The Great Tax Reform: Xi Jinping Promises To Take From The Rich And Give To The Poor

President Xi Jinping warned the citizens of China about the upcoming changes, saying that the main feature of modernization in China should be "common prosperity". In this regard, the party leadership has outlined a "smart adjustment for excess income" to encourage high-income companies and citizens to give more to the Chinese society.

For the same purpose, education will be reformed so that more citizens can become wealthy, and thus create a society with a large middle class, a small number of very rich and very poor. To do this, it is necessary to more clearly regulate unjustified incomes, decisively put an end to illegal incomes, and also correct the procedure for their distribution.

Today, the maximum income tax rate in China is 45% for citizens who earn more than 960,000 yuan (or $ 150,000) a year. The maximum taxable personal income from private business is 35%. The corporate tax rate is 25%, and other companies associated with the development of technology pay the tax at a preferential rate of 15%, but now it can be canceled.

However, the party bosses reaffirmed their commitment to Deng Xiaoping's idea, expressed back in 1978: to allow some citizens to be richer than others, since it was this idea that became the hallmark of the openness of the Chinese economy.

Shi Zhengwen, a professor at the Chinese University of Political Science and Law, recalls that direct and indirect taxes in the country are approximately 3: 7. Moreover, indirect ones are added mainly to commodity prices, and this places a burden on the consumer. That is, the rich actually have a lower tax burden than the poor, leading to blatant income inequality. If by increasing direct taxes, reducing indirect taxes, which provides for the reform, the burden on enterprises will become lighter.

A reform of the property tax is also expected, most likely an additional one will be introduced for the rich, who, unlike ordinary citizens, have several houses, while ordinary people may be exempted from property tax. This will help both redistribute income and regulate house prices. Xi Jinping also proposed inheritance tax, which is not in China today, but which plays a big role in the distribution of wealth, encouraging youth to self-sufficiency.

Shared prosperity, as predicted by the Chair, will be achieved by 2035.