Total Personal Taxable Income Contributed To Each Income Band

Published 28 May 2009

The following table shows the total amount of taxable income all individuals contribute to each taxable income band, for the 2009/10 financial 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 2009/10 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 $76,650 contributes:

$1,000 to each of the one thousand dollar bands below $70,000;
$5,000 to the $70,000 and $75,000 band;
$1,650 to the $75,000 - $80,000 band; and
nothing to the bands above $80,000.

Table - Total Personal Taxable Income Contributed To Each Income Band In 2009/10
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	$25,000 - $26,000	1,566	$51,000 - $52,000	677
$1 - $1,000	3,031	$26,000 - $27,000	1,527	$52,000 - $53,000	648
$1,000 - $2,000	2,985	$27,000 - $28,000	1,491	$53,000 - $54,000	614
$2,000 - $3,000	2,948	$28,000 - $29,000	1,454	$54,000 - $55,000	585
$3,000 - $4,000	2,910	$29,000 - $30,000	1,416	$55,000 - $56,000	564
$4,000 - $5,000	2,871	$30,000 - $31,000	1,382	$56,000 - $57,000	535
$5,000 - $6,000	2,827	$31,000 - $32,000	1,344	$57,000 - $58,000	520
$6,000 - $7,000	2,795	$32,000 - $33,000	1,297	$58,000 - $59,000	504
$7,000 - $8,000	2,762	$33,000 - $34,000	1,256	$59,000 - $60,000	480
$8,000 - $9,000	2,718	$34,000 - $35,000	1,216	$60,000 - $61,000	463
$9,000 - $10,000	2,659	$35,000 - $36,000	1,178	$61,000 - $62,000	445
$10,000 - $11,000	2,611	$36,000 - $37,000	1,147	$62,000 - $63,000	431
$11,000 - $12,000	2,555	$37,000 - $38,000	1,113	$63,000 - $64,000	420
$12,000 - $13,000	2,500	$38,000 - $39,000	1,077	$64,000 - $65,000	400
$13,000 - $14,000	2,453	$39,000 - $40,000	1,042	$65,000 - $66,000	378
$14,000 - $15,000	2,290	$40,000 - $41,000	1,006	$66,000 - $67,000	363
$15,000 - $16,000	2,174	$41,000 - $42,000	977	$67,000 - $68,000	347
$16,000 - $17,000	2,097	$42,000 - $43,000	949	$68,000 - $69,000	334
$17,000 - $18,000	2,006	$43,000 - $44,000	910	$69,000 - $70,000	320
$18,000 - $19,000	1,948	$44,000 - $45,000	884	$70,000 - $75,000	1,425
$19,000 - $20,000	1,842	$45,000 - $46,000	844	$75,000 - $80,000	1,211
$20,000 - $21,000	1,781	$46,000 - $47,000	816	$80,000 - $85,000	1,039
$21,000 - $22,000	1,736	$47,000 - $48,000	790	$85,000 - $90,000	864
$22,000 - $23,000	1,687	$48,000 - $49,000	761	$90,000 - $95,000	732
$23,000 - $24,000	1,646	$49,000 - $50,000	725	$95,000 - $100,000	633
$24,000 - $25,000	1,615	$50,000 - $51,000	699	Over $100,000	7,054

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 15.54% i.e. for every dollar in personal tax gained/lost from a tax change, 15.54 cents are forfeited/retrieved from the indirect and company tax offset.

Example 1 - The lower middle effective tax rate of 21% is increased to 22%, 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 $M47,504.
Multiply this figure by the change in the effective tax rate:
$M47,504 x 0.01 = $M475.
Calculate the indirect and company tax offset as 15.54% of the change:
$M475 x 0.1554 = $M74.
Subtract the offset to give the total change in tax revenue:
$M475 - $M74 = $M401.

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 $M47,504, and the income total in the taxable income band $48,000 - $49,000, which is $M761.

Tax revenue under the old $48,000 threshold:
$M47,504 x 0.21 + $M761 x 0.33 = $M10,227.

Tax revenue under the new $49,000 threshold:
($M47,504 + $M761) x 0.21 = $M10,136.

Subtract "old" from "new" to get the tax revenue change without the offset:
$M10,136 - $M10,227 = -$M91.

Calculate the indirect and company tax offset as 15.54% of the change:
-$M91 x 0.1554 = -$M14.

Subtract the offset to give the total change in tax revenue:
-$M91 - (-$M14) = -$M77.

Please read the Introduction for more information about this table.

The Revenue Effect of Changes to Key Tax Rates, Bases and Thresholds for 2009/10 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 15. These estimates are based on data from 2007/08 Statistics NZ Household Economic Survey, which was inflated to 2009/10 using Taxwell. The tax year is from 1 April to 31 March of the following year.

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