Effective Marginal Tax Rates: The New Zealand case

Date published

1 May 2018

Downloads

Effective Marginal Tax Rates [1.3 MB PDF]

Effective Marginal Tax Rates (EMTRs) reflect the interaction of the personal income tax scale, main benefits, and supplementary benefits. They show how a dollar increase in gross income translates to an increase in income in the hand (after taxation and the withdrawal of income-tested assistance). This paper presents an algebraic approach to estimating EMTRs in New Zealand. EMTR profiles are then illustrated with examples of hypothetical families. This paper also discusses the design of family and working tax credits in five liberal welfare states, including Australia and New Zealand, as these programmes have at times been suggested as key instruments in addressing the problems associated with high EMTRs (poverty traps).

Also published as New Zealand Productivity Commission Working Paper 2018/01. ISBN:978-1-98-851909-8.

If you would like to access the background material - EMTR spreadsheet and Tax credit spreadsheet - please contact Patrick.Nolan@productivity.govt.nz.

Number 2018/01

JEL Codes H24 - Personal Income, Other Non-business Taxes, Subsidies

Tags Finance and tax

Publications

Filter publications by topic.

Hero image Breaking the cycle of persistent disadvantage girls dashing through the door of their new home

Evaluation report for a fair chance for all inquiry

31 October 2023

The New Zealand Productivity Commission (the Commission) commissioned an independent evaluation of the A Fair Chance for All inquiry.

Multidimensional disadvantage and wellbeing

17 October 2023

A quantitative analysis report final 30July 2023

A quantitative analysis of disadvantage and how it persists in Aotearoa New Zealand

31 July 2023

main image for productivity by the numbers report 2023

Productivity by the numbers 2023

3 July 2023

A family of four walking down on a beach

Statement of intent FY 2023/27

30 June 2023

NZPC Statement of performance expectations 2023 24

Statement of performance expectations FY 2023/24

30 June 2023

Breaking the cycle of disadvantage girls running through the door of their new home

Final report - A fair chance for all: Breaking the cycle of persistent disadvantage

20 June 2023

Causal diagrams to support ‘a fair chance for all’

3 May 2023

An illustration of people traversing two mountain ranges viewed close-up under a magnifying glass

Frontier Firms follow-on review

1 May 2023

Frontier Firms follow-on review: detailed observations

1 May 2023

Three kids jumping into the water from a pier

Annual report FY 2021/22

30 March 2023

Four people transcending a steep mountain ridge helping each other

Working together: Re-focussing public accountability to achieve better lives

17 March 2023

Three large cranes at an industrial port pictured in a sunset

A New Zealand history of shocks

28 February 2023

Containers piled up at a port - economic resilience main image

Issues paper - Improving Economic Resilience

28 February 2023

A learning system for addressing persistent disadvantage

27 February 2023

A boy looking into binoculars publications cover

Summary of submissions on interim report

27 February 2023

Seven kids sprinting on a green field - fair chance for all inquiry main image

Summary of talanoa session on interim report

20 February 2023

Supply chains to the last bus stop on the planet

23 December 2022

Does high-speed internet boost exporting?

21 December 2022

Haemata Wananga Feedback Report A Fair Chance for All November 2022

Haemata wānanga feedback on interim report

15 November 2022

green New zealand map with iconic landmarks - A fair chance for all illustration

The benefits of reducing persistent disadvantage

29 September 2022

Three men on a construction site pointing to the horizon immigration inquiry main image

Evaluation of immigration settings inquiry

1 September 2022

Te puna korero cover image children lined up

Te puna kōrero: Understanding persistent disadvantage in Aotearoa New Zealand

29 August 2022

Economics and Research publication image

Review of the Productivity Commission's Research function FY 2020/22

29 August 2022

Cover Migration firm level productivity Page 01 v2

Migration and firm-level productivity

18 July 2022

Statement of performance expectations FY 2022/23

30 June 2022

NZPC Colonisation Racism Wellbeing Final

Colonisation, Racism and Wellbeing

9 June 2022

Immigration by the numbers

31 May 2022

Planning for prosperity: Transparent and public immigration targets

30 May 2022

Data-led approaches to identifying skills shortages

29 May 2022

Case study: Construction industry and migration

28 May 2022

Case study: Aged residential care

28 May 2022

Immigration - Fit for the future

1 April 2022

Annual report FY 2020/21

15 December 2021

Seven kids running on a field - public feedback cover

A fair chance for all: Where should we focus?

