China's Major Tax Problem

Dipublikasikan tanggal 27 Jun 2022
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Komentar

  • Get your free subscription to Morning Brew at morningbrewdaily.com/economicsexplained

    • @androgynoid The abortion issue is just a symptom of far deeper problems, like rampant theological Conservatism and the divisive politics surrounding it.

  • It's ok guys, you can just sell new residential land forever, it'll be fine.

    • China does not allow private ownership of land.

    • And after 70 yrs,you take it back and sell it again.

    • Yes who cares about farmland we can import food from outside

    • I hear the sewer oil market is booming.

    • Love your insight on Ukraine. Not really a big fan of videos of people throwing around buzzwords like “Javelin” or “HIMARS”, without really saying anything.

  • There has always been a very strong cultural believe in chinese literature that heavy taxation is a prove of governance failure, heavy taxation is also a phenomenon near an end of chinese dynastic cycles. So the avoidance of heavy taxation may also have been influenced by sociocultural factors... When we are talking about humans it may not always about numbers.

    • @Premium Just like a slave who needs waterr from his master?

    • @Mereen no it’s paying for services that you need and use

    • That’s a good perspective!

    • @OwO those two things go hand in hand. Your philosophical background is built on the foundation of your experiences and society, even if in opposition to that. That’s why countries in Asia can have “oppressive” governments in western eyes and still be happy. They’ve been raised in that system, and so have their ancestors. To deny that your society and upbringing influenced your world view is equal parts arrogant and stupid.

  • Small correction: You said the Shanghai residents were banned from leaving the house "outside of getting groceries". This is wrong. They were banned from leaving their house *even to buy groceries*. That's why the headline read "residents running out of food", because they were relying on government deliveries which were pretty unreliable.

  • Sustainability should be a metric in your rankings. For example an economy over reliant on proceeds from one source scores lower than a diverse economy which collects proceeds from many very stable sources.

    • @Ace Vaver As a matter of fact in Corporate Finance Psychology plays a key role. Even good for a Nobel Price. In Microeconomics I learned at my university power relations are extremely important. So, I shouldn't be so sure.

    • Solid point as China has a MASSIVE pollution problem. Last time I was in north central China, I got up one morning (on the 12th floor), opened my window shades and could barely make out large buildings more than a 1/4 mile away because the smog was so thick. I asked my host if the smog is always this bad. "The fog in this region can be heavy". Me thinking he misheard me "No, I said smog, not fog." "This region is known for it's morning fog." The stern tone he used when repeating "fog" was obvious, as in "Dude, shut up, the government makes me call it fog"

    • @INDIA SUPER CLEAN 🇮🇳 - Ha ha, That was cool 😎 would be nice if you could change the font to Comic Sans !!

    • @Tryfan Evans - Seems they all have their heads in the sand..,

    • ​@Francisco Costa "freedom" is squishy, and as this video points out- adherence to taxes is squishy too. By focusing on outcomes rather than ideologies, the economics ranking keeps integrity to its namesake.

  • My wife was paid a set wage plus a bonus wage. The set wage was taxed and the bonus was not and the bonus was at least twice the set wage. So effectively she was paying tax on only a third of her wage. This was normal practice for a majority of companies. When I see data on the average wage of the Chinese citizen I always laugh because it is no doubt way off the truth.

    • Same happens in India however you still pay taxes and tax department has slowly become more and more ruthless.

    • @Bjorlame le fourbe. I wouldn't waste time commenting to that guy, most probably a bot. I've seen them spam multiple threads on multiple videos copying and pasting the same silly comment.

    • @Bjorlame le fourbe. Contain China while China have allies like Pakistan and Afghanistan surrounding India 😂😂who's getting contained now?

    • @Elemy69 no it ain’t,

  • FYI: Irish person here. This “dodgy” “Local Government Financing Platform” you described is almost completely identical to Irish semi state bodies like Irish Water and ESB. Because of debt rules in the EU a lot of European countries have semi state business that do the same thing

    • I suggest you go back to subsistence farming.

    • @Rajesh Upadhyay hey there scambot#3534y64535

    • @Rajesh Upadhyay Try fixed deposits in a reputable bank. Or not being a bot.

    • Still sounds like a scam when you are skirting the rules just to get bad debt.

  • This video misses a very important aspect of the chinese tax system. China gets most of its revenue from VAT/Sales, which are relatively higher compared to countries in similar economic situations. So it's not like the government is not collecting a lot of money, but the tax revenue goes down in times of reduced consumption like now. There has been interest in reforming that system but income taxes are very very controversial among the chinese public especially due to the huge variance in quality of gov services. Before china can switch to income tax base, they need to improve public Healthcare and a much bettersocial security net before they can justify taxes

    • most companies get exempt by this though, the video is fine

    • I assume they also get significant income from government own ventures and government own joint ventures.

