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Household incomes in New Zealand The impact of the market, taxes and government spending, 1987/88-1997/98
New Zealand Treasury Working Paper 04/20
Published: September 2004
Authors: Ron Crawford, Grant Johnston
Abstract
How well have New Zealand households fared over a decade of extensive economic and social changes? This study compares household incomes in 1997/98 with household incomes in 1987/88, using the concept of “final income”. Final income is a measure of the income accruing to households after adjusting for payments to, and benefits from, central government, whether these benefits are in cash or in kind. In particular, receipt of government health and education services is counted as adding to a household’s income, and payment of consumption taxes is counted as taking away from a household’s income. In all income deciles, the real final incomes of households were, on average, at least maintained between 1987/88 and 1997/98 and in most cases increased. Government intervention, through taxes, cash benefits and social services, has acted to protect less well-off households over a period of upheaval in New Zealand.
Table of Contents
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twp04-20.pdf (317 KB) pp. 66 |
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Table 1 – Personal income tax rates, 1986/87 and 1997/98
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Table 2 – Final income as a proportion of market income, by income decile, 1987/88 and 1997/98
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Table 3 – Share of total income, by income decile, 1987/88 and 1997/98
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Appendix Table 1 – Number of households, by income decile, 1987/88 and 1997/98
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Appendix Table 2 – Number of households, by household type, 1987/88 and 1997/98, using 1987/88 age cut-offs
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Appendix Table 3 – Number of households, by household type, 1987/88 and 1997/98, using 1997/98 age cut-offs
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Appendix Table 4 – Characteristics of households, 1987/88
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Appendix Table 5 – Characteristics of households, 1997/98
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Appendix Table 6 – Characteristics of occupants of households, by income decile, 1987/88
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Appendix Table 7 – Characteristics of occupants of households, by income decile, 1997/98
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Appendix Table 8 – Receipt of cash benefits, 1987/88
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Appendix Table 9 – Receipt of education benefits, 1987/88
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Appendix Table 10 – Receipt of total government benefits, 1987/88
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Appendix Table 11 – Tax payments, 1987/88
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Appendix Table 12 – From market income to disposable income, 1987/88
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Appendix Table 13 – From market income to final income, 1987/88
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Appendix Table 14 – Shares of government benefits, tax payments and income, 1987/88
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Appendix Table 15 – Receipt of cash benefits, 1997/98
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Appendix Table 16 – Receipt of education benefits, 1997/98
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Appendix Table 17 – Receipt of total government benefits, 1997/98
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Appendix Table 18 – Tax payments, 1997/98
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Appendix Table 19 – From market income to disposable income, 1997/98
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Appendix Table 20 – From market income to final income, 1997/98
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Appendix Table 21 – Shares of government benefits, tax payments and income, 1997/98
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Appendix Table 22 – Receipt of cash benefits, 1987/88
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Appendix Table 23 – Receipt of education benefits, 1987/88
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Appendix Table 24 – Receipt of total government benefits, 1987/88
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Appendix Table 25 – Tax payments, 1987/88
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Appendix Table 26 – From market income to disposable income, 1987/88
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Appendix Table 27 – From market income to final income, 1987/88
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Appendix Table 28 – Receipt of cash benefits, 1997/98
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Appendix Table 29 – Receipt of education benefits, 1997/98
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Appendix Table 30 – Receipt of total government benefits, 1997/98
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Appendix Table 31 – Tax payments, 1997/98
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Appendix Table 32 – From market income to disposable income, 1997/98
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Appendix Table 33 – From market income to final income, 1997/98
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Figure 1 – Real GDP per capita, seasonally adjusted by quarter, 1986 to 1998
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Figure 2 – Government expenditure per household by purpose, 1987/88 and 1997/98
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Figure 3 – Average household income, by different definitions of income, 1981/82 to 1997/98
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Figure 4 – Average equivalent disposable income, by income decile, 1981/82 to 1997/98
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Figure 5 – Market income by income decile, 1987/88 and 1997/98
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Figure 6 – Average receipt of cash benefits, by income decile, 1987/88 and 1997/98
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Figure 7 – Average receipt of education benefits, by income decile, 1987/88 and 1997/98
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Figure 8 – Receipt of education benefits per occupant aged between 3 and 22 years, by income decile, 1987/88 and 1997/98
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Figure 9 – Average receipt of health benefits, by income decile, 1987/88 and 1997/98
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Figure 10 – Receipt of government benefits, by income decile, 1987/88 and 1997/98
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Figure 11 – Average income tax payments, by income decile, 1987/88 and 1997/98
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Figure 12 – Average consumption tax payments, by income decile, 1987/88 and 1997/98
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Figure 13 – Tax payments, by income decile, 1987/88 and 1997/98
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Figure 15 – Average receipt of government benefits minus tax payments, by income decile, 1987/88 and 1997/98
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Appendix Figure 1 – Average gross income by income decile, 1987/88 and 1997/98
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Appendix Figure 2 – Average disposable income, by income decile, 1987/88 and 1997/98
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Appendix Figure 3 – Average equivalent disposable income, by income decile, 1987/88 and 1997/98, from Mowbray
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Acknowledgements
We are grateful to a number of people who read and commented on versions of this paper and in particular to Bob Stephens, Roger Hurnard, John Creedy and Dean Hyslop. We are also indebted to Matthew Bell, Katy Henderson and Ivan Tuckwell from the Treasury, who performed the TAXMOD modelling for this study.
Statistics New Zealand kindly made available the documentation and statistical programmes for their 1990 study. Many of the staff at Statistics New Zealand, John Scott in particular, made helpful contributions.
Ron Crawford began this study and undertook it over a number of years while employed at the Treasury.
Disclaimer
The views, opinions, findings, and conclusions or recommendations expressed in this Working Paper are strictly those of the authors. They do not necessarily reflect the views of the New Zealand Treasury or the Ministry of Economic Development. The Treasury takes no responsibility for any errors or omissions in, or for the correctness of, the information contained in these working papers. The paper is presented not as policy, but with a view to inform and stimulate wider debate.
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