1 December 2021

Together alone: A review of joined-up social services

14 November 2021

Primer to New Zealand's immigration system

8 November 2021

Cover International migration to NZ historical themes and trends

International migration to New Zealand: Historical themes & trends

8 November 2021

Impacts of immigration on the labour market and productivity

8 November 2021

The wider wellbeing effects of immigration

8 November 2021

Immigration policy: International perspectives

8 November 2021

Cover International migration to NZ future opportunities and challenges

International migration to New Zealand: Future opportunities and challenges

8 November 2021

Haemata report on wananga with Maori cover

Wānanga feedback on the terms of reference

27 September 2021

Text Ferret report on public feedback Page 01

Consultation on the Terms of Reference

1 September 2021

Scoping the terms of reference for an inquiry

19 July 2021

Evaluation of frontier firms inquiry

1 July 2021

Productivity by the numbers: 2021

27 May 2021

Exporting challenges and responses of New Zealand firms

21 April 2021

Frontier firms: Four industry case studies

21 April 2021

Picking cherries

20 April 2021

He Manukura - Insights from Māori frontier firms

20 April 2021

Focused innovation policy: Lessons from international experience

20 April 2021

An illustration of people traversing two mountain ranges

New Zealand firms: reaching for the frontier

1 April 2021

Living on the edge: an anatomy of New Zealand's frontier firms

2 March 2021

Benchmarking New Zealand's frontier firms

25 February 2021

Pages from The performance of Maori firms New Zealand Work Research Institute

The performance of Māori frontier firms: a strategic management approach

4 December 2020

Pages from The dairy sector in NZ TDB Advisory

The dairy sector in New Zealand: extending the boundaries

4 December 2020

Migration and New Zealand's frontier firms

30 November 2020

New Zealand boards and frontier firms

4 September 2020

Firm dynamics and productivity growth

31 August 2020

A cost benefit analysis of 5 extra days at COVID-19 alert level 4

7 August 2020

How does monetary policy affect welfare?

30 June 2020

Statement of intent FY 2020/24

30 June 2020

Pages from Frontier firms David Skilling

Frontier firms: an international small advanced economy perspective

28 May 2020

Trust and total factor productivity

28 April 2020

Technological change and the future of work main illustration

Final report - Technological change and the future of work

31 March 2020

Job-to-job transitions and the regional job ladder

18 March 2020

New Zealanders' attitudes towards robots and AI

9 March 2020

Local government insights

19 February 2020

Local government funding and financing main illustration

Final report - Local government funding and financing

16 December 2019

Vacant land taxes and housing supply

1 December 2019

Recovering costs from tourists to pay for mixed-use local services

1 December 2019

Scope and funding of local government

30 November 2019

New jobs, old jobs

16 October 2019

Competition and productivity

16 August 2019

Insight Economics Review of changes to council development contributions policies cover v2

Review of changes to council development contributions policies in four high-growth areas

6 August 2019

Productivity by the numbers: 2019

7 June 2019

How funding and financing affects productivity

1 June 2019

Analysis of local government cost drivers

16 May 2019

Report on land based local tax systems

15 May 2019

Analysis of the current and past use of council rating tools in New Zealand

7 May 2019

Local government funding and finance – Accounting and financial management issues