    • @SmartStoneSystems literally haven't used cash for the last 6 years

    • It doesn’t mean just income tax, it means all tax receipts

    • 13% VAT is not very high by European standards where 15-20% is common and especially not to Sweden where live and we pay 25% VAT. It is higher than in the US though.

  • This video explains why they're so keen to develop and implement a CBDC. Destroy the hand in cash economy and give them more control and surveillance on how money is spent and who spends it makes it easier to levy taxes.

  • After the 70 year lease or 20year lease they can start to implement year to year lease witch would basically be normal property tax.

    • @G M they don’t care as much about what the upper crust of Chinese society will do if real estate takes a hit. They care more about high homeownership rates. It’s share capital in the broader socialized system (America is socialist as well). This attitude is why China is rising so meteorically in a completely unprecedented way.

    • @Zybernetics Production can move. It follows the dollars. China's industrial capacity is very iterative. Making gradual technical improvements on existing designs. Like Anker or Xiaomi for instance, they lead essentially zero bleeding edge industries like chip fabrication. The demographics are against them and their financials are beginning to move against them. Being productive in the short term is handy but won't save you in the long run.

    • @Danny D revenue problem in real terms or nominal? Obviously nominally speaking they don’t any revenue at all to spend a currency they issue by sovereign right. In real terms China is much better off and much more anti fragile than say the U.S. because they are the worlds most productive (real terms) nation.

    • @G M good thing they have the worlds strongest and most productive industrial base to fall back on! Good luck Anglos! Not going to be so easy for you.

  • 8:35 just LOL. If the financial crisis taught me anything (and it taught me a few things) is that rating agencies are actually a total joke and “rough guide” at best.

    • But muh MOODIES............

    • @pfeilspitze so rich paid more tax in total amount or is it adjusted per income or total wealth? What I mean if person with 100k income pays 20% it is 20k, person with 1mil income pays 5% tax it is 50k.

    • Israelistan 🇺🇲 where the Top 50 companies pay ZERO TAX Amazon last year 11.2 billion profit TAX PAID? a 124 million refund. The reason Trump wanted Tarrifs on China was to go back to the system before WW2 where NO US BUSINESS PAID TAX.

  • Philosophy of perpetual growth, government bailout... reminds me of something.

    • @Zybernetics Grows into ghost towns you mean lol.

    • It's human nature. Every organism in the world does this. It's yin and yang.

    • 2008 😂

    • @Zybernetics exactly!

  • Besides those leases, the 1 question I've always had is the interaction between land prices/sales/demand and an ageing population. Around 2050 when 40% of China is retired and at least some of them start selling their homes to a decreasing pool of younger investors (real estate is seen as the only really secure investment asset in China), what impact will this have on real estate demand, prices and the continued ability of local government financing companies to sell land to hungry developers?

    • @P Davison Japan's situation doesn't only apply to demographics. Japan's sudden stagnation was due to the housing bubble crash and government how the government was unable to innovate and get around the issue. In fact the problems Japan faced back in 1989 are still present today, although I'm not just talking about demographics

    • Look at Japan’s situation from 1990 to current for some idea of what will occur with rapidly aging population.

    • @Zenpai And do you really think the CCP will last more than 2050? Once demographics fully take hold of East Asia, its inevitable that they open up to immigrants and that helps their issues. But for places like Japan and China, that will take a while for the immigration barriers to be brought down. And, I don't think I EVER said Japan would send people to China. That's BS

    • @J X also do you really think Japan is in a position to send its people to China? It’s also in decline with its population

  • This was always going to be a challenging video for you to create/produce. I know some people will focus on the scoring, but like all things in life the value is in the detail that goes into determining those scores and the overview presented beforehand.

  • as an 'expat' in China, I am unfortunately one of that minority who actually pays significant income taxes. Most people don't earn enough to pay much income tax.

  • I am from india, and It is true here also. Very small minority approx 2.5 - 3% of the population pays the taxes because the top level earners have the means to evade tax and the lower end of the population earns well below the beginning income tax threshold. This severely limits the amount of money govt can spend in india. But surprise about 25% or a bit ore of the govt budget comes from direct taxasion. The reason for sustained supremacy of countries like USA and Europe is the fact that they have a very efficient income tax policy, allowing them to have huge amounts of money to spend.

    • Rich Americans pay more income tax than you might think, esp. on salary income. The USA also has a large upper middle class that pays income tax amounting to 25-35% of its income. The smallest 50% of returns (ranked by AGI) pay only 3.5% of all income tax.

    • @akshay kumar "In development?" There is nothing to develop.

