 30%. This is not the case.

$14,000 is hardly going to change the world. There are approximately 210,000 people unemployed in New Zealand. This means that you are contributing 6.7 cents per year to each person unemployed. But your tax is also going to vital services such as healthcare, education, police, and recreation. So really, your contribution to the ‘needy’ is actually much less.  

So before you go thinking you are doing those less fortunate than you a fantastic service, think again. Don’t forget that there will always be someone earning more than you, who is contributing even more tax than you. Potentially contributing towards ‘free’ things that you get to enjoy.

The whole point of what I am saying is we need to stop thinking of paying tax begrudgingly. It is a fact of life and we have no choice but to pay it.

Instead of thinking of all the people that may be benefiting from your taxes, think of how YOU can benefit from taxes.

You can claim some of your $14,000 tax back by enjoying free council events, subsidized healthcare, subsidized education, many of our great nature walks and trails, some tennis or rugby at our free courts and fields, some reading at our free libraries. The list could go on.

So, instead of complaining about paying taxes, start enjoying some of the benefits of the taxes you pay for. Over time, you may even end up benefiting from taxes more than they cost you.

We shouldn’t be worried about the amount of tax we pay. We can’t change this. It is set in stone. In fact, we should be striving to pay more tax. The more tax we pay means we are earning more income. That’s a good thing, so let’s stop making it into a bad thing.

 

 

The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here

 

Share your thoughts below. Are you bitter about having to pay taxes? How do you benefit from taxes?