Why only 2% of Chinese pay any income tax
Disclosure: using a throwaway giving the sensitive nature of the topic<p>I&#x27;ve always found very curious to not hear more about taxes in China.<p>It is a mystery to probably no one who have spent a certain amount of time in China that a very few amount of people are actually paying taxes. There is a few regular patterns on how they achieve evasion, but in short it is a mix of large amount of cash&#x2F;cash payments, and close to 0 actions on whatever personal bank transactions.
The later has always amazed me. While some countries will start tracking each transfer &gt; $1,000, Chinese banks will probably not even bother contacting you for a transaction of $10,000 (in RMB, foreign currencies being quite regulated) or even probably more.
And yes, you can buy a car or a house with this money, in Cash. No question asked. There are also some easy ways to use some complex&#x2F;criminal networks of money laundering in order to get the RMBs out of China through shell companies often in tax heavens.<p>We all know that China&#x27;s CCP is gathering a very consequent amount of data about virtually everyone entering the territory (or more). But they seem to struggle at implementing actions.<p>This would explain the government&#x27;s efforts to reduce the amount of cash circulating in the country, and encouraging (via strong investments) mobile payments (wechat&#x2F;alipay).
This would also explain the very short upcoming of the &quot;social credit score&quot; and I&#x27;ve found astonishing that no one every mentioned taxes on that matter.<p>Now, open list of [somewhat naive and genuine] questions:
- Where does the government&#x27;s money comes from? [it appears to me to be mostly inflation, on an underlying crazy monster bubble]
- Can a government subsist with a population not paying taxes? [apparently not, i.e social credit score]
- How will the people react when they will realize they have to give away XX% of their pay when they never gave any $$?
- [last but not least] Is that somewhat comparable to, say, the US [or other western countries] few generations earlier? If yes, are we paying the bill for these generations? If yes, should we start worrying? [Are taxes going to keep raising indefinitely along with debt?]<p>I&#x27;m sorry for a not so organized answer but I wanted to express a few comments about things I&#x27;ve seen myself. The [] answers of the questions are personal guesses&#x2F;notes and I would love to hear more accurate answers from people with better knowledge on the topic.