    • In the USA, the poorer half of the population pays only 3% of the personal income tax. The richest 1% of households pay 39% of all personal income tax. First world income tax systems are not "efficient" (whatever that means). Rather, in the first world the informal sector is not very large. Almost every person and business has a bank account. The tax authorities can peruse the monthly statements of businesses and so determine It is well known that the only third world people who owe income tax are civil servants not in the lowest pay grades, and white collar employees of major businesses. The number of households for which this is the case is probably less than 3-5%.

  • By the way it's India's problem too. Too many freebies and only 3 percent pay income tax. Those who pay are getting fleeced

    • Both countries do pay taxes for consumption. All products and services you consume have taxes

    • Thats why india public standard is a joke.

    • Ever heard of indirection taxes. Stop spamming like idiots everywhere that everyone is on freebies. Government doesn't even insure better schools and healthcare for indirect taxes it take. Does it do????

    • @kitkat47 Chrysalis ur income upto 10 lakhs

    • It's very similar. India's tax to GDP ratio is 11.7%. At least it's heading in the right direction though.

  • I think this explains why my college professor said that every chinese company maintains three sets of books. One set to show the government which minimizes taxes paid. Another set to show the shareholders to maximize shareholder returns. And yet another set which accurately records the true state of the company's finances but this set remains confidential to the company and does not get released.

    • Isn't it what every big company does in the west? None of them pay tax, but all do record profit...

  • A very well explained summary - I do appreciate the effort you take to make this information, accessible, clear, comprehensive yet simple ! I do look forward to each of your presentations - thank you 😊

  • Years ago "The Economist" reported that you can buy accounting software in China that keeps three sets of books. One for the tax man, "See how I'm losing money!", one for the banker, "See how profitable my business is!", and a real account.

  • the severity of the condition of our economic circumstances is beyond many peoples comprehension and many continue to deny its existence.

  • I have a seriously-hard time believing it deserves 6/10 on "Stability", given that individual businesses can (and regularly do) get smacked down on a whim from the central government.

    • @Ishan Bhusal017 those same businesses are now leaving 😂😂that is the “confidence”

    • @Purin how does something lose -9999999999% of its value when the most it can lose is -100%

    • @???????? not really because it doesn't affect the economy

    • @BrianS1981 how does something fall by multiple hundreds of percent? the largest something can decrease is -100%... i see you're an economist on this matter

    • @Ralph Jesperson I see you're an economist. I guess you were lectured by media on this economic matter

  • Due to many rules on taxation and numerous tax codes increasing over time. It would make sense to have a flat tax around 15-30% on revenue from sales, property and other sources of land. The progressive income tax system is not working for most people within the lower and middle class income brackets. Especially if you want to keep most, if not all tax revenue in a single country.

    • your land and your tenants. Send in the demo crew.

  • I wouldn't be surprised if the reason everything is so vague about what happens after the land lease expires is so that they would have justification to take your land any time they want for free. Just like how they can bring anyone down for any arbitrary reason with their tax system. We need to demolish this apartment complex to build a new highway. Hey land owner, your lease expired 22 years ago, why haven't you renewed your lease? What? I was never told I need to renew my lease. No one renews anyways. I see, well if you want to keep your land you must pay for the 22 years of illegal occupation + a fee + a new 100 year lease. I can't afford that. That's too bad, but don't worry, we'll take good care of your land and your tenants. Send in the demo crew.

  • Great analysis as always. I believe this is the real reason the Chinese central gov cracked down on fintech so harshly and is pushing the digital yuan so hard. On the income tax side, there is still a strong incentive to keep it low, because the #1 economic problem the country faces is how to transition from a growth model mostly driven by capital investment (real estate, infrastructure, etc.) and export to a model with more domestic demand. On the value added tax side, however, if most of the transactions are done either via cash or via private fintech, then they miss out a lot of internal revenue they want to collect, and as pointed out in the video, they cannot get the level of control over the economy they need.

  • as an 'expat' in China, I am unfortunately one of that minority who actually pays significant income taxes. Most people don't earn enough to pay much income tax.

  • Similar problem in India - huge swath of the economy is made up of the informal economy. India's total tax collection is only 7-9%.

  • I'd love to hear what you think about Canada's housing market....

    • Canada must bun immigration and foreign buyers. They worsen the housing market

    • Isn’t it Chinese own just like all of Canada now?

    • @Julia Lerner How?

    • "Is housing in Canada a Giffen good?" would be an interesting video

    • It's a great way to launder money.

  • I remember when I worked in China, back in 2019 the taxation bureau actually sort of begged me to pay taxes, they said it like: “maybe you should start paying some tax?”

  • Sustainability should be a metric in your rankings. For example an economy over reliant on proceeds from one source scores lower than a diverse economy which collects proceeds from many very stable sources.

  • Based on your economics leader board analysis at the end, one would think that China is a very good investment destination. However, your videos over the last year give a very different vibe. A seemingly over extended economy heavily reliant on real estate. How do you explain this contradiction ?

