China comes after its billionaires
China has begun to enforce an individual income tax on the nation’s ultrarich in what appears to be an effort to expand revenue sources, per Bloomberg.
While China has had a long-standing regulation that individuals should be taxed on their worldwide income, this rule has seldom been enforced. Individual income tax has not been a major source of revenue for the government, either — a July Marketplace report said that only 14% of the working population in China pay individual income taxes. The majority of China’s fiscal revenue come from land sales and leasing.
But the postpandemic economic malaise and property crisis put China’s fiscal revenues under pressure. Taxing the ultrarich appears to be one of the solutions. About $1 trillion of the nation’s $24 trillion personal wealth is held overseas, as Chinese nationals put their wealth into non-Chinese real estate or earn investment gains. According to Bloomberg, several wealthy individuals could be subjected to taxes of up to 20% on their gains.
Over the past few weeks, China has also introduced a slew of fiscal and monetary stimulus measures to revive the economy. But foreign investors have cast doubts on China’s economic fundamentals, as deflationary threats became apparent and Hong Kong’s stock market fell.
But the postpandemic economic malaise and property crisis put China’s fiscal revenues under pressure. Taxing the ultrarich appears to be one of the solutions. About $1 trillion of the nation’s $24 trillion personal wealth is held overseas, as Chinese nationals put their wealth into non-Chinese real estate or earn investment gains. According to Bloomberg, several wealthy individuals could be subjected to taxes of up to 20% on their gains.
Over the past few weeks, China has also introduced a slew of fiscal and monetary stimulus measures to revive the economy. But foreign investors have cast doubts on China’s economic fundamentals, as deflationary threats became apparent and Hong Kong’s stock market fell.
