
Why only 2% of Chinese pay any income tax - known
https://www.economist.com/china/2018/12/01/why-only-2-of-chinese-pay-any-income-tax
======
porpoisely
Many here are wondering how the chinese government can finance itself when so
few people pay income tax. There are many ways for a government to raise funds
besides the income tax. People forget that we didn't have income tax in the US
for much of our history and a few states still have no income tax.

We've become indoctrinated into thinking income tax is the norm. Nobody
questions it but for much of US history, people viewed taxing work as an evil.
And income taxes was a temporary tax instituted to fund wars ( civil war ).
For most of american history, we didn't pay income tax.

~~~
bilbo0s
Just to be clear here though, the Chinese do pay income tax. They just don't
call it income tax.

The government concocted a scheme that is a bit involved, and complicated, and
clever. There are actually a lot of different sorts of taxes VAT, sales, etc
etc etc. Some optional, some not.

In terms we'd be familiar with, the "income tax" over there is charged on the
business side. Imagine that you didn't have to pay income tax, but your
employer cut your salary 30% because he had to pay a "social harmonization
insurance fee" or some such nonsense for each of his employees. The employees,
of course, would never see that, but it still, to my mind anyway, is
effectively an "income tax".

It really is rare to find a developed nation where people get away from income
taxes. Even when you do appear to find such a nation, if you examine the
system closely enough, you can usually find how they're paying it.

~~~
cthalupa
> Imagine that you didn't have to pay income tax, but your employer cut your
> salary 30% because he had to pay a "social harmonization insurance fee"

You mean payroll taxes?

~~~
bilbo0s
If payroll taxes were 100% the responsibility of the employer, and included
the employee's income tax obligation. So in the US the taxes are effectively
split between the employer and the employee, but in China they're basically
all on the employer with a trivial amount charged to the employee.

One of the gotchas if you plan on operating a business in China at all.

~~~
conanbatt
Economically speaking, payroll taxes are always a burden on the employee, not
on the employer, even if the employer is the one writing the check.

~~~
aoeusnth1
Doesn't that depend on the relative price sensitivity of the employer vs. the
employee - namely, the elasticity of labor demand / supply?

~~~
conanbatt
That is correct, its just that employees are a lot less inelastic than
employers, for multiple practical reasons.

------
awsedr58479
Disclosure: using a throwaway giving the sensitive nature of the topic

I've always found very curious to not hear more about taxes in China.

It is a mystery to probably no one who have spent a certain amount of time in
China that a very few amount of people are actually paying taxes. There is a
few regular patterns on how they achieve evasion, but in short it is a mix of
large amount of cash/cash payments, and close to 0 actions on whatever
personal bank transactions. The later has always amazed me. While some
countries will start tracking each transfer > $1,000, Chinese banks will
probably not even bother contacting you for a transaction of $10,000 (in RMB,
foreign currencies being quite regulated) or even probably more. And yes, you
can buy a car or a house with this money, in Cash. No question asked. There
are also some easy ways to use some complex/criminal networks of money
laundering in order to get the RMBs out of China through shell companies often
in tax heavens.

We all know that China's CCP is gathering a very consequent amount of data
about virtually everyone entering the territory (or more). But they seem to
struggle at implementing actions.

This would explain the government's efforts to reduce the amount of cash
circulating in the country, and encouraging (via strong investments) mobile
payments (wechat/alipay). This would also explain the very short upcoming of
the "social credit score" and I've found astonishing that no one every
mentioned taxes on that matter.

Now, open list of [somewhat naive and genuine] questions: \- Where does the
government's money comes from? [it appears to me to be mostly inflation, on an
underlying crazy monster bubble] \- Can a government subsist with a population
not paying taxes? [apparently not, i.e social credit score] \- How will the
people react when they will realize they have to give away XX% of their pay
when they never gave any $$? \- [last but not least] Is that somewhat
comparable to, say, the US [or other western countries] few generations
earlier? If yes, are we paying the bill for these generations? If yes, should
we start worrying? [Are taxes going to keep raising indefinitely along with
debt?]