    • @kashiandevs where in this world there are a real democracy?

    • @Spooky Ghost Writer I think, at the moment, you can move as much money out of China as you want legally. That said, they do required that you some how proof you have paid taxes on all the money you are moving which might proof difficult for some or difficult in general.

    • The videos are an analysis of the potential future, whereas the ranking appears to be based on past performance!

    • lol that's the us that you just described. housing is like 20% of our economy AND IT ONLY GOES UP BABY

    • @obsidianstatue Agreed. Disaster porn sells. That said, I think this video is quite fair especially considering he summarizes the bigger context.

  • I remember when working there that our MD was at a presentation from local government stating the 10-15% of foreign companies paid 60% of all taxes end pensions while employing less people and most of them not making high profits. Salaries were same as market rate, we lost 50% of people after every Chinese New year.

    • @J. Joseph thank you for sharing

    • @J. Joseph I agree with Ink that you are just not paying them enough. (I don't own a business.) As a worker, i will take any job if they cam make me an offer I can't refuse. I think most competent workers will seek out larger companies since there are more opportunities for advancement. There is a clear limit on how much you can earn working for a smaller firm. Where in larger firms the annual budget of one department might already surpassed the gross income of a smaller firm.

    • Huge corporations are more likely to have political connections. They are the ones that get bailed out. Perhaps Chinese employees consider that a safety for their job.

    • @Ink Bold I see you don't own a business. Thank you for your insight.

  • With half a billion middle income earners improving their standard of living, any country in the world would love to have the tax revenue from the consumption of these people, that is collected at the point of sale. If this is a tax problem, most would be glad to have it.

  • Can someone explain to me the difference between our system where your land is taken away if you don't pay your 2% a year lease (property tax), vs China's? What would be their comparative rate? Is it much more than this?

    • @Bleu People who try to excuse or justify the CCP's policies generally aren't top tier, intellectually speaking.

    • @Robert Bray I dont understand how 4 different people didn't understand what you were saying. It's a very reasonable question and possible scenario. Personally I also think it's absurd. 70 year leases may seem like a long time but we're currently seeing a record number of people choosing to stay with their family/parents since they're not able to afford high housing prices. Not to mention, where would the original homeowners go? There are many people who live past 70 years old. Even if you worked for retirement and saved responsibly you'd lose your property just because of a lease.

    • @Limitless Apocalypse how so?

    • @Robert Bray your question seems like an AnCap strawman..

    • @Kan Ding well I could use what usually happens when a lease expires as an example. One year, 10 years, 70 years, 99 years. When it's expired it's finished. Note I said probable scenario, based on what's standard practice pretty much everywhere. Will it happen like that? I don't know. I can guarantee you don't know either. However that's definitely a very possible outcome.

  • When i live in South China i knew Chinese teachers. They assumed their tax was somewhere between 2 - 10%. They thought any tax was wrong and did not like it ( a bit like all of us ) This was in an Autonomous Region. Of course many Chinese that ran their small businesses did not pay tax or pay only very little.

  • Heyo EE! Any chance you’d do a video and ranking of Denmark’s economy? I’m curious where we sit with our rather high tax. Being the second happiest country in the world, 40% tax isn’t too bad

    • That's just trying to get a good metric out of two bad ones.

  • I have a seriously-hard time believing it deserves 6/10 on "Stability", given that individual businesses can (and regularly do) get smacked down on a whim from the central government.

    • @rer ror Why not? Because only countries can be attacked? I cant follow your logic here😂

    • @rer ror It was, so was the republic of China, of which Taiwan was a province. But Taiwan was never a country by itself

  • 3:21 Ahh, actually in the US there are some towns and cities completely dependent on traffic tickets. Take Henderson, Louisiana, where fines collected made up 89% of its general revenues in 2019.

  • Sustainability should be a metric in your rankings. For example an economy over reliant on proceeds from one source scores lower than a diverse economy which collects proceeds from many very stable sources.

  • Hey, will you please do a video about the "inflation" we are currently experienceing? To me this doesnt seem like normal inflation, but idk how to describe it. Would love to hear your thoughts! Thanks for the great content!

  • As long as people are productive, stuff gets created. Unless you can convince 1 billion people to stop what they are doing, their economy wont stop. Bailing out some entities won't reduce their productive capacity.

    • @Johann Schmidt I believe that the one-child policy of the past was just the start of the age demographic problem. Some of the young people now have adopted a "lying flat" and/or "let it rot" attitude. If one-child slowed down births, what about not getting married and not having children. If enough young people adopt this in their 20's and 30's that could be as negative for growth as the one-child policy. Also, bankruptcies in China supposedly affect the record of the next two generations. Who's going to have children if their children and grandchildren will be effected? Lot's of people are not paying mortgages at the moment and could lead to personal bankruptcies.

