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Political Breakdown: What is a wealth tax and does anyone benefit?

With all this chat about how the Government has no idea if NZ's super-rich are paying their fair share of tax or not, I thought I'd explain what a wealth tax is. 

A wealth tax is something the Government could be considering if they discover the very well-off have somehow been avoiding paying tax. 

And if they have been paying their fair share of tax, I'm sure the Government would have seen it in their coffers - but they haven't. 

So what is a wealth tax? 

It varies from place to place, but it's generally a tax on an individual's assets like properties, cash, shares, vehicles pension plans, trusts, and money funds. 

And it usually only kicks in when an individual's combined wealth from all those exceeds a certain level. 

The Greens are the main proponent of a wealth tax. They want a tax of 1 percent for wealth over $1m, and then of 2 percent when it gets over $2m. 

If you've got a mortgage or any other debts, that debt is subtracted from your assets' worth. 

An example: If you and your partner own a home valued at $2.5m, and you have a mortgage for the majority of it, and don't have any other assets, you won't have to pay a wealth tax.

But if you don't have a mortgage on that house, your wealth would be split between you and your partner as $1.25m each and you'd pay a wealth tax on the $250,000 each - which would be $2500/year. 

If you're a mega-wealthy property magnate with seven properties worth $11m and you own them outright, your wealth tax would be $100,000/year. 

But it does get complicated when you include different ownership structures like trusts with numerous trustees and beneficiaries. 

How would that get calculated? 

No tax system is simple, and a wealth tax would undoubtedly add another layer of complexity. 

And the Greens are the only party advocating for one - although Te Paati Maori have talked about it too, so it's not out of the question. 

What it would achieve is another question. Would it just be used to raise money for the Government's coffers or would it be used especially to make our society more equitable? 

Otherwise, it's just another tax, although, for the mega-rich, a couple of thousand bucks a year is nothing.