Total Personal Taxable Income Contributed To Each Income Band
Published 19 May 2011
The following table shows the total amount of taxable income all individuals contribute to each taxable income band, for the 2011/2012 tax year[1].
This table can be used to model the impact of changing tax rates, or thresholds, or both, on personal tax revenue. It enables a much wider range of personal tax regimes to be modelled, with reasonable accuracy, than is possible using the estimates given in the Revenue Effect of Changes to Key Tax Rates, Bases and Thresholds for 2011/2012 table. Examples of how to use the table are given directly below it.
The taxable income totals in this table are not restricted to individuals in that taxable income band. They give the total amount of taxable income contributed by all individuals to that band.
For example, a person earning an annual taxable income of $86,650 contributes:
- $1,000 to each of the one thousand dollar bands below $80,000;
- $5,000 to the $80,000 - $85,000 band;
- $1,650 to the $85,000 - $90,000 band; and
- nothing to the bands above $90,000.
|
Taxable income |
Amount of income in band ($m) |
Taxable income ($) |
Amount of income in band ($m) |
Taxable income ($) |
Amount of income in band ($m) |
|---|---|---|---|---|---|
| $0 | 0 | $30,000 - $31,000 | 1,448 | $61,000 - $62,000 | 570 |
| $1 - $1,000 | 3,065 | $31,000 - $32,000 | 1,412 | $62,000 - $63,000 | 548 |
| $1,000 - $2,000 | 3,016 | $32,000 - $33,000 | 1,376 | $63,000 - $64,000 | 530 |
| $2,000 - $3,000 | 2,977 | $33,000 - $34,000 | 1,341 | $64,000 - $65,000 | 510 |
| $3,000 - $4,000 | 2,948 | $34,000 - $35,000 | 1,310 | $65,000 - $66,000 | 487 |
| $4,000 - $5,000 | 2,912 | $35,000 - $36,000 | 1,286 | $66,000 - $67,000 | 474 |
| $5,000 - $6,000 | 2,877 | $36,000 - $37,000 | 1,248 | $67,000 - $68,000 | 460 |
| $6,000 - $7,000 | 2,842 | $37,000 - $38,000 | 1,216 | $68,000 - $69,000 | 444 |
| $7,000 - $8,000 | 2,804 | $38,000 - $39,000 | 1,184 | $69,000 - $70,000 | 433 |
| $8,000 - $9,000 | 2,764 | $39,000 - $40,000 | 1,157 | $70,000 - $71,000 | 417 |
| $9,000 - $10,000 | 2,710 | $40,000 - $41,000 | 1,121 | $71,000 - $72,000 | 408 |
| $10,000 - $11,000 | 2,652 | $41,000 - $42,000 | 1,091 | $72,000 - $73,000 | 392 |
| $11,000 - $12,000 | 2,616 | $42,000 - $43,000 | 1,055 | $73,000 - $74,000 | 380 |
| $12,000 - $13,000 | 2,534 | $43,000 - $44,000 | 1,018 | $74,000 - $75,000 | 368 |
| $13,000 - $14,000 | 2,476 | $44,000 - $45,000 | 989 | $75,000 - $76,000 | 353 |
| $14,000 - $15,000 | 2,429 | $45,000 - $46,000 | 951 | $76,000 - $77,000 | 342 |
| $15,000 - $16,000 | 2,303 | $46,000 - $47,000 | 922 | $77,000 - $78,000 | 332 |
| $16,000 - $17,000 | 2,210 | $47,000 - $48,000 | 889 | $78,000 - $79,000 | 321 |
| $17,000 - $18,000 | 2,110 | $48,000 - $49,000 | 862 | $79,000 - $80,000 | 313 |
| $18,000 - $19,000 | 2,047 | $49,000 - $50,000 | 833 | $80,000 - $85,000 | 1,379 |
| $19,000 - $20,000 | 1,985 | $50,000 - $51,000 | 811 | $85,000 - $90,000 | 1,171 |
| $20,000 - $21,000 | 1,901 | $51,000 - $52,000 | 784 | $90,000 - $95,000 | 986 |
| $21,000 - $22,000 | 1,827 | $52,000 - $53,000 | 758 | $95,000 - $100,000 | 861 |
| $22,000 - $23,000 | 1,774 | $53,000 - $54,000 | 734 | $100,000 - $105,000 | 769 |
| $23,000 - $24,000 | 1,731 | $54,000 - $55,000 | 704 | $105,000 - $110,000 | 673 |
| $24,000 - $25,000 | 1,692 | $55,000 - $56,000 | 684 | $110,000 - $115,000 | 578 |