    • Well... Reverse time to 30 years ago and you can see it is possible to convince 1 billion people to stop what they are doing...

    • To expand a little on the 'age demographics', the largest generation in China is entering into retirement now and in the coming decade or two. Meanwhile, the one child policy has decimated birth rates meaning the working age population is shrinking and the birth rate is miniscule. Because there are now more elderly dependents per working age adult, and because the pension system is not developed in China, the relatively few working age adults have to work even harder to earn a living and support the older generation. What do you not have time or disposable income to do if you're working hard and looking after elderly relatives? Have children of your own. So there's a downward demographic spiral which some other countries have experienced but nowhere near to this extent because most other countries aren't insane enough to have a one-child policy.

  • I'd be interested in your take on Peter Zeihan's prediction that globalisation is pretty much at an end (His latest book out being 'The End of the World Is Just the Beginning.' an examination of the consequences for countries in a de-globalised order) If he's right then China's economy is fragile. And if he is correct that US business is rapidly moving back onshore then.....

    • China's economy is only about a fifth exports. They do import both raw materials and components, but the latter they eventually substitute with domestic production and the former will always flow since those nations' economies rely on exporting that stuff.

    • @Romualdas Kuzborskis Except no, China is best poised to being first to market right now and once that's available then established supply chains are going to become even cheaper. There is just no way to compete against it since even the software developers and robot manufacturers in China are cheaper, while ASEAN is moving hard into the upstream components of the supply chain. The problem is that in order to actually move these things, the US has to have most of the supply chain appear domestically all at once. This is politically impossible without a command economy. This is Asia's story now. The US, sad to say, has already forgotten how to manufacture most things of consequence. It's not happening.

    • Globalization absolutely isn't ending, especially given the priorities of ASEAN and India. The UK must depend on it for survival, and much of Europe has to as well. It just won't include the US, basically.

  • Such an insightful and well researched video thank you!!

  • we have exactly same problem of 5% of tax payers in India too, no idea how to solve this

  • Am I missing something or could they just convert to standard property taxes after a properties 20/70 year lease expires. Worst case scenario is that the shell companies local governments use to raise bonds indirectly go under, in which case they use the property tax revenue combined with central government support to prop up the banks.

  • They should try out Georgism. Just a tax on the natural resources. And in a society where evasion is rife. Land tax cannot be dodged. And land tax actually improves economic productivity with its positive incentives.

    • @Bob Boberson Georgism would fail miserably because we're not in an agrarian society anymore. Land ownership is no longer where the big money is made. Some of the most profitable, taxable ventures could be done on a small piece of land designated as wasteland (for example the IT sector or anything partaining to intellectual property). There's a reason people created so many taxes, it's because it's very hard for a single tax to cover all aspects of a society (and future societies). George lived in the 19th century. You can't expect him to have envisioned how the world would change over X amount of decades. Same with Karl Marx his theories.

    • ​@OGNotAPussySlayer You continue to keep misrepresenting Georgism and failing to substantiate most of your arguments. Just saying "land taxes are bad" or "people who disagree are disgusting" is not an argument. Georgism doesn't inherently hurt the rural poor. You could easily have progressive land taxes just like we have progressive income taxes and sales taxes. And this isn't even including using tax breaks or government stimulus to reimburse adversely affected populations (something we already do for other taxes. For example trump increased aid to farmers when he put tariffs on china, protecting them from counter tariffs; many governments have lower business taxes on new businesses; every government social program). Your example of a poor rural subsistence farmer doesn't even make sense. They wouldn't be taxed much in the first place, and they already participate in the economy.

    • ​@Bob Boberson I made three arguments against Georgism, one stemming from a critique of land taxes, one stemming from a unique geographical situation where some people literally cannot participate economically, and one based in an argument that generally, forcing economic participation via forcing overhead is a BAD thing. The arguments in favor of Georgism are "Land is a natural monopoly and thus and so the best way to delegate land usage is to impose a high tax on land", which literally only works in theory because land taxes have a myriad of other undesirable economic effects and incentives in the creation of public policy and in economics more generally. It isn't "the whole point" to force economic participation, that's an unintended consequence. The "whole point" is to make it difficult for someone to just sit on land that they're not using. Those aren't the same things, literally at all. If I want to set up a property where I chop down trees on my land, sell them for some money by the roadside, and otherwise mostly live off-grid and subsistence farm, Georgism would prohibit me from doing so. I think that's disgusting, and that Georgism adversely affects the rural poor. I'm personally in favor of a law that takes inspiration from the Homesteading Principle, which states that land is owned when someone tends to it and develops it. This allows a more free flow of land to whoever needs or wants to use it, eliminates pesky real estate middlemen, and most importantly: doesn't force people pay rent to the government for living on this planet. Monkeys don't have to pay taxes for existing, neither should people. It's disgusting anyone thinks we should.