I'm sorry for a not so organized answer but I wanted to express a few comments
about things I've seen myself. The [] answers of the questions are personal
guesses/notes and I would love to hear more accurate answers from people with
better knowledge on the topic.

~~~
adinobro
I'm living in China at the moment. Feel free to ask any questions.

Here are some points that you might find interesting:

1\. There is an income tax but there is no income tax return. If you pay too
much you don't get anything back. You can pay a fine if you don't pay enough.
This means you have to work with finance and do lots of paperwork to reduce
your taxable income. Not always worth the effort.

2\. You can choose to pay sales tax or not. It is optional. Generally,
individuals don't pay sales tax while companies do. Companies have to prove
that they spent money and they do this by collecting "tax receipts". Some
companies give everyone a tax receipt. Some companies only give it on request.
The machine that makes the tax receipt takes money from the company in real
time and transfers it to the government. This cannot be faked BUT they can be
traded ... sometimes. VAT/Sales tax is also different for different industries
(I think food is about 5% while electronics is more)

Basically, individuals have more freedom than many western countries BUT
companies have a lot more restrictions. It is a very clever system that
"mostly" works.

~~~
Buge
If you can choose whether or not to pay sales tax, why would anyone ever
choose to?

~~~
rtpg
No sales tax => no receipt

I went to a restaurant and they offered us a drink at the end of the meal in
exchange for no asking of receipts

~~~
jacquesm
That goes a lot further: no receipt: no taxes at all, not just no sales tax.

------
rishav_sharan
It is a similar case in India with only 1.7% of households paying the income
tax. [https://timesofindia.indiatimes.com/business/india-
business/...](https://timesofindia.indiatimes.com/business/india-business/toi-
budget-2018-special-income-tax-payers-in-india-are-
minuscule/articleshow/62538779.cms)

~~~
sytelus
NPR article on the topic:
[https://www.npr.org/sections/parallels/2017/03/22/517965630/...](https://www.npr.org/sections/parallels/2017/03/22/517965630/why-
do-so-few-people-pay-income-tax-in-india)

Summary: Large portions of people are involved in small mom & pop shops. Most
of these shops do business in cash. Most even don't register with tax
department. They use bribes to avoid getting fines.

~~~
sbmthakur
> They use bribes to avoid getting fines.

Yup. That's where corruption actually starts in India.

~~~
cies
Sure, it starts at the pop'n'mom shops. /s

------
EZ-E
Back when I worked in China, avoiding taxes was super common. I even received
SMS spam advertising consultancy to companies about how to avoid them. The
company I worked in wired my salary in multiples bank transfers from different
accounts. The after taxes salary ended up only 1-2% less than the one before
taxes because the declared&taxed income was just around 1000$. The bank never
asked questions.

In China, companies are in charge of paying the income taxes for you but they
usually have the means to dodge it, and the workers are complacent since they
benefit from it too.

If China starts cracking down on it, lots of Chinese with high leveraged
mortgages (up to 70% of their income sometimes) will be in trouble.

~~~
dis-sys
Individuals are required to declare annual income on their own once they earn
anything above 120K CNY (~15K USD).

~~~
NedIsakoff
The Constitution of the People's Republic of China also guarantees freedom of
speech, press, assembly, and association.

------
hhtest
Actually, the gov is taking actions and it's quite strict. One example is, my
friend's bank account was AUTOMATICALLY withdrawn a couple hundred RMB from
last month, to pay the tax AUTOMATICALLY.

Lived in the US for a couple of years, I can't imagine IRS doing that to my
bank account

Also, to the @awsedr58479 's question: Chinese consumption tax is crazily
high. Most people don't know they are paying it since it's structured into the
price tag. Also the companies are paying quite a lot of taxes

~~~
awsedr58479
16% VAT isn't that high to my knowledge.

