7 ms·

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 bes

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.

fjsolwmv 8y ago
Black Americans whose ancestors paid 100% income tax dispute your notion that USA was built without work tax or that it was regarded as evil by most people in power.
- bilbo0s 8y ago
  Technically, they did pay tax as the owners of the slaves would have been obliged in some states to pay certain fees based on outputs. (And a lot of times even on the inputs.) No one ever evades taxes. As horrible as this may sound, that kind of included blacks.
HappyRobot 8y ago
An episode of Planet Money[0] mentioned that some economists believe income tax is not ideal. Their thinking was that taxation usually discourages the action that is being taxed. Work shouldn't be discouraged. The proposed solution in the episode was to replace the income tax with a carbon tax. Encouraging people to cut down on their carbon footprint with taxes that wouldn't be more than their current income tax. [0] https://www.npr.org/sections/money/2018/07/18/630267782/episode-472-the-one-page-plan-to-fix-global-warming-revisited https://www.npr.org/sections/money/2018/07/18/630267782/epis...
- kristofferR 8y ago
  A carbon tax on people? How would that work without massively invading people's privacy, it seems like it would require tracking everything people do and consume? (I don't have time right now to listen to the episode unfortunately).
  - danharaj 8y ago
    Mostly just tax their cars and consumer products.
    - kristofferR 8y ago
      Car taxes here in Norway are already sky high for polluting cars, often more than 100% of the non-taxed car value. Fuel prices are around $7.5 USD per gallon. Yet, car taxes amounts to only 44 billion NOK in income for the state per year (it was 70 billion NOK in 2007, before electric cars became popular here) [1]. The income/fortune tax on the other hand amounts to 248 billion NOK in income to the state per year [2]. Car taxes are nowhere near sufficient, and will never be. If taxes were increased to even more per polluting car, it would just drive even faster adoption to electric cars and a even more rapid car tax income decline. Replacing the income tax with a personal car carbon tax can't work. [1] https://www.aftenposten.no/okonomi/i/Vy9xV/Bilavgiftene-har-sunket-25-milliarder-kroner-pa-ti-ar https://www.aftenposten.no/okonomi/i/Vy9xV/Bilavgiftene-har-... [2] https://www.regjeringen.no/contentassets/62bcdd722d344cd0ac6b5361471f825c/faktaark_inntekter_utgifter.pdf https://www.regjeringen.no/contentassets/62bcdd722d344cd0ac6...
      - danharaj 8y ago
        > If taxes were increased to even more per polluting car, it would just drive even faster adoption to electric cars and a even more rapid car tax income decline. Sounds like a good way to lose tax revenue.
        kristofferR 8y ago
        Exactly my point. However, I read the transcript of the podcast now, and it turns out it doesn't actually talk about replacing the income tax with a carbon tax, but rather reducing the income tax and offsetting the reduction with an increase of carbon taxes. That on the other hand is a great idea, it's much like we're doing in Norway already.
bilbo0s 8y ago
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 8y ago
  > 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 8y ago
    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 8y ago
      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 8y ago
        Doesn't that depend on the relative price sensitivity of the employer vs. the employee - namely, the elasticity of labor demand / supply?
mempko 8y ago
All sovereign governments which have their own fiat currency finance themselves by simply spending money into existence, including the USA. The purpose of taxes isn't to finance directly but to provide a demand for the money (I need dollars because I have to pay taxes) but also discourage/encourage certain behaviors. This idea that taxes are directly used to pay for things is completely wrong (except for the case where the government doesn't have it's own money, like in the EU).
JohnWilcox 8y ago
This is going to be a bit of a challenging point for many, so if you are one of those feeble minded types that gets offended not only on your own, about all the things in the world you have been trained to be offended by, but also project your offense on others ... this is not a discussion you will be prepared for and I ask you to kindly not read on, since it will upset feeble sensibilities. In America, people have an inalienable, God given right to free speech. I understand that is not the case anywhere else on the planet, but consider stopping the abuse cycle by not perpetuating the interests of those who deny you the freedom of speech. --------- Please stop reading here if you are too weak for free speech ---------- Even beyond the fact that the involuntary income tax that is used to fund the lives and lifestyle of others is slavery, people don't realize just how few people also actually pay net income taxes of any significant portion in the USA. Even most of those who pay any income taxes whatsoever, which makes up about 112 million, don't realize that what they pay doesn't even cover what they consume, like if you contributed $10 to a garden party that cost $100 per head in costs, because you forced those high expenditures. Unfortunately, those types ... you know them ... feel justified and rationalize their entitlement because they "paid their taxes". Unfortunately for all of us, things simply don't add up and unless you are willing to freely engage in this type of thing to support others at your expense, you are being enslaved on a bell curve on an income scale. Peak tax slavery is probably somewhere around the $60-70k level