THE WEALTH TAX FANTASY
WEALTH TAX
What is Being Proposed?
The Green Party is proposing a 2.5 percent annual tax on net wealth above $2 million for individuals and $4 million for couples. the tax would apply to property, land, shares, and businesses every year, with no exemptions.
The ‘Top 3 Percent’ Myth
The Greens pitch their wealth tax as targeting the “top 3 percent.” This is not the reality. Based on 2021 data (certainly an underestimate today), those already over the threshold include:
$42,000
Return (0.9%)
$68,000 Tax Bill (2.5%)
The tax bill for an individual farmer across the threshold is 1.6× what the farms return on equity.
A Penalty on Small Business
The wealth tax would apply to small business owners whose wealth is tied up in their business rather than cash, reducing their ability to reinvest in their business and grow the economy.
Example
6.5 percent of retired couples 5.5 percent of single retirees 3.4 percent of couples
Because the thresholds aren’t indexed to inflation, more households will be dragged in every year by rising property values alone.
A Sledgehammer to Farming
The average dairy farm holds about $4.7 million in equity. That means an annual wealth tax bill of roughly $68,000 for an individual farmer or $18,000 for a couple, regardless of whether it was a good season or a bad one.
A business owner with $4 million in assets earning a 5 percent return generates $200,000 before company tax. The wealth tax alone would take $50,000 of that, a quarter of pre-tax earnings.
The more successful the business, the greater the penalty. Owners must set aside money for a growing tax bill instead of reinvesting, making it harder for small businesses to grow
Double Taxation
Almost every pathway to building wealth in New Zealand involves money that has already been taxed. The Greens would tax it again, year after year, at 2.5 percent, simply for holding assets above the threshold.
Business profits taxed at 28 percent get taxed again when reinvestment grows the business. KiwiSaver balances, built entirely from after-tax contributions and already-taxed returns, get taxed again once they cross the line. Interest and dividends, already taxed as income, get taxed again on the balance.
With the sector’s return on equity at just 0.9 percent, a 2.5 percent wealth tax means farmers would owe more in tax than the farm actually earns. The only option: sell land or sell up entirely.
“A wealth tax will likely lead some high wealth individuals to leave New Zealand, and discourage others who might have moved to New Zealand.”
— The New Zealand Treasury
The Revenue Fantasy
The Greens claim their wealth tax would raise the lion’s share of more than $17 billion a year, or around 12 percent of total Crown tax revenue. This would be one of (if not the) highest-yielding asset taxes ever implemented anywhere in the world. Compare that to what wealth taxes actually raise:
Capital Flight in Action
One of the most common effects of a wealth tax is capital flight, where money and investment leave the country. Fewer investments mean fewer businesses expanding, fewer jobs being created, and weaker wage growth. Over time, that leaves the economy smaller, and the tax burden heavier on those who stay
Norway France
Raised rate from 0.85% to 1.1%
Expected: +$245M/yr
Result: –$988M/yr
$89.7B in wealth left the country
Implemented wealth tax
shortfall: $14.2B
Roughly double what the tax raised
Treasury warned in 2023 that a wealth tax rate above just 2 percent would be “extremely economically costly” and would raise little additional revenue once Kiwis changed their behaviour.
The Greens’ proposed asset taxes are not grounded in international reality, nor in the expert advice of the New Zealand Treasury. It combines one of the most aggressive tax rates in the OECD with revenue projections that ignore every lesson from overseas.
CONCLUSION
The wealth tax would hit farmers whose returns can’t cover the bill, retirees whose life savings and family home push them past an arbitrary threshold, and small business owners punished for growing what they built. It would tax income that has already been taxed, penalise saving over spending, and ignore thirty years of international evidence that wealth taxes shrink economies rather than fund them. The Greens’ tax package is light on evidence, heavy on populism, and green with envy.