As seen in other comments, middle classes are the one who will likely pay the
most. Lots of "legit" companies/workers are paying income taxes; they
represent the 2%.

~~~
isostatic
The left often argue that VAT is a regressive tax, with "poor" (by which they
mean low income, not low wealth) people paying more as a percentage of their
income than "rich" people.

I'm not entirely sure why, given the number of basic items that don't attract
vat (rent, train fares, food).

Buy a new car though and you're paying tons.

~~~
CiaranMcNulty
Because the % of income spent on goods decreases as earnings increate.

Many high-earners aren't 'spending' their money, they're investing it to make
more money

Whereas low-earners are spending their pay cheque before the next one arrives.

------
mmmBacon
From the article :

 _The threshold at which tax becomes payable was raised from 3,500 yuan ($503)
to 5,000 yuan a month on October 1st. The finance ministry says the number of
people liable for income tax should fall to 64m as a result._

Is the article correct that only 64M out of 1.1B people will pay income tax or
did they miss an order of magnitude? Just trying to calibrate since only 64M
people making ~>$750/month seems like a low number for China.

~~~
jerrre
> 64M people making ~>$750/month

I read it as 64M people making enough to pay ~>$750/month in taxes

------
azinman2
So then how does the gov have any money to do these giant infrastructure
projects?

~~~
eksemplar
They tax/own companies.

I mean, it’s obviously much more complicated, but that’s the gist of it.

------
dis-sys
I bought a German made car last year, its drive away price is about $60k USD
in the US, I paid $120k for that in Shanghai - 25% tariff, 17% VAT, 25% sales
tax, 10% vehicle tax, that is 77% combined. Trump choose to focus on the 25%
tariff part and complains that it is difficult to sale American cars in China.
What Trump didn't want to tell is the other 52% that apply to all cars
including domestic brands.

On top of those taxes, to get the new car registered you need a number plate
right? the number plate is auctioned monthly, every month you have about 5%
chance to secure the number plate even if you are willing to pay the current
market price of $16k. They don't call it a tax, but it is obviously a tax
collected on every car owner in Shanghai. statistically, you can keep bidding
every month for 2 years and still couldn't get your car registered. and no
there is no way to buy such number plate at $16K USD from other owners/the
black market, the only alternative option is to pay $60K USD to the gov to get
a motobike number plate and convert that to a regular car number plate. Again,
it is a tax.

Once you have everything above sorted out, congratulations! time to pay tax
for petrol! For every $1 you spent on petrol, around 50% of that goes into
taxes. Time to hit the roads right? Time to pay the toll roads then. In some
provinces, we are talking about toll stations every few kilometers. Too
expensive to even use the new car? Fine, just park it somewhere - $200k USD
for a car park in my building, as expected, don't forget the $50k
taxes/levies/agent fees/stamp duty on top of that as well.

Life in China is like playing video games in Expert mode and those numerous
taxes is by far the most significant reason.

~~~
russum
It seems couple of "k" characters are to be removed from some of those
numbers.

~~~
scbrg
While the numbers sound outrageous, they seem to be at least roughly the same
as reported elsewhere.

"The average price for a Shanghai plate soared to 75,000 yuan ($12,000) at the
city’s license plate auction over the weekend, roughly equal to the retail
price of a brand new, fully loaded Geely MK-II sedan." [0]

"Over at a new 1,700-household community in Xuhui district ostentatiously
named East Manhattan, its 500 parking spaces cost 1 million yuan each." [1]

[0] [http://www.theurbancountry.com/2013/02/shanghai-license-
plat...](http://www.theurbancountry.com/2013/02/shanghai-license-plates-cost-
same-as-brand-new-fully-loaded-sedan.html)

[1]
[http://www.globaltimes.cn/content/963391.shtml](http://www.globaltimes.cn/content/963391.shtml)

------
gniv
The article doesn't say how much of the budget is from income taxes, but it
cannot be a lot if only 2% pay taxes.

