China's tax take totaled 569.7 billion yuan ($93.0 billion) during the first three quarters of 2014, up 12.4 percent from the same period last year. Individual income tax accounted for 6.3 percent of the overall amount.
Personal incomes are taxed in order to bolster government revenue and, more importantly, redistribute social wealth and narrow widening income gaps. With these goals in mind, it would make sense if authorities targeted such a tax toward the rich. In reality though, survey results show that lower-income households in China account for about two-thirds of personal income tax contributions.
By contrast, in some developed countries, the upper class contributes about 90 percent of payments.
Low-income wage earners account for such an oversized contribution in part because their share comes mostly from a payroll levy collected directly by their employers.
On the other hand, many wealthy individuals have no fixed salaries. They can also minimize their tax exposure in ways that remain off limits to most regular workers.
The real income of most households in China remains a mystery to tax officials. For this reason alone, a scientifically differentiated tax regime is impossible to implement.
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