The ratio of US tax revenue to China tax revenue

The United States and China are two different social systems, and there are many differences in cultural concepts, social development and living standards, so they are very different from China in tax declaration, payment, use and management.

First, what are the differences between China and the United States in tax returns?

I. Individual income tax

The monthly salary of every China person generally includes personal income tax (3%-45%), endowment insurance (8% for individuals and 20% for companies), medical insurance (2% for individuals and 0/0% for companies/kloc), unemployment insurance (0.2% for individuals and 0/0% for companies/kloc) and industrial injury insurance (0.3% for companies). Judging from the ratio of personal after-tax income/unit expenditure, the actual tax paid in China is about 45%-50%, which is much higher than the highest personal income tax rate of 33% in the United States.

Second, property tax.

China people have special feelings for houses, which is one of the reasons for the rapid development of domestic housing prices. From the perspective of property tax, the deed tax, business tax, urban construction tax, stamp duty and land transfer fee that Chinese consumers have to pay for buying a house will eventually accumulate on the buyers. So, how is the real estate tax rate in the United States calculated?

The lowest real estate tax rate in the United States is 0. 14%, and the highest is only 1.76%. It is not difficult to understand why the same money can buy a villa in the United States, but even an apartment in China is difficult to meet. And American real estate rights are permanent.

The main taxes in the current tax system in the United States are: enterprise income tax, personal income tax, sales tax, inheritance and gift tax, social security tax, industry tax, capital or net wealth tax, accumulated profit tax, environmental tax, luxury consumption tax and so on. Federal taxes are mainly personal income tax and social security tax, followed by corporate income tax, consumption tax, inheritance and gift tax, customs duties, etc. The national tax is mainly based on business tax, supplemented by income tax. When the local tax is mainly industrial tax.

In America, illegal income is also taxed. Generally speaking, theft, robbery and other illegal gains should also be taxed.

In terms of personal income tax, China and the United States have different personal income tax systems, which also leads to different direct tax burdens between China and the United States. Almost everyone in China complains that the tax burden is too heavy, but the tax revenue accounts for less than 8% of China's total tax revenue, while the United States accounts for more than 40%.

In China, wages and salaries are the least easy to evade taxes. Generally speaking, almost 90% of the income of low-and middle-income groups consists of wages. However, many high-income people have many other sources of income or hidden income. There are no specific controls and regulations on this part of channel income, and the relevant taxes are rarely paid.

The tax rate in China is relatively fixed. The United States has great tax flexibility, because there is tax exemption, so individuals will pay higher taxes, especially single nobles; Families will pay lower taxes, especially those with more children.

From the numerical point of view, the tax rate in the United States is relatively high, but to really compare the tax burden, it is still subject to the actual tax burden. Therefore, comprehensive comparison shows that the national conditions are different, the tax system is different, and there is no comparability.

In fact, taxation is the financial guarantee for the government's operation, and it can also be regarded as the consideration for the government's public services. Therefore, the judgment of tax burden should also be combined with the quantity and quality of government services.

First, the tax structure is different.

The tax system in the United States is divided into three independent levels: federal, state and local, and is responsible to parliaments and voters at all levels. There is no hierarchy. China established a "tax sharing" financial management system on 1994. Although taxes and revenues are divided according to the central and local governments, in fact, tax power is still highly centralized, and tax legislative power is unified to the central government.

The United States is a country with direct tax as the main body. Direct taxes are mainly levied on individuals, and the function of regulating income distribution is more prominent. However, China mainly relies on indirect taxes, which is conducive to increasing fiscal revenue, and is mainly paid by enterprises, which has obvious pro-cyclical characteristics.

Direct taxes in the United States accounted for 72.6% in fiscal year 2020, of which personal income tax and social security tax were the main sources, accounting for 40.8% and 26.8% of the total US tax revenue respectively. The federal government focuses on personal income tax and social security tax, the state government focuses on personal income tax and sales tax, and the local government focuses on property tax including real estate.

Personal income tax at the federal level accounts for 36% of the federal fiscal revenue, social insurance accounts for 3 1%, corporate income tax accounts for 8%, and taxes such as consumption tax, customs duty, inheritance tax and gift tax account for 7% of the fiscal revenue.

In 2020, about 90% of China's tax revenue will be collected from enterprises, including 36.8% value-added tax, 23.6% enterprise income tax and 7.8% consumption tax. The individual tax accounts for only 7.5% because the number of people covered is small and the basic deduction is constantly increasing.

From the perspective of tax structure, China and the United States have different tax settings. There is no value-added tax in the United States, and the main tax in China is value-added tax. Social security is levied in the form of tax in the United States and fee in China, and it is gradually being levied by tax authorities.

Second, the tax burden is different

Tax burden refers to an economic burden caused by state taxation. Tax burden is the result of the influence of national tax on social economy, and it is also a manifestation of the economic distribution relationship reflected by national tax, also known as tax burden rate, which is the ratio of tax payable to main income.

From the comparison of tax burden between China and the United States, there is a big difference; The tax paid by enterprises in China accounts for 90% of the total tax revenue, while the tax paid by individuals only accounts for 7.5% of the total tax revenue. American enterprises pay 25% of the total tax, and individuals pay 75% of the total tax.

China enterprise income tax adopts a single proportional tax rate of 25%, which is levied at one time. In the United States, corporate income tax is levied repeatedly by the federal, state and local governments, and the dividends and retained part of enterprises are levied again at the rate of 15%. In this way, the corporate income tax in the United States will be levied in four times, and the highest tax rate will reach 70%.

Although there is no social security tax in China, the pension insurance and unemployment insurance paid by Chinese enterprises are actually equivalent to the social security tax in the United States. The proportion of pension insurance and unemployment insurance paid by Chinese enterprises is about 22% of wages, while the social security tax paid by American enterprises is 6.2% of wages.

The medical insurance premium paid by Chinese enterprises is about 10% of wages, while that paid by American enterprises is only 1.45% (the coverage of the elderly in the United States is narrow). In addition, Chinese enterprises also bear the remaining "4 gold", accounting for about 40% of the total wages. However, American enterprises have no housing provident fund, and all kinds of insurance for employees add up to less than 8% of total wages.

In August this year, US Treasury Secretary Yellen said that the corporate tax in the United States is too low compared with other developed countries, and it may support the Biden administration's 10 long-term investment plan through tax increase in the future. On March 30th, American media disclosed Biden's tax increase plan in detail.

The plan includes: raising the corporate income tax rate from the current 2 1% to 28%, and restoring the highest personal income tax rate of high-income people earning more than $400,000 to the level of 39.6% before Trump's tax reduction. If this tax increase plan is implemented, it will increase the US government's fiscal revenue by nearly 1 trillion dollars in the next 10 year.

The overall tax burden rate in the United States has been between 16% and 20%. After Trump implemented the tax reduction policy in 20 16, it fell to 15.58%. Although China's per capita income is lower than that of the United States, the overall tax rate has surpassed that of the United States since 2008. At present, China's overall tax burden is 16.05%.

From the comparison of individual income tax rates, we can see that the collection standard of individual income tax in the United States is higher than that in China, especially the tax burden of low-and middle-income people is much higher than that in China. The personal income tax rate of the lowest income group in China is 3%, while that of this group in the United States is 10%.

In short, from the perspective of the overall national tax burden, China has exceeded the tax burden level of the United States, that is to say, the portion of China's national income used for tax payment exceeds that of the United States.

Legal basis: China-US (United States of America) Tax Agreement, Protocol and Exchange of Notes.