In the US income taxes are almost half of budget revenues.

~~~
sanxiyn
> The article doesn't say how much of the budget is from income taxes

It does. It is 8%.

~~~
samspenc
That's interesting - because it begs the question, if income taxes are only
contributing 8% to the coffer, where is the country's revenues mostly coming
from?

~~~
gammateam
Nationalized companies and tariffs

The party owns like 15% of every company

~~~
Iv
As well as ~100% of 3 of the 4 largest companies in the world:

[https://en.wikipedia.org/wiki/List_of_largest_companies_by_r...](https://en.wikipedia.org/wiki/List_of_largest_companies_by_revenue)

(and most of the biggest companies in China as well)

~~~
apexalpha
Sweet lord look at that difference between the Chinese petroleum and Dutch
Shell in terms of revenue / employees.

~~~
badpun
Shell most likely contracts out most of the workload to subsidiaries and
external companies (ex. franchise gas stations).

------
netcan
So...

" _Salaried professionals in big cities have long complained that they bear an
unreasonable share of the tax burden. That is because firms are legally
required to withhold a portion of salaries in taxes. The rich, whose income
usually does not come in the form of a pay cheque, and those in the informal
economy._ "

Economists and politicians justify tax setups in terms of efficiency or
fairness. Ultimately though, practicalities are the main authors. ... whatever
yields the highest tax in a given economy.

The reason tarrifs & trade taxes were such a big deal is that ports are
centralized & taxable. Way back in the day, rivers, roads and bridges made
good tax collection points. Land taxes were also practical.

In advanced economies, income taxes have been practical because enough income
is earned as salary at firms large enough to be regulated. Firms are
structured around avoiding corporate tax, not income tax.

China is at the point now where it's _practical_ to tax income.

The west is now at a point where the ultra-rich are an attractive tax target.
But, trying to apply the income tax system to them is not practical for the
same reason it is practical in China.

~~~
isostatic
> Land taxes were also practical.

Why aren't they now?

~~~
speleding
Actually, in a previous article in the Economist on taxes, they claimed taxing
land and real estate is a very good non-distorting way to levy tax, and urged
western governments to do it more.

My country (the Netherlands) has an estate tax of sorts and at least one
problem with it is that the legal system is getting clogged by hordes of
people challenging the government over the valuation of their property (you
pay a percentage of the property value).

~~~
netcan
Good point. Iirc correctly, they suggest taxing _land_ value, excluding the
buildings on it. So, a parking lot is taxed like the skyscraper beside it.

This is "non-distorting" and efficient in an economst-ey sort of way. It will
however, strongly affect land use and make certain uses immediately unviable.
Golf courses, amusement parks...

The efficiency of moving to such a system is premised on encouraging
underdeveloped land to be immediately developed. Say a skyscraper is 80%
building, 20% land. That's tax efficient in that world.

It'd be a hard transition.

~~~
isostatic
Not sure why a golf course or amusement park would be unviable. Alton Towers'
910 acres is worth at most 3.8 times that of this 240 acre £2.2m farm [1], or
£8.4m.

Total UK land is worth £5394b [2], and total budget revenue is £800b,
requiring a 15% land value tax to cover total spending.

At 15% LVT, Alton Towers would attract taxation of £1.2m a year, spread over 2
million visitors, or about 64p on the ticket price.

Currently tickets are in the £30-60 range, so already attract £5-10 of vat.

A land value tax will actually mean that Alton Towers tickets would be
cheaper, and as they wouldn't be paying things like national insurance
contributions, overheads would be cheaper.