| $25,000 - $26,000 | 1,649 | $56,000 - $57,000 | 660 | $115,000 - $120,000 | 523 |
| $26,000 - $27,000 | 1,609 | $57,000 - $58,000 | 646 | $120,000 - $130,000 | 898 |
| $27,000 - $28,000 | 1,568 | $58,000 - $59,000 | 627 | $130,000 - $140,000 | 742 |
| $28,000 - $29,000 | 1,517 | $59,000 - $60,000 | 604 | $140,000 - $150,000 | 624 |
| $29,000 - $30,000 | 1,484 | $60,000 - $61,000 | 591 | Over $150,000 | 4,408 |
Examples of Tax Rate and/or Threshold Change Calculations Using the Table
When modelling personal tax increases/decreases, we assume some offset from decreased/increased GST, excise duties and company tax. The logic behind this is that the higher/lower tax means individuals have less/more disposable income and hence spending goes down/up. The result is a decrease/increase in indirect taxes, such as GST and excise duties on goods like petrol. With lower/higher sales, the profits of companies are affected and hence company tax also decreases/increases. The formula used to calculate this offset has assumptions about average household savings rates, indirect tax rates (more than GST is involved), company profit margins etc. Our present modelling assumptions result in an offset of 15.41% i.e. for every dollar in personal tax gained/lost from a tax change, 15.41 cents are forfeited/retrieved from the indirect and company tax offset.
Example 1 - The second effective tax rate of 17.5% is increased to 18.5%, with no change in the threshold
To calculate the effect on tax revenue:
- From the table, work out the amount of taxable income affected by the change. To do this, add up the income totals in the ranges $14,000 to $48,000 inclusive, to get $M50,851.
- Multiply this figure by the change in the effective tax rate:
$M50,851 x 0.01 = $M509. - Calculate the indirect and company tax offset as 15.41% of the change:
$M509 x 0.1541 = $M78. - Subtract the offset to give the total change in tax revenue:
$M509 - $M78 = $M431.
Example 2 - The middle threshold is raised to $49,000, with no change to the tax rates
To calculate the effect on tax revenue:
- From the table, work out the amount of taxable income affected by the change. This is the sum of the income totals in the ranges $14,000 to $48,000 inclusive, which is $M50,851, and the income total in the taxable income band $48,000 - $49,000, which is $M862.
- Tax revenue under the old $48,000 threshold:
$M50,851 x 0.175 + $M862 x 0.30 = $M9,158. - Tax revenue under the new $49,000 threshold:
($M50,851 + $M862) x 0.175= $M9,050. - Subtract "old" from "new" to get the tax revenue change without the offset:
$M9,050- $M9,158 = -$M108. - Calculate the indirect and company tax offset as 15.41% of the change:
-$M108 x 0.1730 = -$M17. - Subtract the offset to give the total change in tax revenue:
-$M108 - (-$M17) = -$M91.
Please read the Introduction for more information about this table.
The Revenue Effect of Changes to Key Tax Rates, Bases and Thresholds for 2011/12 table provides estimates of the effects of small changes in the tax rates and thresholds on full year tax revenue.
Notes
- [1]This table excludes anyone who is under the age of 16. These estimates are based on data from 2009/10 Statistics NZ Household Economic Survey, which was inflated to 2011/12 using Taxwell. The tax year is from 1 April to 31 March of the following year.