1 May 2019

Final report - State sector productivity

1 March 2019

Firm dynamics and job creation: revisiting the perpetual motion machine

14 February 2019

Growing the digital economy in Australia and New Zealand

14 February 2019

Innovation in primary healthcare

1 February 2019

The tax-benefit interface

1 February 2019

Productivity in developed Asia-Pacific: A firm-level perspective

24 December 2018

A Note on Construction Worker Migration to New Zealand 1962-2018

14 November 2018

Health care homes: Early evidence in Wellington

1 October 2018

Final report - Low-emissions economy

31 August 2018

Assessing and enhancing New Zealand's productivity

1 August 2018

Insights from recent firm-level productivity research

5 July 2018

Promoting the utilisation of productivity measures

1 July 2018

Can the kiwi fly? Achieving productivity lift off in New Zealand

28 June 2018

Effective Marginal Tax Rates: The New Zealand case

1 May 2018

The Labour Income Share in New Zealand: An Update

20 March 2018

Absorptive Capacity in NZ Firms: measurement and importance

22 February 2018

Residential construction and population growth in New Zealand: 1996-2016

1 January 2018

State sector productivity inquiry illustration

Productivity measurement case study: Courts

1 December 2017

Productivity measurement case study: Ministry of Social Development

1 December 2017

Productivity measurement case study: Police

1 December 2017

The impact of RD grants on the performance of NZ firms

The impact of R&D grants on the performance of New Zealand firms

23 November 2017

Innovation and the performance of New Zealand firms

23 November 2017

Estimating quality-adjusted productivity in tertiary education

1 November 2017

Productivity measurement case study: Early childhood education

1 November 2017

History of efficiency measurement by the New Zealand health sector - Post 2000

1 October 2017

Examining the UK Climate Change Act 2008

29 September 2017

Cover Public Sector Productivity School Quality Adjustment v3

Quality adjusting sector-level data on New Zealand schools

1 June 2017

Social sector productivity: a task perspective

1 June 2017

4 tertiary students underneath some symbols of academia

Final report - New models of tertiary education

21 March 2017

Urban landscape with cityscape in background

Final report - Better urban planning

28 February 2017

Explaining ethnic disparities in bachelor's qualifications

20 February 2017

Cover Geographic proximity and productivity convergence.jpg

Geographic proximity and productivity convergence across New Zealand firms

16 December 2016

The servicification of trade

16 December 2016

Achieving New Zealand's productivity potential

28 November 2016

Subjective wellbeing in New Zealand: Some recent evidence

9 May 2016

What can complexity theory tell us about urban planning?

27 April 2016

Cover History of tertiary education reforms

History of tertiary education reforms in New Zealand

12 January 2016

Productivity Symposium transcript

1 December 2015

Final report - Using land for housing

21 October 2015

More effective social services inquiry illustration

Final report - More effective social services

15 September 2015

Do New Zealand firms catch up to the domestic productivity frontier?

30 June 2015

The impact of R&D subsidy on innovation

29 June 2015

Measuring the innovative activity of New Zealand firms

29 June 2015

New Zealand’s productivity growth

29 May 2015

Firm dynamics and job creation in New Zealand

29 May 2015

The labour income share in New Zealand

5 February 2015

Reform of the UK’s decumulation market

21 January 2015

Regulatory institutions inquiry illustration

Final report - Regulatory institutions and practices

16 July 2014

New Zealand's international trade in services

5 June 2014

Trade over distance for New Zealand firms

5 June 2014

Structural change and New Zealand’s productivity performance

5 June 2014

Boosting services sector productivity illustration

Final report - Boosting services sector productivity

1 June 2014

Infographic How high are New Zealand prices v2

Explaining international differences in the prices of tradables and non-tradables

21 May 2014

An international perspective on the New Zealand productivity paradox

16 April 2014

The prices of goods and services in New Zealand

1 March 2014

Investigating New Zealand-Australia productivity differences

19 December 2013

Pages from NZPC Conway Meehan Productivity by the Numbers

Productivity by the numbers: the New Zealand experience

20 September 2013

Housing affordability in New Zealand

16 July 2013

Better local regulation inquiry illustration

Final report - Towards better local regulation

13 May 2013

The effect of Auckland's Metropolitan Urban Limit on land prices

28 March 2013

How integrated are the Australian and New Zealand economies?

28 March 2013

Final report - Strengthening trans-Tasman economic relations

30 November 2012

Final report - International freight transport services

24 April 2012

Housing affordability inquiry illustration

Final report - Housing affordability

30 March 2012

Load more publications