[1] [https://www.rightmove.co.uk/commercial-property-for-
sale/pro...](https://www.rightmove.co.uk/commercial-property-for-
sale/property-68170718.html) [2]
[https://www.ons.gov.uk/economy/nationalaccounts/uksectoracco...](https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/bulletins/nationalbalancesheet/2018)

------
baybal2
Guys, you have a huge misunderstanding there. While income tax may be paid by
few, China, just like many ex-bloc countries, collects significant social
security and pension contributions that are often bigger than ones income tax.
This is a de-facto because Chinese never see the benefit of their social
security and pension contributions.

------
jeffdavis
A lot of people in the U.S. don't pay net income taxes either, about 44%
accoeding to [1].

[1] [https://nypost.com/2017/04/18/almost-half-of-americans-
wont-...](https://nypost.com/2017/04/18/almost-half-of-americans-wont-pay-
federal-income-tax/)

~~~
gok
But that's because they don't owe anything, not because of evasion

~~~
mikeyouse
That obnoxious statistic always excludes payroll tax as well. Not to mention
that the "Lucky duckies" is one of the most rightly ridiculed tropes in recent
memory, arguing that poor people in the US have it _too good_ :

[https://web.archive.org/web/20030626024327/http://www.tnr.co...](https://web.archive.org/web/20030626024327/http://www.tnr.com/etc.mhtml?pid=475)

------
justfor1comment
Runaway thought: Could all taxes be removed and replaced with the government
simply printing money for its initiatives? Income tax is such that the rich
are supposed to pay more than the poor but that does not happen in practice.
The rich hire smart people to find loopholes and avoid taxes. Sales taxes are
such that the government can dissuade people from harmful activities like
smoking by levying heavy taxes on it. An alternative could be to print money
for initiatives that the government wants to support like nicotine patches for
example. The US government has already done something similar before with
quantitive easing without much impact to the economy. So there is a
possibility that this might work.

------
HillaryBriss
> _... workers skimp on taxes because they do not trust the government will
> spend their money wisely. Mr Liu cites the Belt and Road Initiative, a
> global infrastructure-building project, as an indefensible giveaway to poor
> countries ..._

interesting. sounds kinda like what some US red-state voters think.

also: US media tend to portray the Belt and Road Initiative more like a plan
to dominate the world than a giveaway to poor countries. quite a difference in
perspective here.

~~~
swuecho
Us media is from the strategic view. for the Chinese who are barely make a
living. It is hard for them to be happy when their country are pouring money
to other nations.

~~~
kkarakk
does it really matter what chinese citizens think? they are under their govt's
thumb

~~~
chillacy
Why bother with propaganda if you don't care what your citizens think?

~~~
pmontra
Thinking about the history of the world, brain washing people since they are
born and having no opposition is much a safer approach than crushing
occasional revolts.

------
JoeAltmaier
Not as bad as all that. Only 180+M people earn enough to pay. At 28M paying,
that's closer to 16% of those who _should_ pay that are paying (not 2%)

------
zangrc
[https://www.economist.com/china/2018/12/01/why-only-2-of-
chi...](https://www.economist.com/china/2018/12/01/why-only-2-of-chinese-pay-
any-income-tax)

------
fjsolwmv
Modern Monetary Theory argues that income tax (and alll other direct taxes)
are unnecessary because the government can riase fund via fist money and its
indirect taxation via inflation.

This is effectively a tax on the entire economy and challenges every sector or
segment to grow price (including labor wages!) or lose value.

~~~
RobertoG
That's not what MMT argue precisely.

The idea is that (for sovereign governments with its own currency) the
government is the issuer of money and logically doesn't need to get money from
the population or to borrow it in any market.

Taxes have three possible purposes: create demand for the currency in the
population, discourage some kind of spending or managing inflation.

MMT stress that almost the only limit for government spending is inflation and
that the concept of 'public debt' is irrelevant. What makes a country rich or
poor it's not how much money have but what resources (natural resources,
population, knowledge, infrastructure..) it has. The obvious corollary is that
the way of improving the life of the future generations is not 'saving' or
reducing the 'public debt' but investing in the country now.

See a short overview here: [https://theconversation.com/explainer-what-is-
modern-monetar...](https://theconversation.com/explainer-what-is-modern-
monetary-theory-72095)

For example, related to the subject at hand, if the Chinese government wanted
to start a big infrastructure project, being the issuer of the currency, it
doesn't need any kind of external financing or taxes. What could happen is
that if the new project represent a big drag in the total economy, inflation
would appear. A possible way of controlling this inflation is by retiring
money from the economy by taxation.

------
swuecho
in china, a big part is house buying tax in disguise of bubbled land price.

well, if everyone pay tax as they should in theory, the housing bubble would
not be that crazy. people ducked taxes believing they save the money and then
give them back when buy house. who are the cleverest?

