4 ms·

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

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?
      - conanbatt 8y ago
        That is correct, its just that employees are a lot less inelastic than employers, for multiple practical reasons.
- seanmcdirmid 8y ago
  China has those also. They are quite separate (with employee and employer portions, just like in the USA) from what parent was talking about. You actually get a refund on some of it (retirement) when you leave China.
seanmcdirmid 8y ago
This would be such a pain in the ass when it came to filling out a USA foreign tax credit form. Thankfully, Chinese income taxes I paid were high enough to negate my US tax obligation. And yes, VAT is super high on many things, shopping in China is pretty expensive.
tigershark 8y ago
That is not an income tax, it’s an employer tax. I thought that pretty much everywhere you have the distinction between employer’s taxes and employee’s taxes, is not that the case in US?

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?
    - conanbatt 8y ago
      That is correct, its just that employees are a lot less inelastic than employers, for multiple practical reasons.
seanmcdirmid 8y ago
China has those also. They are quite separate (with employee and employer portions, just like in the USA) from what parent was talking about. You actually get a refund on some of it (retirement) when you leave China.

seanmcdirmid 8y ago

This would be such a pain in the ass when it came to filling out a USA foreign tax credit form. Thankfully, Chinese income taxes I paid were high enough to negate my US tax obligation. And yes, VAT is super high on many things, shopping in China is pretty expensive.

tigershark 8y ago

That is not an income tax, it’s an employer tax. I thought that pretty much everywhere you have the distinction between employer’s taxes and employee’s taxes, is not that the case in US?