Chinese Economics Thread

FriedRiceNSpice

FriedRiceNSpice

Captain
Property taxes, capital gains taxes, and inheritance taxes do not have to be implemented as a flat-rate tax. They could all be tiered taxes, similar to income taxes. By using tax brackets, the Chinese government can choose how to best distribute the tax burden across different income strata. By only having a graduated income tax, you end up with a situation similar to what you have in the US, where the middle class ends up having the highest effective tax rate (due to income tax rates at the highest bracket being a far higher rate than capital gains tax on the highest brackets). It would be prudent for China to lower income taxes, and raise the other forms of taxes instead.

Furthermore, wealth redistribution is not the only consideration when it comes to taxation policy. Two other important things to consider are housing and the flow of capital.

With regards to housing, government policies should strive for a balance between wealth creation from real estate appreciation with housing affordability. The ratio of real estate growth to income growth needs to be taken account - otherwise you will end up with a housing crisis. The ratio of median home price to median income in in tier 1 Chinese cities are among the highest in the world - exceeding 30 : 1 for many cities. For comparison, the highest home price to income ratios seen in US cities are only in the range of 8 : 1. Property taxes should be designed to encourage a healthy but controlled level of growth in real estate while still making housing affordable.

Finally, property taxes may redirect some of the flow of investment away from the real estate market and into other more productive investments. By channeling investments into emerging / high tech sectors, China can encourage growth in such sectors as well as provide its citizens with alternative ways to invest and grow wealth.
 
ZeEa5KPul

ZeEa5KPul

Colonel
Registered Member
Overbom said:
People generally dont like taxes. And especially parents often (always?) work to provide wealth for their next generation.

Now if the Gov suddenly comes and start saying, "you know what? We will take a fat (could be more) %20 of your wealth if you want to give it to your (e.g) son", that would definetely alienate the old people.

Ofc there are many ways for the Gov to implement it while not losing much support from the people. They can direct it to the wealthy, or have a high threshold ($1.000.000 or $500.000) before taxing them.

By the way I have not seen any proposal so far saying that there will be threshold in China, so for now, this proposal would apply to everyone which obviously is impossible to happen politically
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What are they going to do, vote for the other party? *TomCruiseLaughing.gif*
 
O

Overbom

Brigadier
Registered Member
hkbc said:
It has nothing to do with 'investment' one of the tenets of the CPC is that everyone gets a roof over their head, it would be regressive to then tax that as some kind of benefit!
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I find it impossible for China to control its spiralling property market without a property tax (or something similar).

You may disagree with that and thats ok, I am open to listening different ideas, but I cant think of another way for the Gov to control the crazy property market in China.
Eventually these high costs can become social, political, economical risks for the CPC which obviously is unacceptable.
 
Hendrik_2000

Hendrik_2000

Lieutenant General
Overbom said:
I find it impossible for China to control its spiralling property market without a property tax (or something similar).

You may disagree with that and thats ok, I am open to listening different ideas, but I cant think of another way for the Gov to control the crazy property market in China.
Eventually these high costs can become social, political, economical risks for the CPC which obviously is unacceptable.
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The problem is housing in China is controlled by private companies who bought land from cities which collect land fee to pay for their expenses in providing health care, education, social welfare and what not.

Singapore has HDB(housing development board) which government developer providing cheap and subsidized housing to majority of the people. Land is government owned there if private land but minuscule amount. So even if land is very scarce in Spore they still make housing affordable to most people. Funding for the development come from CPF or government mandated saving which China also have copying Spore

Because cities revenue come from land transfer fee they are not interested in providing cheap houses for the people. so yes property tax is the way t go and government subsidized housing must be implemented!
 
vincent

vincent

Grumpy Old Man
Staff member
Moderator - World Affairs
A property tax can be progressive if it will only apply to investment properties (not live in by the owner)
 
H

hkbc

Junior Member
Overbom said:
I find it impossible for China to control its spiralling property market without a property tax (or something similar).

You may disagree with that and thats ok, I am open to listening different ideas, but I cant think of another way for the Gov to control the crazy property market in China.
Eventually these high costs can become social, political, economical risks for the CPC which obviously is unacceptable.
Click to expand...

Hmm... The so called spiralling property market is in the tier 1 and some 2 cities which gets the usual loud and proud MSM broadcasts whilst huge those cities don't represent the bulk of China's population or housing stock. As a real world example here in the UK there's stamp duty and it doesn't curb house prices in London!

The remedies include

i) Build satellite cities to offload the tier 1 cities
ii) Invest in the tier 3 cities
iii) Develop the hinterland so people don't have to migrate to the tier 1 cities for work and those that have can go back to their home towns because life is better there and you even get reverse migration
iv) Reform social and medical services so people don't feel the need to invest for a rainy day medical emergency locking up capital that can be more liquid and circulated
v) Provide more liquid investment opportunities (helped in part by US policies :))

But if that seems all like too much hard work I guess they can just slap an arbitrary tax and call it a day, problem fixed, CPC stays in power (MSM narrative) or maybe the CPC are the real deal those 5 year plans actually get executed and they're not your usual 'kick the ball into the long grass and let the next mob worry about it' western grifters politicians!
 
O

Overbom

Brigadier
Registered Member
The way I see it, aside from all the obvious economic benefits of this, lets also not forget that Xi is going to show up for a 3rd term next year (?).

This move can greatly boost his credentials from the poor and middle class which could easily secure his 3rd term.

In addition, Xi having achieved so much, first by "eliminating extreme poverty", he is now throwing the gauntlet down again and says that for his next term he is going to fight for the poor people by the "common prosperity" term.

This is him, clearly saying that on the next (3rd) term, Xi is going to dedicate himself in helping the poor people and middle class people.

This is a masterclass on politics, who is going to stand up and say "no 3rd term, no common prosperity", who is going to stand up with the rich and against the poor and middle class people?

I cant but just stand in awe how beautifully, this move combines economical and political benefits. Just another proof of his political astuteness

Incredible move

Ok politics end now
 
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