~~~
netheril96
Even if you don't duck taxes, you still face the high house prices, unless
everyone else magically agrees to not duck taxes too.

------
vidoc
potentially because 98% of the society is getting wages deemed as "below the
taxable" level ?

~~~
TomMarius
Possibly, but without the Western subtext of being too poor

------
dools
Income tax is stupid ... we want people to work. Why discourage it?

~~~
CiaranMcNulty
Progressive income tax retains the property that the higher your salary is,
the more you take home

~~~
richardknop
But there are diminishing returns which is not exactly motivating. The way to
think about it is, imagine you would work 20% harder, but instead of 20% extra
take home money you only get 10%. And it gets more skewed progressively which
discourages trying hard at some point. People just stop trying as they don't
see the reward as good enough for working harder.

~~~
SmellyGeekBoy
Evidence doesn't seem to suggest that higher earners "stop trying", but above
a surprisingly low threshold it's cheaper to pay someone to organise your tax
affairs for you and move your money through various loopholes to (legally)
avoid paying taxes.

Any government plans to "tax the rich" end up hitting the people just below
this threshold the hardest (usually small business owners) while
multimillionaire corporate CEOs with various offshore holding companies
continue to not pay their fair share.

~~~
richardknop
Ok but that kind of proves my point. They are avoiding taxes and using
loopholes and tax havens precisely because it is unfair that their tax rate is
increasing the more they earn. At least they feel it’s unfair to them. Why not
solve the problem by having a simple flat tax? Everybody pays the same amount,
let’s say 20%. Then it becomes much easier to come after tax dodgers on moral
grounds. They no longer have an excuse of them being unfairly treated as their
tax is identical to everybody else.

~~~
sumedh
> At least they feel it’s unfair to them.

and yet you have people like Buffett and Gates who say the exact opposite that
they should be taxed more. So who is right the other rich people complaining
about taxes or Buffett/Gates saying they want more taxes?

------
cft
US had no income tax until 1913- that's what made the Golden Age of America
possible, and created the foundation for its 20th century wealth. In a similar
fashion, China is benefiting from the low tax burden, getting ahead of the
rest of the world.

~~~
Kaveren
Why was pre-1913 the "Golden Age of America"? The US did very well for itself
post-WWII, and we're in a pretty good place today.

~~~
cft
[https://en.wikipedia.org/wiki/Gilded_Age](https://en.wikipedia.org/wiki/Gilded_Age)

~~~
zorga
That's not a golden age, that's a bad era of American history where industries
were corrupt and dominated by monopolies, our best times were post WWII when
our incomes taxes were the highest ever, that's what created the middle class
and the American dream.

~~~
TangoTrotFox
Your argument fails to the same issue as the one you're responding to. There
are countless countries with both extremely high and extremely low tax rates,
but here seems to be little connection in general to economic/social
development based on tax levels.

I think it all has to do with something very simple: opportunity +
nationalism. Post WW2 US was basically a land of endless opportunity spurred
on by great nationalism. The reason nationalism is important is because it
helps align motivations beyond just profit. Now a days most large corporations
wouldn't think twice about firing all their domestic workers if they could
profitably replace them with cheaper workers in another country. This is
ostensibly good for the corporation, but not so great for the country, and
worst of all for the workers left behind. Aside from that social bond there is
also a practical commercial one. When individuals in a nation strongly bias
towards domestic products, this incentivizes domestic production. E.g. - 'Made
in the USA' was a major selling point.