where you are most heavily burdened by the crush of taxes and get the least benefits. By estimate, at that level you are probably roughly 20% slave as an American. It's a bit difficult to peg down exactly without thorough investigation, but if you remove all the government employees, who are not only not net contributors, but negative "contributors", aka, cost centers, to income tax receipts; and you then control for those who contribute some significant number higher than the cost of what they consume, you are left with very similar numbers as in China ... if those numbers can even be believed, which they far more likely than not can not. Only around 3% of all income tax payers in the USA, or less than 1% of all residents of the USA actually make net positive contributions to the tax burden. I know this is not going to be well received because it's contradictory to the indoctrination and I say it as someone that is no fan of the elite and wealthy in general, but it's fact that somewhere around 99% of American society is living off or freeloading on 1% of the population. People don't really know that, and are not told that, and it's also clearly obviously hidden from them, but it is more or less reality. Even if the rate were as high as 2% of the population, which is simply in no way possible, that still would not change the ramifications. Would 2 people supporting 98 freeloaders make any significant difference? It's quite stunning actually and some people simply cannot and do not want to accept it for varying reasons. It's really really not a good situation regardless of how you look at it; whether by the number of people who are not contributing members of society, or the fact that the government has enslaved the middle and lower upper class people to support both the unproductive members of society and use them to further enrich and empower the elite by taking their slaves' money from them against their will and giving in to the non-contributing masses in order to essentially buy their authoritarian power through democracy. It' essentially what is going on right now with the immigration debate, millions of low wage foreign people are going to enrich and empower the elite against the middle class that is being gutted and democracy fracked through immigration. Ironically, it's not really all that different of a model than the slavery the British and Spanish aristocrats and elite introduced to the Americas, import slaves to undermine providing a fair wage and increase their profits and power. Same model, just a bit of a pivot to outsourcing the slave management and from taking large profits on a few slaves to taking lower profits from many more less, outsourced slaves. Because in the end, income tax is slavery, whether it was 100% income/labor tax in 19th Century Brazil, Hispaniola, etc, or whether it was the indentured servitude and company stores, or whether it was sharecropping, ... a Progressive shift from high margin, high management cost, low volume; to low margin, low management cost, high volume. But we are largely the beneficiaries of this slavery here, so most of us cannot see it or simply do not want to see it. What you don't accept can't hurt you, of course.
timdavila 8y ago
> 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. Do you mean federal or state income tax? I am in one of the states with no tax paid to the state (Texas) but rest assured we still pay federal income tax as well as higher property and sales tax to make up for it.
- max76 8y ago
  He almost certainly meant a few states do not collect state income tax. I'm in a state with no state income tax as well (Washington). I've lived in states with income tax before. As a single individual with high income that rents their primary residency I greatly benefit from living in places without income tax compared to places with even modest income taxes.
beginningguava 8y ago
we should go back to that, the federal government is essentially cancer and money is the glucose that feeds it's constant growth. The initial idea of small federal government with states rights was brilliant because people could vote with their feet. If you're a progressive who supports the right to abortion, legal weed, and government health care you could move to a state that supports those things and gladly pay that states higher income taxes to fund it. In my mind that system is far superior to having the federal government shove laws down the states throats and prevents the divide between our citizens becoming so massive as we've seen over health care and taxes at the federal level.
- GcVmvNhBsU 8y ago
  It’s always interesting when people think the initial idea of a strong state government and weak federal government was such a great idea, without acknowledging that the US existed under that regime for some time, realized it didn’t work well, and moved on. Those who don’t study history and all that.
snackbugs 8y ago
The US also didn't have a national highway system and other social services for much of its history. Interesting.
conanbatt 8y ago
Also take into account the state spent 5% of GDP in the 1800's. That would barely pay for medicare today. Income taxes are, however, pretty progressive, relatively easy to levvy and practical. They are not particularly bad taxes. Sales taxes, or VAT are worse in my opinion.

fjsolwmv 8y ago

Black Americans whose ancestors paid 100% income tax dispute your notion that USA was built without work tax or that it was regarded as evil by most people in power.

bilbo0s 8y ago
Technically, they did pay tax as the owners of the slaves would have been obliged in some states to pay certain fees based on outputs. (And a lot of times even on the inputs.) No one ever evades taxes. As horrible as this may sound, that kind of included blacks.