    • ​@OGNotAPussySlayer Your only actual argument against georgism in this entire wall of text is that it forces economic participation. However, that is the whole point of georgism; that is why people want it or a similar policy system instituted. I would suggest actual reading up on the logic behind the ideology before criticizing it

  • Hi EE, love your videos. one thing on China's local government debt to note is that most of the debt is owed to Chinese banks denominated in Yuan. and guess who owns all the Chinese banks? so basically the CCP is lending to itself and can also print it's way out of the said debt which also isn't bad as it will devalue the Yuan making Chinese products more competitive on the global market.

    • The banks in turn raise the money by selling bonds to the populace and corporations. This is akin to indirect taxation.

    • A really, really important thing about all government debt is that who it is owed to matters at least as much as its amount. This is the flaw in this and the previous video - China's debt is owed to other Chinese. Just as the property wealth is paper wealth, the debt on it is paper debt. Government debt represents an IOU to somebody, and if the IOU is held by your own citizens it effectively means it need never be honoured, especially if you are a government that doesn't need to worry much about asset-holding citizens' reaction.

  • Many years ago, I worked my first job in a small French company in Shanghai, my boss pays all the taxes as regulated, he bankrupted 2 years later.

  • This was always going to be a challenging video for you to create/produce. I know some people will focus on the scoring, but like all things in life the value is in the detail that goes into determining those scores and the overview presented beforehand.

  • Here in Brazil the middle class is penalized with high income taxes, while the rich manage to evade the rules or pay little. Also, we don't have a VAT, but several different and confusing consumption taxes. We need a fairer and more simplified taxation system.

    • ​@Pensnmusic Except the data shows this isnt true at all. The top 1% in the US pay almost 40% of the income tax collected, while earning 20% of the total wages. Youre also ignoring the fact you have to take a loss, to use a tax loss... In what Universe does it make sense to tax a $1000 gain, if I have an offsetting $1000 loss?

    • That's how everyone handles taxes. In the US our wealthy elites pay a smaller proportion of their taxes by abusing different tax deductions and the system of capital gains tax. You can defer your investment earnings from getting taxed as long as you don't sell the investment. You can, however, use the investments as collateral to get very favorable loans and then wait for a year where the market crashes to sell allowing you to write off your investment losses (it counts directly against your tax bill so you can continously offload your poor performing stocks and assets risk free as they reduce your tax burden while retaining the high performing investments). They often pay little or no taxes even as their investment portfolios go up billions of dollars.

    • middle class is penalized everywhere. In Bulgaria we have 20%VAT + 10% flat "income tax" over your salary which totals 30%. This is w/o the other taxes for waste, buildings, car, healthcare, etc. If you own a small company, you cannot get government order - that's how the mid class is hit.

  • I would love to see a video on the economics of slavery. Why do people enslave others (it's not always about race), history, and how slavery still prevails today (because yes it still exists).

    • Soon artificial intelligence and robots will probably start doing cheap and boring labour, not slaves from the villages of Africa

    • @S asi58 Yeah, it is incorrect at a nation-wide level. Though most of the northern states abolished slavery almost immediately after the American revolution, so in regards to beating the British, I suppose I'm still half right.

    • @Bushy incorrect. Various other countries abolished slavery before the US. For example the British empire did it in 1833. Some other European countries did it even earlier. Heck there were some countries that abolished slavery in the middle ages (granted they ceased to exist later on due to other reasons).

    • @Bushy en.wikipedia.org/wiki/Timeline_of_abolition_of_slavery_and_serfdom look up 1904 in the EU or just the entire list the USA are still mention in 1918, 1940 and 1956 because of grey area and wiggle room in the law they had to change. Also, the all illegal Mexican immigrant "working" on farm thingy.

  • It is funny that all video regards to very serious criticism and worry about China's future, and yet the score put it in second place. Our tendency to evaluate things as they are as opossed as where they are going is really going to bite in the behind sooner than later.

  • It has a lot of nationalized industry with generates its own revenue. It doesn’t necessarily need to increase tax revenue.

  • @7:19 I like how some of the 50-ish apartment buildings are oriented slightly differently than the rest. Really emphasizes the playful character of Chinese property development, and can lead to quite a lovely surprise among more exploration-inclined residents, I imagine.

  • I am always amazed at the quality of information conveyed in each of their videos.simply very well done ! thank you for all the effort that goes into these videos, i can certainly say that i appreciate it myself.cheers to the Econimcs Explained team

  • When you said China has a major tax problem the first thing I thought was "Well, duh. No-one who works for government pays tax" The proof for this is trivial.