But most importantly, I think you'll find this pattern of opportunity +
nationalism is something that maps pretty well to national success in general.
The US in its boom times, China today, the rebuilding of South Korea, Japan,
etc.. What triggers the eventual decline there though is something far more
difficult to answer. E.g. the US and South Korea continue to grow, while Japan
ended up facing (and continuing to face) decades of stagnation.

~~~
sonnyblarney
"There are countless countries with both extremely high and extremely low tax
rates, but here seems to be little connection in general to economic/social
development based on tax levels."

This is not true.

If you draw a map of low-tax v high-tax countries there's a strong correlation
between high taxes and higher GDP.

A few countries have high taxes and low prosperity.

But the one's with low taxes and high prosperity are universally 'oil rich' or
'gambling rich'.

There are no countries with almost zero taxes that are very prosperous at all.
Switzerland has lower taxes, but not that low. Same with Monaco, they have
very high taxes outside of income.

As far as 'nationalism' \- it was more the fact that American industry was
intact, and everywhere else was burned to the ground. And yes - 'the spirit'
of workers and managers was very important, I would say Nationalism was part
of it, but it was not the foundation. Yes, everyone was a 'leave it to Beaver'
believer until rock and roll and cynicism came along.

South Korea and Japan 'boomed' just like Europe did because they were
recovering from a war where investment opportunities abound, and are obvious.

China in much the same way. If there are still zillions without homes, you can
easily build more homes to create value. No highways? Build them. Easy, no
brainer investments.

------
Markoff
I find it obscene people in west are fine with idea of having their income
taxed and then with this taxed money they go and pay for products/services
taxed again with VAT, why people consider this normal?

------
swuecho
china is so different from west countries.

for example, in china, when you sell stock, there is no tax on profit gain.
however, there is a stamp tax.

~~~
xmly
Dude, you really need to learn how western countries work.

Majority of policies in China, especially economic policies, China learns from
either HK or Taiwan, then they are learning from either US or UK.

Like the stamp tax you mentioned, you know what it is if you trade stocks in
HK or UK.

------
situomeng
I suppose this is the data for salary. If you check out the income
distribution, most people simply don't make that much money to reach the tax
line

~~~
freddie_mercury
That's not what the article or the Chinese finance ministry say. Didn't you
read the article?

~~~
sasaf5
The article is paywalled. Any TL;DR?

~~~
supremerumham
[https://outline.com/vfgWnR](https://outline.com/vfgWnR)

should be able to see it now!!

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xmly
Read the article. Could not believe The Economist would publish this amateur
article.

Very naive on economics.

~~~
garmaine
You must not be very familiar with The Economist.

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xmly
In China, there is no property tax either. HAHA.

A lot of differences between US and China.

2% pay the income tax is because the income is really low, that is why the
jobs are moving to China. The US is losing jobs only because US labors are
paid too high.

In my opinion, it is just due to economical stage and structure. China's
salary is rising, so a lot of jobs are moving to other countries, like
Vietnam. In the future, China government would more rely on income tax like
US. But it would take another 15-20 years in my opinion.

~~~
wjnc
In my little country in Western Europe starting in World War 2 all those with
income from labor have paid wage taxes. The first income tax was introduced in
1915. Before that in the 16th century: the first value added tax. Most revenue
up until 1915 came from value added taxes and levies. That goes to show that
(comparatively) low taxes is not a function of low income.

~~~
xmly
So there is so many tax genius: [https://www.bankrate.com/finance/taxes/how-
to-pay-no-federal...](https://www.bankrate.com/finance/taxes/how-to-pay-no-
federal-income-tax.aspx)