HappyRobot 8y ago

An episode of Planet Money[0] mentioned that some economists believe income tax is not ideal. Their thinking was that taxation usually discourages the action that is being taxed. Work shouldn't be discouraged. The proposed solution in the episode was to replace the income tax with a carbon tax. Encouraging people to cut down on their carbon footprint with taxes that wouldn't be more than their current income tax. [0] https://www.npr.org/sections/money/2018/07/18/630267782/episode-472-the-one-page-plan-to-fix-global-warming-revisited https://www.npr.org/sections/money/2018/07/18/630267782/epis...

kristofferR 8y ago
A carbon tax on people? How would that work without massively invading people's privacy, it seems like it would require tracking everything people do and consume? (I don't have time right now to listen to the episode unfortunately).
- danharaj 8y ago
  Mostly just tax their cars and consumer products.
  - kristofferR 8y ago
    Car taxes here in Norway are already sky high for polluting cars, often more than 100% of the non-taxed car value. Fuel prices are around $7.5 USD per gallon. Yet, car taxes amounts to only 44 billion NOK in income for the state per year (it was 70 billion NOK in 2007, before electric cars became popular here) [1]. The income/fortune tax on the other hand amounts to 248 billion NOK in income to the state per year [2]. Car taxes are nowhere near sufficient, and will never be. If taxes were increased to even more per polluting car, it would just drive even faster adoption to electric cars and a even more rapid car tax income decline. Replacing the income tax with a personal car carbon tax can't work. [1] https://www.aftenposten.no/okonomi/i/Vy9xV/Bilavgiftene-har-sunket-25-milliarder-kroner-pa-ti-ar https://www.aftenposten.no/okonomi/i/Vy9xV/Bilavgiftene-har-... [2] https://www.regjeringen.no/contentassets/62bcdd722d344cd0ac6b5361471f825c/faktaark_inntekter_utgifter.pdf https://www.regjeringen.no/contentassets/62bcdd722d344cd0ac6...
    - danharaj 8y ago
      > If taxes were increased to even more per polluting car, it would just drive even faster adoption to electric cars and a even more rapid car tax income decline. Sounds like a good way to lose tax revenue.
      - kristofferR 8y ago
        Exactly my point. However, I read the transcript of the podcast now, and it turns out it doesn't actually talk about replacing the income tax with a carbon tax, but rather reducing the income tax and offsetting the reduction with an increase of carbon taxes. That on the other hand is a great idea, it's much like we're doing in Norway already.

bilbo0s 8y ago

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 8y ago
> 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 8y ago
  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 8y ago
    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 8y ago
      Doesn't that depend on the relative price sensitivity of the employer vs. the employee - namely, the elasticity of labor demand / supply?

mempko 8y ago

All sovereign governments which have their own fiat currency finance themselves by simply spending money into existence, including the USA. The purpose of taxes isn't to finance directly but to provide a demand for the money (I need dollars because I have to pay taxes) but also discourage/encourage certain behaviors. This idea that taxes are directly used to pay for things is completely wrong (except for the case where the government doesn't have it's own money, like in the EU).