  • I don’t agree with 6/10 for “Stability and Confidence”, I would place it lower because even without Covid they were killing Hong Kong. They’re losing all kinds of tax revenues in HK and capital is like water slipping between their fingers as they tighten their grasp. Everything else was pretty much spot on though.

    • @preston lui Kind of yeah but I recommend you get acquainted with “Perun” as the source of info for Ukraine, the TLDW is it’s a kind of proxy war and Russia isn’t having a great time over there.

    • @depth386 frankly speaking. The West are letting it happen in Ukraine

    • Hong kong never pays taxs to mainland, lol.

    • @preston lui A fair argument. The west let it happen too, it’s like Russia & Georgia or Russia & Crimea. It is not Ukraine.

    • @depth386 Honestly yeah, those are problems that is truly killing the confidence of China. My main point is the "changes" imposed on HK is merely a symptoms of the deeper problems but not the source of the confidence problem, the fact that they managed to pull that off to HK without any material recoil damage is kind of a sign of confidence

  • "China's economy is primed to crumble any time now" "let's give them 8.2"

    • How far, wide, slow or fast does it crumble? The key to a strong economy is to survive crisis after crisis.

  • Can you cover India please ? Can you also cover the causes of the current inflation in the US? Thanks!

    • @Jacob B Walters Thank you for your answer. I tend to agree, most people and politicians have a hard time admitting how little we can actually control. That is the beautiful thing about our economic system, it is so intertwined it becomes extremely complex to identify cause and effect.

    • Inflation is the US was caused by supply chain issues and the low rates the federal reserve imposed for so long compounded with the more reactive reaction rather than pro active one. Um. That’s basically it.

    • @ben5056 I am going to preface this post by saying that while my previous post was based entirely on data and tangible research done by credible think tanks and research institutions, this one is based in large part on my experience. While it is easy to pick out drivers of inflation based on historical data and trends, it is much more difficult to pinpoint just how much of a role each factor plays. I am sure that other economists have slightly different views. I personally believe that international factors like war and disease have played a greater role in pushing inflation than the average American is willing to admit. When people begin to feel powerless about a situation, they tend to envision solutions that put them back in control. This is why in democracies the economy is such a good indictor of reelection chances for incumbents. In times of crisis, they become easy scapegoats and voters express their frustration with economic circumstances by voting them out of office. Unfortunately, the reality is that economic circumstances are determined by so much more than a single person or party. I also find the international factors to be inextricably linked to the policies they spurred. Essentially, you get into a chicken or the egg scenario. Was Covid to blame for supply disruptions or were Covid related shut downs? Was the invasion of Ukraine to blame for inflationary effects on gas and other commodities or were retaliatory sanctions? Your answer could depend on your opinion of the necessity of the reactions in both instances.

    • @Jacob B Walters how much of the inflation fo you think is solely due to international factors?

    • Economist here: Primary policy causes of inflation in the US are: 1. 4-6 years of unusually low taxes without concurrent spending cuts 2. Large short-term stimulus spending in the form of direct payments 3. Extremely low interest rates that encourage lending and spending. 4. Restrictive immigration policies that prevent the leveling of supply and demand in the workforce. 5. Last but not least, global events (COVID-19 and related shutdowns, Russian invasion of Ukraine) that have snarled supply chains

  • China has been very relaxed on personal income tax, super strict on corporate.. they do it on purpose. With the technology they can certainly get it done super fast.

    • @Ink Bold I won't say tax only the wealthy, but definitely we shouldn't make people's lives harder if they are already barely making it. I do think the wealthy probably benefits the most from public spending such as roads, public education (for workers), and other infrastructure.

    • With many state own industries and joint ventures, I don't think personally income tax is really nessesary for their government budget. They were doing alright before implementing personal income tax. I assume they can continue to make it work without personal income tax.

    • As it should be, tax burden should only be on the wealthy not the low income.

  • as an 'expat' in China, I am unfortunately one of that minority who actually pays significant income taxes. Most people don't earn enough to pay much income tax.

    • @Stanley oh they definitely are. Honestly only intent I could extrapolate from this phenomenon is that their a political bot account

    • I've seen this exact copy pasta message several times from different accounts in this thread. What are you, all funded by the NED or something?

    • Boohoo

  • fewer is used to refer to number among things that are counted, as in "fewer choices" and "fewer problems"; less is used to refer to quantity or amount among things that are measured, as in "less time" and "less effort."

  • insane that only 2% of the population pay income tax. Assume things like transactional taxes and customs and excises charges are making up the shortfall alongside the lease / property taxes

  • Can someone explain to me the difference between our system where your land is taken away if you don't pay your 2% a year lease (property tax), vs China's? What would be their comparative rate? Is it much more than this?

