Income and Taxes

Yes, people with great wealth are, in some sense, spoiled. That is, they are overly demanding and insist upon enjoying advantages that they may not really deserve. That may be a fair generalization. Here we would need to examine what we mean by "overly demanding" and we would need to decide what people really do deserve. Your point is that everyone deserves enough to live, simply as a birthright. In wealthy societies such as ours we have other needs that grow in relation to the standards that are common around us. American standards of what is required, in terms of housing size, cars, food types and quantities, and so forth, may be vastly more than the world can provide to 7 or 8 billion people. Our "needs" in terms of entertainment: our televisions, stereos, electronic games, computers, and various electronic gadgets are likewise probably not the sort of thing that everyone in the world can have.

And we always have a choice, although we may not see it, to give up some of our household income that we use to purchase these things, and instead of buying these things, we could instead contribute to helping the very poor people in very poor countries, or we could help the hungry and homeless in our own communities.

How many people would love to give it up to people in need? I know that I do however I do not. I donate small amounts of money out of guilt. While in Cambodia this summer the children would roam around Angkor Watt selling anything and everything for a dollar. People were buying flutes, paperweights and other novelty items just to give these children money. Out tour guide told us not to give these children money. If they are making money they are not going to school. Without education they are limited when they grow up. But just try denying a three year old child who’s covered in mud and has so much desperation on her little face. Can’t happen, which brings me back to your point. Here is an interesting stat that I found at, www.justgive.com. “The average American gives about 3.1% of their income (before taxes) to charity”. So Americans have made a choice to donate extra money (before taxes) to certain charities. I am so split when it comes to this issue. Is giving money a good thing or would it be better to donate your time? I guess that it all depends on the situation.

To some extent we already have agreed collectively to tax ourselves, and depending upon where we live and how wealthy we are, anything from 16% to 55% of our income will go to the common good through sales taxes, payroll taxes, income taxes, property taxes, and various tax burdens passed on to us in the form of higher prices for our housing rents and so forth. This money is supposed to "promote the general welfare" and we're supposed to have some control over where it goes. Quite a bit of it goes to reducing poverty in our own communities or our nation. A very little portion of it goes abroad as foreign aid, but this amount is a small fraction of a cent out of every tax dollar we give up. So, if you want to do something about it, remember that you are, when you pay taxes. You also have some influence when you vote for candidates who will do more to reduce poverty.

You make some interesting points in this above paragraph. We pay taxes to better our society and yes in some cases it helps but not nearly enough. I did some research on tax laws in China and I would like to share a few.

Income Tax Rates in China

• The tax on an individual's income is progressive. As at 2005, an individual's income is taxed progressively at 5% - 45%.
• A limited company in China is liable for tax at the rate of 33% in 2005. This tax is made up of a 30% national tax and a 3% local tax.
• Companies in China that are located in specific legally defined areas pay company tax of 24%.

Capital Gains

• An individual's capital gains are taxable in China at the rate of 20%.
• Capital gains tax for a Chinese company is added to the regular tax.
• A 10% deduction at source is made from the capital gains of a foreign company in China.
• On taxing capital gains from the sale of real estate, when calculating the capital gain the purchase cost is deducted from the sale price at the 20% rate. When the capital gains are in excess of 50% of the purchase price, the rate of capital gains tax fluctuates between 30% - 60%. (It is 60% when the capital gain is over 200% when compared to the cost).

Table of Income Tax Rates in China for an Individual in 2005

Tax %	Monthly Income (CNY)
5%	1 - 500
10%	501 - 2,000
15%	2,001 - 5,000
20%	5,001 - 20,000
25%	20,001 - 40,000
30%	40,001 - 60,000
35%	60,001 - 80,000
40%	80,001 - 100,000
45%	100,001 and above

Americans have a tradition of giving away a significant fraction of their time and their income. It's an interesting question whether Chinese will have the same tradition. What is the tradition of feeling that one owes something to poor people in China? Do people have a sense that it is good to pay taxes to pay for a welfare system that will protect people from harmful poisons, poverty, natural disasters, diseases, and so forth? People in China must certainly open their eyes and see what is around them. Do they also feel that they must help? It seems like it would be human nature to do so. But, perhaps culture also plays a role, and culture pushes Americans to want to do something, to get involved, to help, and to improve a situation. Other cultures are more accepting of whatever happens to be going on.

I have been doing some research on charities and money donation in China. I came across a wonderful from a Chinese man, Mr. Wang. Mr. Wang states, “Donation is a great way to distribute the common wealth of the society. It is better than government budget, which can reach to the smallest area in the society and there are less chances of corruption. More importantly, the joy of donating, seeing the change and get respect are the real meaning of being rich.” This could not have been said any better. Mr. Wang got to the major issues of donating. Donation is a great way to distribute the common wealth of the society. In places like China it is imperative to spread the wealth. I had a very hard time trying to find a dollar amount that would represent how much Chinese donate in China. Therefore I can not compare the US and China on this matter. This summer I visited a steel factory in China and in their introduction presentation they explained that they donated 20 plus million dollars in taxes each year. They were very proud of this number and how they were able to give back to their community. We only wish more companies did and acted this way, right?