JohnWilcox 8y ago

This is going to be a bit of a challenging point for many, so if you are one of those feeble minded types that gets offended not only on your own, about all the things in the world you have been trained to be offended by, but also project your offense on others ... this is not a discussion you will be prepared for and I ask you to kindly not read on, since it will upset feeble sensibilities. In America, people have an inalienable, God given right to free speech. I understand that is not the case anywhere else on the planet, but consider stopping the abuse cycle by not perpetuating the interests of those who deny you the freedom of speech. --------- Please stop reading here if you are too weak for free speech ---------- Even beyond the fact that the involuntary income tax that is used to fund the lives and lifestyle of others is slavery, people don't realize just how few people also actually pay net income taxes of any significant portion in the USA. Even most of those who pay any income taxes whatsoever, which makes up about 112 million, don't realize that what they pay doesn't even cover what they consume, like if you contributed $10 to a garden party that cost $100 per head in costs, because you forced those high expenditures. Unfortunately, those types ... you know them ... feel justified and rationalize their entitlement because they "paid their taxes". Unfortunately for all of us, things simply don't add up and unless you are willing to freely engage in this type of thing to support others at your expense, you are being enslaved on a bell curve on an income scale. Peak tax slavery is probably somewhere around the $60-70k level where you are most heavily burdened by the crush of taxes and get the least benefits. By estimate, at that level you are probably roughly 20% slave as an American. It's a bit difficult to peg down exactly without thorough investigation, but if you remove all the government employees, who are not only not net contributors, but negative "contributors", aka, cost centers, to income tax receipts; and you then control for those who contribute some significant number higher than the cost of what they consume, you are left with very similar numbers as in China ... if those numbers can even be believed, which they far more likely than not can not. Only around 3% of all income tax payers in the USA, or less than 1% of all residents of the USA actually make net positive contributions to the tax burden. I know this is not going to be well received because it's contradictory to the indoctrination and I say it as someone that is no fan of the elite and wealthy in general, but it's fact that somewhere around 99% of American society is living off or freeloading on 1% of the population. People don't really know that, and are not told that, and it's also clearly obviously hidden from them, but it is more or less reality. Even if the rate were as high as 2% of the population, which is simply in no way possible, that still would not change the ramifications. Would 2 people supporting 98 freeloaders make any significant difference? It's quite stunning actually and some people simply cannot and do not want to accept it for varying reasons. It's really really not a good situation regardless of how you look at it; whether by the number of people who are not contributing members of society, or the fact that the government has enslaved the middle and lower upper class people to support both the unproductive members of society and use them to further enrich and empower the elite by taking their slaves' money from them against their will and giving in to the non-contributing masses in order to essentially buy their authoritarian power through democracy. It' essentially what is going on right now with the immigration debate, millions of low wage foreign people are going to enrich and empower the elite against the middle class that is being gutted and democracy fracked through immigration. Ironically, it's not really all that different of a model than the slavery the British and Spanish aristocrats and elite introduced to the Americas, import slaves to undermine providing a fair wage and increase their profits and power. Same model, just a bit of a pivot to outsourcing the slave management and from taking large profits on a few slaves to taking lower profits from many more less, outsourced slaves. Because in the end, income tax is slavery, whether it was 100% income/labor tax in 19th Century Brazil, Hispaniola, etc, or whether it was the indentured servitude and company stores, or whether it was sharecropping, ... a Progressive shift from high margin, high management cost, low volume; to low margin, low management cost, high volume. But we are largely the beneficiaries of this slavery here, so most of us cannot see it or simply do not want to see it. What you don't accept can't hurt you, of course.

timdavila 8y ago

> 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. Do you mean federal or state income tax? I am in one of the states with no tax paid to the state (Texas) but rest assured we still pay federal income tax as well as higher property and sales tax to make up for it.

max76 8y ago
He almost certainly meant a few states do not collect state income tax. I'm in a state with no state income tax as well (Washington). I've lived in states with income tax before. As a single individual with high income that rents their primary residency I greatly benefit from living in places without income tax compared to places with even modest income taxes.

beginningguava 8y ago

we should go back to that, the federal government is essentially cancer and money is the glucose that feeds it's constant growth. The initial idea of small federal government with states rights was brilliant because people could vote with their feet. If you're a progressive who supports the right to abortion, legal weed, and government health care you could move to a state that supports those things and gladly pay that states higher income taxes to fund it. In my mind that system is far superior to having the federal government shove laws down the states throats and prevents the divide between our citizens becoming so massive as we've seen over health care and taxes at the federal level.

GcVmvNhBsU 8y ago
It’s always interesting when people think the initial idea of a strong state government and weak federal government was such a great idea, without acknowledging that the US existed under that regime for some time, realized it didn’t work well, and moved on. Those who don’t study history and all that.

snackbugs 8y ago

The US also didn't have a national highway system and other social services for much of its history. Interesting.

conanbatt 8y ago

Also take into account the state spent 5% of GDP in the 1800's. That would barely pay for medicare today. Income taxes are, however, pretty progressive, relatively easy to levvy and practical. They are not particularly bad taxes. Sales taxes, or VAT are worse in my opinion.