  • The cause of the french revolution: tax. Or more specifically, trying to collect tax from the poorest whilst exempting the wealthy. And running up massive state bills by picking fights with other countries in order to create an empire.

  • It would be interested to know how Indian economy would be rated in current world economic conditions

  • When many naturals resources are owned by the state, and well as numerous companies... taxes on the people can be low or non-existence. However, as the wealth of the 99% grows taxation can be warranted / justified if the government takes an active role in increasing the 99% wealth, e.g. schooling (general, vocational, academic), roads, infrastructure, investments in start ups, etc. 💡

  • Great video as always. Would love to see you take a look at Indonesia's economy.

  • I have a friend with whom I did law, they are ethnic Chinese, before Hong Kong was handed back to China, they practised law in HK, then we’re appointed a Judge. When HK was handed over, they continued to be a Judge, then resigned in disgust at the blatant public corruption. They then practised as a private lawyer but retired in 3 years and retired to Australia. When talking, the examples of corruption given are mind blowing. The whole “public” service is corrupt, the corporations disregard the law entirely as it suits them.

    • True. There are tons of favors and hush money going around. In fact, people want these “gov official jobs” just so they can get these benefits.

  • Love to see a video regarding Moody’s and S&P ratings. How many bad economic outcomes were based in whole or in part on their spurious ratings ?

  • Thanks for the great video! I know you've already done a video on the economy of Norway, but could do add a short video on where it sits on the leaderboard? Best wishes!

  • on the initial comparison you should've included Finland, just to show how stupidly high it can get with still somewhat functioning society.

  • I nearly always agree with your amazing assessment’s BUT Stability and confidence score of 6…. You have to be joking. Their dictatorship is committing genocide on their own people, are totally corrupt at every level, have state control over every aspect of their lives, produce bogus economical data all the time and disappear people business and everything else… let alone their military stance on local/international politics… honestly scoring them above a 3 on this would be generous plus you know their growth is totally bogus as their statistics are completely fabricated. Really think you need to re think this episode. Even writing this makes me worried their government will come after me in some small way so… understand why you may have been rather too nice to them!

  • keep

  • Based on your economics leader board analysis at the end, one would think that China is a very good investment destination. However, your videos over the last year give a very different vibe. A seemingly over extended economy heavily reliant on real estate. How do you explain this contradiction ?

  • Similar problem in India - huge swath of the economy is made up of the informal economy. India's total tax collection is only 7-9%.

  • I'd be interested in your take on Peter Zeihan's prediction that globalisation is pretty much at an end (His latest book out being 'The End of the World Is Just the Beginning.' an examination of the consequences for countries in a de-globalised order) If he's right then China's economy is fragile. And if he is correct that US business is rapidly moving back onshore then.....

  • I'd be interested in your take on Peter Zeihan's prediction that globalisation is pretty much at an end (His latest book out being 'The End of the World Is Just the Beginning.' an examination of the consequences for countries in a de-globalised order) If he's right then China's economy is fragile. And if he is correct that US business is rapidly moving back onshore then.....

  • EE: piles on China. Also EE: places it 2nd on leaderboard. Love the video as always, thanks! Just wanted to say that low tax % of GDP and a land system based on leasehold are not death sentences. Consider Singapore. Its tax as % GDP has been falling since the mid-'80s to just over 13% in 2021. It has several options for leases approaching expiry, including 'topping up', en-bloc sales, and, of course government acquisition.

    • @Porco Rosso Fair point that Singapore differs greatly to China in many respects. However, there are similarities, namely that landed homeowners and taxpayers have little political power. So resolving the problems of low income tax take and expiring leases, while they aren't harbingers of doom, would face less obstruction.

    • Singapore'a case is a very unique and simply will not work the same way for China. Singapore is the size of a big town at most. Most people live in government provided housing. Their tax rate may be low, but a lot of their money comes from outside their country as it operates as a relatively liberal financial hub. The same economy strategy will not work in China. The two places are just too different. The size of the population they need to support is also very different. The access to labor force is also very different.

    • I enjoy his videos, because it is full of interesting information if you can get past the double speak. "Low taxes are dangerous and we should think they suck" -- 😆 Or... we should realize that our Western countries could be much more successful with less taxation. And look at those awesome videos of success. I find this channel to be very China friendly if you see it as a bit of satire.

    • @Jackie It's possible they were both inspired by Henry George and Blackstone with respect to granting decades-long leases instead of freehold.

    • I’m pretty sure the CCP government took a lot of inspiration from Singapore!

  • The leaderboard scoring system is a mystery and the historical significance in the future will likely make it look useless. Do you have a detailed economic model of China to show that it will collapse? China's score and the countries adjacent to it on the leaderboard seems like a joke almost. BTW I don't want China to invade Taiwan like perhaps that's the subject for another day or video.